On October 1, 2016, The New York Times released three pages of Donald Trump’s 1995 tax returns. These documents show that Mr. Trump claimed a $916 million loss that could have protected him from paying any federal or New York State income taxes for the last 18 years.
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Tech Companies Challenge Subpoenas and Gag Orders
Tech companies are increasingly resisting what they believe to be government overreach in an effort to protect the privacy of their consumers’ communications and personal information. Recently, lawyers for these companies have argued that the increase in gag orders accompanying court-ordered subpoenas, as allowed by the Electronic Communications Privacy Act of 1986, is unconstitutional. Specifically, they cite that such practices violate the First and Fourth Amendment rights of their consumers. The ACLU has also indicted this practice as well. It charged that the government is keeping its investigations secret in circumstances where transparency not only is required but would also serve the public good.
Rumors of Disney’s Next Big Acquisition
The Walt Disney Company is known for its prodigious business acumen and high-profile acquisitions. Last year, Disney’s annual profit came in at $8.4 billion, an incredible climb from $3.4 billion in 2006. Since Robert A. Iger began his role as chief executive in 2005, the company acquired Pixar, Marvel Entertainment, and Lucasfilm. In the last year, Disney released four movies, which generated $1 billion in global ticket sales, and this past June, Disney opened the $5.5 billion Shanghai Disneyland. These projects led to an increased share price of $31 in 2006 to $122 in August 2015.
Recap: “Law Firm Hot Topic: Andrew Thorpe and Karen Dempsey, Orrick”
On October 5, 2016, the Berkeley Center for Law, Business and the Economy (BCLBE) hosted Orrick, Herrington & Sutcliffe LLP (Orrick) attorneys Andrew Thorpe, Karen Dempsey, and John Palmer, for a conversation on how to best serve as a trusted advisor to clients.
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EU to Create Tax Blacklist Following Panama Paper Leaks
In the wake of the Panama Paper leaks, European Union tax commissioner Pierre Moscovici urged states to draft a blacklist of countries that serve as tax havens to thousands of companies. EU states agreed to this move on April 22, 2016, and plan to complete the list by the end of the summer. Finance ministers have also agreed to automatically exchange information on certain beneficial company owners.
Rise of Institutional Investors Raises Questions of Collusion
In recent years, institutional investors like BlackRock have grown to own 70% of the public stock market. This growth is particularly noticed in horizontal shareholdings in concentrated product market, like airlines, causing them to compete less vigorously with each other. For instance, 7 institutional shareholders who controlled 60% of United Airlines also controlled major rivals such as Delta Airlines (27.5%) and Southwest Airlines (22.3%).
Complying with Dodd-Frank: Complexities Arising from MetLife, Inc. v. FSOC
The Financial Stability Oversight Council(FSOC) was established in the wake of the 2008 financial crisis in order to mitigate the risks and proffer stability to the U.S. financial system, but a U.S. District Court Judge’s ruling in MetLife, Inc. v. FSOC on March 30, 2016, is bound to complicate the FSOC’s ability to fulfill its mandate.
Halliburton-Baker Hughes Merger Hits Antitrust Roadblock
On April 6, 2016, the United States Justice Department announced the filing of an antitrust suit in the U.S. District Court for the District of Delaware to block the proposed merger between Halliburton and Baker Hughes—citing its potential to “eliminate vital competition, skew energy markets and harm American consumers.” Originally brokered in 2014, the $35 billion deal would bring together the second and third largest oil field service firms in the world. Attorney General Loretta Lynch has voiced concerns that this merger of two of the top three firms would serve to create “non-competitive duopolies” in twenty-three separate markets throughout the United States.
Panama Papers Revelations: How Far Can Lawyers Go in Abetting Financial Wrongdoing?
In the context of any financial scandal, questions are asked about the scope of lawyers’ involvement in the financial misconduct. With respect to the 1980-90s savings and loan crisis, the Panama Papers shed light on the role of lawyers in aiding wealthy individuals, including public officials, in setting up offshore bank accounts and shell corporations to keep their assets from the public eye. The International Consortium of Investigative Journalists (ICIJ) published these 11 million plus confidential documents dating back to the 1980s that are reportedly connected to the Panamanian law firm Mossack Fonseca.
Ramón Fonseca, a founder of the firm, told The New York Times that Mossack Fonseca’s lawyers did not engage in any wrongdoing in helping their clients set up shell corporations. Fonseca explained, “We are like a car factory who sells its car to a dealer (a lawyer for example), and he sells it to a lady that hits someone. The factory is not responsible for what is done with the car.”
The Risks of Insolvency in Venture Capital
The venture capital industry has one goal: making startups incredibly lucrative and, thus, maximizing returns to venture capital investors. For the venture capital investor these outstanding returns are generally materialized 5 or 6 years after the Series A investment round, when the investor makes an exit and the startup either performs an initial public offering of its shares (IPO) or is sold to a strategic acquirer or a private equity fund.
However, in a business inherently risky as venture capital, there are also many examples of failures, where venture capital backed startups go insolvent or bankrupt. This happened recently with online retailor and Montreal-based Beyond the Rack, which had previously raised over U$90 million in venture capital investments and other financings. When the company was entering into insolvency, it pursued a sale with a potential buyer, but negotiations fell through, forcing it to file for creditor protection on March 23.