Ferrari Files Its First IPO

Ferrari’s first initial public offering on October 20, 2015 was priced at $52. 10% of Ferrari’s shares are now being sold on the New York Stock Exchange. All of the shares are being sold by Fiat Chrysler Automobiles (FCA), which owns 90% of Ferrari, while Pieror Ferrari, the son of the company’s founder, owns the other 10%. The stocks are being sold in order to separate Ferrari from FCA, which is planned to happen by the beginning of next year. The remaining 80% of FCA’s stake in Ferrari will be transferred to their stockholders.

After its first trading day Ferrari closed at $55 and increased overnight to $56.75. The next important factor to be determined is if the company will be labeled a carmaker or luxury brand. If Ferrari is viewed as a carmaker its valuation greatly exceeds that of its rivals.


Volkswagen Woes Continue as Emissions Issues Spread to Gasoline Cars

On Tuesday, Volkswagen AG announced that it found misstated emissions readings in gasoline-powered cars for the first time. The announcement widened the crisis that had so far focused only on diesel-powered vehicles and marked the first time carbon-dioxide emissions had been brought under fire.

The scandal first emerged in September, when Volkswagen admitted they had been deceiving U.S. pollutions tests with illegal software for years. In response to the discovery, stock price has plummeted by more than a third and the company has made significant leadership changes.

In this latest revelation, Volkswagen said that an internal probe showed “unexplained inconsistencies” in carbon-dioxide output affecting possibly 800,000 gasoline-powered cars. This number is on top of the estimated 11 million diesel vehicles Volkswagen admitted were outfitted with deceptive software. Before the issues expanded to gasoline-powered cars, Volkswagen had estimated the scandal would cost them €6.7 billion. The addition of the problems with gasoline-powered vehicles will cost the company an additional €2 billion or $2.2 billion in possible financial penalties.


Pfizer Contemplates Benefits Of Becoming Behemoth For Tax Purposes

Pfizer has recently engaged in talks to purchase Allergen. This deal would be the one of the largest in a year of large deals—Pfizer and Allergen combined would amount to over a $330 billion market valuation. In the proposed scenario, these two large pharmaceutical companies would combine for the purposes of an inversion deal.

An inversion deal is a transaction used by a company where it becomes a subsidiary of a new parent company in a different country for the purpose of falling under more beneficial tax laws than it had in its previously domiciled country. In this case, Pfizer would like to pay the lower taxes in Ireland, where Allergen is currently domiciled, instead of the tax rate of the United States where it is currently domiciled.


Can You Hear Me Now? Appeals Court Permits Bulk Collection of Metadata for One More Month

In a narrow ruling last week, a federal appeals court declined to enjoin the National Security Agency (NSA) from the bulk collection of metadata on domestic phone conversations. Controversy has dogged the once-secret bulk collection program since its existence was first revealed by Edward Snowden. Earlier this year, the same three-judge panel of the United States Court of Appeals for the Second Circuit had ruled that bulk collection fell outside the ambit of the USA PATRIOT Act. Amid heated debate this summer, Congress enacted companion legislation, the USA Freedom Act, which sought a groundwork for an alternative phone records program and proscribed bulk collection after a “transition period” of 180 days.

Although the federal government had obtained permission from the Foreign Intelligence Surveillance Court to operate the bulk collection program for the duration of this transition period, the American Civil Liberties Union (ACLU) sought injunctive relief against the N.S.A. on the theory that bulk collection violates the Fourth Amendment of the United States Constitution. In declining to intervene, the Second Circuit also punted on this constitutional question, suggesting that it would be unwise to address such a complex and weighty topic for the sake of a transition period that is, by definition, finite.


Mistrial Declared in Dewey & LaBoeuf Case

People v. Davis, the Manhattan criminal trial for three former senior executives from big-time law firm Dewey & LeBoeuf LLP, ended in a mistrial due to a hung jury. The jury of seven women and eight men acquitted each defendant on several counts of falsifying records and remained deadlocked 8-4 on the remaining 93 charges relating to fraud, larceny, and conspiracy. Defendants Steven H. Davis, Stephen DiCarmine and Joel Sanders were originally charged with a total of 151 counts, ranging from minor felonies to grand larceny, a charge that would have potentially made each of them face a prison sentence of 25 years.

According to the prosecution, the three defendants had allegedly stolen over $200 million from insurers and financial firms in a fraudulent scheme that involved manipulating the firm’s accounting reports in an attempt to cover up its dire financial situation. Dewey & LeBoeuf LLP then collapsed and filed bankruptcy in 2012. Experts estimated the firm owed about $245 million to creditors.  Defense counsel rebutted the allegations, contending the demise of the firm related to mass departures of “greedy” partners and that the defendants never had any intention to defraud investors.


Recap: “The Scott Carey Speaker Series—The Real Estate Lawyer”

On October 29, 2015, the Berkeley Business Law Journal and the UC Berkeley Department of City & Regional Planning welcomed Leo Pircher ’57, a founding partner at Pircher, Nichols & Meeks, for a Q&A discussion about his career as an industry leading real estate attorney and changing dynamics in real estate law.

A graduate of UC Berkeley ‘54 and UC Berkeley School of Law ‘57, Mr. Pircher began his legal career working in a variety of practice areas including tort litigation, wills & estates, and tax.  After several years of firm work, Mr. Pircher joined J&B Reedly Corporation, which at the time was the largest private equity real estate company in the nation. As corporate counsel, Pircher innovated real-estate tax structures and legal techniques for real estate transactions that remain industry standards to this day.


All Cash Is Not Created Equal: Basel III’s Liquidity Coverage Ratio & its Effects

The banking industry, served with a cocktail of financial re-regulation and an anticipated interest rate increase, may be in for a headache.

The banking industry has gradually been adapting itself to the regulation regime introduced by Basel III, introduced after the 2008 Financial Crisis to account for its deficiency in focusing only on capital requirements. The older Basel II regime has been reformed to increase not only the levels of certain “tiers” of capital in capital requirements, but also to encapsulate two additional areas for regulation: liquidity and leverage. Leverage regulations are further set to change. Questions, however, arise as to whether liquidity regulation in this environment is the best time for financial re-regulation.


Tesla’s Unreliability: Instead of Correcting Issues, Focus Shifts to New Model 3

After Consumer Reports released its annual survey of vehicle reliability on October 20, Tesla Motors Inc.’s stock prices took a significant hit, dropping 6.6 percent that day, and have continued to fluctuate since.

Tesla is no stranger to this type of fluctuation nor to the impacts of publicity. In fact, in May 2013, after Consumer Reports gave the Model S the best review of any car in the magazine’s history, stock prices soared over 40 percent within days. In October of that same year, when reports of two Tesla vehicle fires became public,  stock prices dropped by 10 percent within two days, and when a third fire was reported in November of that year, prices again plummeted. Despite the fluctuations, Tesla has responded with spectacular customer service, innovation, introductions of its vehicles in new markets, and a showing of strong growth.


Tough Law for Investment Banks in Delaware Courts

Investment banks are having a rough time litigating in Delaware Courts, and the horizon does not look any clearer. As the presence of investment banks in major merger deals in US becomes almost mandatory, it is easy to observe an ever-growing number of disputes related to alleged conflicts of interests between the investment banks and the multiple parties involved in such transactions. These disputes are mostly resolved in Delaware courts, which are the main venues for merger disputes, as most of the publicly-traded companies are incorporated in such state.

One of the latest lawsuits discussing this kind of conflict of interests is In Re Zale Corporation Stockholders Litigation. As explained in this comprehensive article published by Prof. Steven Solomon, in this case Merrill Lynch (“ML”) was retained by the Board of Directors of Zale Corporation (“Zale”) to advise it on the latter’s buyout by Signet Jewelers Limited (“Signet”) in a $1.4 billion transaction. However, before being retained by Zale, ML pitched to advise Signet on the very same deal, and the former only disclosed that it had previously pitched Signet after the closing of the transaction. Zale accepted a price per share of $21.00, which represented a 41% premium, exactly within the price range suggested by ML’s pitch to Signet.


Recap: “Practitioner Speaker Series – Life of a Corporate Finance Attorney: A Conversation with Philip Jonathan Tendler, Partner in Pillsbury’s SF Office”

On October 22, 2015, the Berkeley Center for Law, Business, and the Economy (BCLBE) welcomed Philip J. Tendler, Partner in Pillsbury’s SF Office, for a Q&A discussion about his career and how law school can arm students with the skillset needed to succeed in the wild world of debt finance.

A former equity securities analyst in the Global Energy and Power Group at Schroders, Mr. Tendler joined Pillsbury after graduating from Boalt in 2000.

Travelling back in time, Mr. Tendler reflected on the things he learned in law school that helped him demystify the concepts and themes of finance in his practice. The conversation was weaved around two anecdotes that he shared from his time at Boalt.