Flying Under the Radar, New Municipal Advisor Rules May Alter the Municipal Securities Landscape

By By Andrew Sioson, J.D. Class of 2013 | Posted on

Dodd-Frank mandates fundamental changes in the oversight of the municipal securities market. Section 975 amends section 15B of the Securities Exchange Act of 1934 by requiring that municipal advisors register with the SEC in a similar manner as traditional investment advisors. The proposal has been met with controversy, as critics like Clifford Kirsch, a partner at Sutherland Asbill & Brennan, state that the proposal “goes much further than what was anticipated in Dodd-Frank.”

Municipal securities, such as municipal bonds, are issued by local governments and cities to fund their operations, as well as large projects. Historically, the municipal securities market has been less regulated than other capital markets, but Section 975 of Dodd-Frank significantly increases regulatory oversight of issuers and industry professionals. In December 2010, the SEC proposed rules specifying potential registration requirements and criteria governing mandatory registration for municipal securities advisors. Until Dodd-Frank, the activities of these advisors were largely unregulated. However, regulators came to the conclusion that change was needed when several municipalities were rocked by unscrupulous advice regarding the issuing of securities. For instance, Jefferson County, Alabama is in the midst of rare municipal bankruptcy proceedings after it relied on advice from JPMorgan and borrowed 3.2 billion dollars in floating instead of fixed rate debt. With the proposed municipal advisor rule, the SEC intends to protect municipalities from excessive risks and fees.

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Lower Court Decisions Show that Concepcion’s Scope Remains Unresolved

By James Nguyen, J.D. Class of 2013 | Posted on

Updating a prior post on the impact of the Concepcion decision, two recent lower court cases have demonstrated the limits of Concepcion’s reach and identify at least two particular claims that could render class-action waivers unenforceable: unconscionability and Magnuson-Moss Act claims.

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President Obama Proposes Easing Restrictions on Crowdfunding

By By Joseph Santiesteban, J.D. Class of 2014 | Posted on

By Joseph Santiesteban

Part of President Obama’s recently released American Jobs Act proposes altering the Securities Act of 1933’s rules on Initial Public Offerings (IPOs) to include a crowdfunding exemption and to raise “the cap on ‘mini-offerings’ from $5 million to $50 million.” The goal is to reduce burdensome regulations on small businesses that currently have limited options in seeking financing by taking advantage of social networks’ ability to “crowdfund,” in which a large number of investors contribute small sums of money to projects.

Currently, the Securities Act prohibits firms from publicly selling or advertising stocks or other interests in its firm’s profits without first going through the onerous process of registering an IPO with the SEC (Form S-1). This process often prices out many small firms that can’t afford the time and expense of filing. The primary exception to the standard IPO process is a “mini-offering” made pursuant to Regulation A. These offerings require a less thorough inspection by the SEC, but are currently limited to offers of less than $5 million.

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California’s Response to Dodd Frank and the Repeal of the “Private Advisers” Exemption

By Charles Rogerson, J.D. Class of 2013 | Posted on

By Charles Rogerson

The Commissioner of the California Department of Corporations is considering amending Rule 260.204.9 of Title 10 of the California Code of Regulations in response to the repeal of the “private advisers” exemption mandated by the Dodd-Frank Act. The former exemption, found in the Investment Advisers Act of 1940 (“Advisers Act”), had allowed specified investment advisers with fewer than fifteen clients in any twelve-month period to forgo SEC registration. Notably, the exemption counted each fund as a single client, not each individual investor. This exemption had a corollary in the California Code under 260.204.9. As amended by Dodd-Frank, the Advisers Act requires investment advisers with assets in excess of a specified statutory amount ($25 to $100 million) to register with the SEC.

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Online Retailers and Taxes in California

By Angelica Salceda, J.D. Class of 2013 | Posted on

Earlier this summer, Governor Jerry Brown signed into law a budget bill that required online retailers like Amazon to start collecting state sales tax as of July 1, 2011.The passage of ABX1 28 (Blumenfield) prompted Amazon to initiate a campaign to place a referendum on the ballot that would overturn the new online sales tax.The online retailer had already spent over $5 million on the referendum campaign and was prepared to collect the necessary 504,000 signatures required within 90 days of filing with the office of the California Attorney General to place the referendum on the ballot. To show its virulent opposition to the bill, Amazon has already cut ties with some 25,000 affiliate businesses in California.

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Will Concepcion Allow Arbitration Agreements to Squash Consumer Class Actions?

By James Nguyen, J.D. Class of 2013 | Posted on

Not entirely—at least that’s the conclusion according to this article in the most recent ABA Infrastructure issue.The key holding of the Supreme Court decision in AT&T Mobility LLC v. Concepcion–that the Federal Arbitration Act (FAA) preempts any state rule invalidating class-action waivers (such as the Discover Bank v. Super. Ct. rule in California prohibiting non-class arbitration clauses)–significantly bolsters the already superior bargaining power of defendants in class-action suits and undermines the ability ofconsumers to even undertake these suits. (There is already some evidence that banks have increased adoption of arbitration clauses as a result of the decision)

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The Network Lecture Series: Nathan Bush’s Corruption and Fraud in China Part II

By By Mike Perez, J.D. Candidate Class of 2012 | Posted on

On August 29th, 2011, Nathan Bush, Partner at O’Melveny & Myers, Beijing, delivered a lecture titled “Corruption & Fraud in Contemporary China: Challenges for U.S. Companies & Investors.” Mr. Bush’s lecture addressed two equally important questions:

(1) What pressures do U.S. companies face when operating in China, and

(2) What challenges do Chinese companies face when listing on American stock exchanges?

In answering the first of these queries, Mr. Bush took the lecture attendees through a brief history of Chinese political and social culture, Chinese anti-bribery laws, the Foreign Corrupt Practices Act, Dodd-Frank’s strengthened whistleblower protections, and the U.K. Bribery Act. In tackling the second question, Mr. Bush focused on reverse- takeover mergers of shell U.S. companies listed on American stock exchanges by Chinese companies and the recent intensification of investigations into those companies’ dealings.

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The California Amazon Tax

By Angelica Salceda, J.D. Class of 2013 | Posted on

In a recent tentative deal with California lawmakers, Amazon will continue doing business as usual and will delay collecting taxes from online sales until September 2012.

The online retailer was the main target of Assembly Bill 28x that mandated Amazon to gather taxes from California sales starting July 2011. In response to the mandate, Amazon initiated a referendum campaign to challenge the law. (more…)

DOJ Puts the Brakes on Proposed AT&T T-mobile Merger

By Peter Benesch, J.D. Class of 2013 | Posted on

On August 31, the Department of Justice (DOJ) brought suit to block the proposed merger of AT&T and T-mobile, the second and fourth largest mobile phone service providers in the nation. The DOJ asserts that the combination would result in “higher prices, fewer choices, and lower quality products.”
The DOJ’s argument is bolstered by the observation that T-mobile has been an engine for innovation and competition in the market in the past, as it was the first carrier to bring Android-powered handsets to market and to introduce various unlimited service plans. However Deutsche Telekom, the company that owns T-mobile, has stated that that it no longer plans on investing capital in the U.S. mobile phone service market. This statement, if credible, would make it more difficult for a court to conclude that T-mobile would be able to continue to serve as a source of competition and innovation in the future.

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The Network Lecture Series: Nathan Bush’s Corruption and Fraud in China Part I

By Mike Perez, J.D. Candidate Class of 2012 | Posted on

On August 29th, 2011, Nathan Bush, Partner at O’Melveny & Myers, Beijing, delivered a lecture titled “Corruption & Fraud in Contemporary China: Challenges for U.S. Companies & Investors.” Mr. Bush’s lecture addressed two equally important questions:

(1) What pressures do U.S. companies face when operating in China, and

(2) What challenges do Chinese companies face when listing on American stock exchanges?

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