President Obama Signs JOBS Act: Landmark Reform for Small and Emerging Growth Companies Now Law

On April 5, 2012, President Obama signed the Jumpstart Our Business Startups (JOBS) Act, enacting it into law. The JOBS Act is intended to make it easier for smaller and earlier stage companies to raise capital and also to revitalize the U.S. market for initial public offerings, which has been in decline since the beginning of the last decade.

The provisions of the JOBS Act represent a watershed change to the laws and regulations governing capital raising for private companies. Some of the provisions – such as the “IPO on-ramp” provisions and the increase in the number of holders triggering mandatory registration and public reporting under the Securities Exchange Act of 1934, are effective immediately. Others, including the new crowdfunding exemption, the removal of the ban on general solicitation for offerings under Rule 506 to accredited investors and Rule 144A to QIBs, and the new exemption modeled on Regulation A, will require SEC rulemaking before they come into force.

We have previously blogged about the original House version of the Act and the changes the Senate adopted, which changes were enacted into law. This article discusses the full Act as enacted.

Background

The U.S. House of Representatives passed the Act (H.R. 3606) on March 8, 2012 by a vote of 390-23. Despite opposition from SEC Chairman Mary Schapiro and many organizations, the Senate bypassed its normal committee process and passed the JOBS Act, with a substantially revised section on crowdfunding, on March 22, 2012. The Senate vote was 73-26. On March 26, 2012, the House passed the Senate version of the bill by a vote of 380-41. As noted above, President Obama signed the Act into law on April 5, 2012.

Overview

The JOBS Act is organized in Titles. The major titles are summarized below

Title I – IPO on-ramp provisions

• New category of issuer: emerging growth company (EGC)
• Allows EGCs to file registration statement confidentially and “test the waters” with large institutional investors
• Eliminates most restrictions on research publications
• Reduces financial reporting and executive compensation disclosure obligations for EGCs 

Implemenation: Effective immediately

Title II – Relief from ban on general solicitation

• Removal of ban on general solicitation for Rule 506 offerings provided all purchasers are accredited
• Removal of ban on general solicitation for Rule 144A offerings provided all purchasers are reasonably believed to be QIBs

Implementation: Exemption from broker-dealer registration for operation of a general solicitation portal (subject to conditions) SEC directed to revise Regulation D rules within 90 days; broker-dealer registration provisions effective immediately.

Title III – Crowdfunding

• Crowdfunding exemption through funding portals for offerings up to $1 million  

Implementation: SEC directed to issue rules within 270 days.

Title IV – New “mini-public offering exemption

• New exemption for private offerings up to $50 million, modeled on Regulation A

Implementation: SEC directed to issue rules to create exemption. No deadline set.

Titles V and VI - Relaxation of mandatory Exchange Act registration standard for record holders

• Increases number of record holders triggering mandatory registration to 2,000, no more than 500 of which may be unaccredited
• Excludes holders of employee benefit plan securities
• Increases thresholds for bank holding companies

Implementation: Effective immediately.

What are the IPO on-ramp provisions?

The JOBS Act creates a new category of issuer — an emerging growth company, or EGC. An EGC is a company that has had its first registered sale of securities within its five prior fiscal years and has total annual gross revenues of less than $1 billion (subject to inflationary adjustment by the SEC every five years) and less than $700 million in publicly traded shares. Issuers that had their first registered sale of securities on or before December 8, 2011 are not eligible to be an EGC.

The JOBS Act provides the following relief from disclosure, compliance and governance obligations for EGCs:

• Registration statements can be submitted confidentially to the SEC and need not be publicly available until 21 days prior to the first road show. The SEC has indicated it will shortly publish guidelines for confidential submission. Note that if an offering is going to proceed to a road show, the initial confidential filings will still become public, which will allow public comparisons between the initial filed documents and later filed documents.
• Publication of research about an EGC by a broker-dealer is not considered an offer of securities, even if the broker-dealer is participating in the IPO. Broker-dealers have been restricted from publishing research reports during a “quiet period” following an IPO, and that quiet period will no longer apply to EGCs.
• SEC and stock exchange rules limiting communications by analysts with companies and potential IPO investors must be repealed.
• “Testing the waters” communications between companies and qualified institutional buyers (QIBs) are permitted at any time during the IPO process.
• The IPO registration statement need only include audited financial statements (and corresponding management discussion and analysis) for the two prior fiscal years rather than the three prior fiscal years required for companies other than smaller reporting companies, and subsequent reports under the Exchange Act need not include years earlier than those required in the IPO registration statement.
• Exchange Act reports and registration statements after the IPO registration statement will require summary financial information only for the periods starting with the earliest year of audited financial statements presented in the IPO registration statement[1]. Until now, such information has been required for the five prior fiscal years.
• Say-on-pay and say-on-golden-parachute votes are not required during the period that the company qualifies as an EGC. Smaller reporting companies are currently exempt from these votes until 2013.
• EGCs may use the scaled executive compensation disclosures currently permitted for smaller reporting companies. They may therefore include compensation information for fewer executive officers, omit the Compensation Discussion & Analysis (CD&A) and omit some of the compensation tables, including the burdensome table of Golden Parachute Compensation.
• Compliance with the auditor attestation requirement of Section 404(b) of the Sarbanes-Oxley Act is not required for the period that a company remains an EGC. This extends the relief from attestation from the current two years post-IPO to up to five years. EGCs are still required to maintain adequate internal control over financial reporting and to report the assessment of their principal executive officer and principal financial officer as to the effectiveness of such internal control.
• EGCs may pick and choose (opt-in) amongst the scaled disclosure provisions.
• Compliance with new accounting standards is not required until such standards apply to companies that are not subject to Exchange Act reporting.
• The SEC is ordered to conduct a study of the effect of decimal quoting of securities on IPOs and liquidity for smaller companies and report to Congress within 90 days.
• The SEC is ordered to conduct a review of Regulation S-K to “determine how such requirements can be updated to modernize and simplify the registration process and reduce the costs and other burdens associated with these requirements for issuers who are emerging growth companies,” and then report its findings to Congress 180 days after enactment.

What will the IPO on-ramp provisions mean to companies considering going public and the market new offerings?

The IPO market is characterized not only by legal requirements but also market realities and long-standing customs. Markets can change rapidly and unpredictably. Customs are typically slow to change in response to relaxation of legal requirements. It is not clear at this point what effect the relaxation of these rules will have an companies proposing to go public via a traditional IPO. Some of the uncertainties include:

• Will confidential filing increase the willingness of companies to file for an IPO in more uncertain market conditions?
• Will confidential filing affect the timing for clearance of SEC comments?
• Will companies eschew confidential filings because of the loss of public exposure that can lead to acquisition offers (the "dual track")?
• Will broker-dealers involved in an IPO be comfortable publishing research close in time to an IPO? Will investors consider those reports to be credible?
• How will the test the waters provisions interface with the confidential filing provisions?
• What controls will issuers and underwriters develop to protect themselves from liability that might be associated with test the waters communications?
• Will the market be comfortable with only two years of audited financial statements and no unaudited financial data for prior years?
• Will the market be comfortable with the scaled executive compensation disclosures?
• Will the relaxation of these rules meaningfully reduce the costs and risks of going public?
• Will the elimination of the “ethical wall” between investment bankers and analysts, and possible future changes to decimalization quotation of securities, encourage boutique investment banks to re-enter the IPO business?
• Will the market accept public offerings from smaller and/or earlier stage issuers, which tend to have a higher risk profile?

What is the elimination of the prohibition on general solicitation?

Currently, a company wishing to raise capital through the exemption from registration provided in Rule 506 of Regulation D cannot offer its securities by any form of general solicitation or advertising. The prohibition on general solicitation requires investors to be recruited based on pre-existing relationships with the issuer or an agent of the issuer that creates a reasonable basis to believe that a person would be interested in an investment of the type offered. This rule has represented the fundamental divide between registered public offerings, such as IPOs, and exempt offerings, commonly known as private placements.

The JOBS Act requires the SEC, within 90 days of enactment, to remove the prohibition on general solicitation in Rule 506 private placements provided that all the investors are accredited. The JOBS Act directs the SEC to adopt regulations to require the issuer to take reasonable steps to verify that the purchasers in Rule 506 private placements are accredited. The reform applies only to offerings under Rule 506 and does not directly affect offerings under other exemptions afforded by Regulation D or Section 4(2) of the Securities Act of 1933.

Rule 506 offerings are exempt from state blue sky qualification requirements under the National Securities Markets Improvement Act of 1996 (NSMIA), so the general solicitation that is permitted by the JOBS Act cannot be restricted by states.

In addition, the JOBS Act directs the SEC, within 90 days of enactment, to amend Rule 144A to permit general solicitations of securities sold under Rule 144A that reach investors who are reasonably believed to be QIBs.

What types of exchanges are non-broker-dealers permitted to operate for the sale of Rule 506 securities?

The JOBS Act creates an exception to broker-dealer registration rules, effective immediately, for operating a platform or mechanism to offer, sell and purchase securities sold under Rule 506 and for providing certain ancillary services associated with such securities. The permitted ancillary services are due diligence services and providing standardized transaction documents. The exception applies to online and other types of exchanges.

This exception applies only if the operator and associated persons receive no compensation in connection with the purchase or sale of securities, do not take possession of customer funds and have not been subject to a “bad boy” disqualification from a self-regulatory organization such as FINRA.

What will the elimination of the prohibition on general solicitation and requirements for broker-dealer registration for Rule 506 portals mean?

As noted above, the prohibition on general solicitation has been the fundamental divide between public and private offerings. There will remain important differences between public offerings and private placements, but the line of contrast will be significantly blurrier.

Public offerings generally have significantly greater investor protection mechanisms, including SEC review, involvement of at least one (and usually many) underwriter intermediaries, due diligence performed by both the issuer’s and the underwriters’ legal counsel, audited financial statements, and strict liability under the securities laws for issuers, and, subject to a due diligence defense, for underwriters and directors.

These investor protection mechanisms are in part responsible for the high costs of IPOs – a problem the JOBS Act has tried to address. The JOBS Act will therefore allow companies that have raised money under Rule 506 (i.e., most funded emerging growth companies) to greatly expand the audience of potential investors. That may make it easier for such companies to raise capital, particularly those whose business is interesting to the public at large. That may also make it more practical for emerging growth companies to accept smaller investments from accredited investors, which may incentivize more people to invest. However, it remains to be seen whether accredited investors recruited via general solicitation will be willing to invest, on the whole, substantial sums in riskier companies that are, for the most part, issuing illiquid securities[2]. If investors have an appetite for these securities, early stage companies will benefit greatly from this provision of the JOBS Act.

The JOBS Act requires the SEC rules to address verification of the accredited status of investors who are generally solicited. It is not clear how burdensome those rules will be or what will be the consequences if issuers fail to observe all of the requirements or if investors lie about their status and the lie is not detected. We note that the JOBS Act language relating to Regulation D, Rule 506 requires investors "are accredited," whereas the corresponding language for general solicitation of Rule 144A offerings requires only that the issuer "reasonably believe" that the investors are QIBs. The rules the SEC adopts here may become important to the practical utility of general solicitation in Regulation D offerings.

Sophisticated angel investors and venture capital funds usually negotiate for certain control rights in connection with their investments. It is unclear what types of investor control mechanisms might occur in private placements solicited generally or what effect those might have on issuers or investors.

There are a number of potential downsides to the elimination of the prohibition on general solicitation and the opening of portals to firms that are not broker-dealers.

All other things equal, companies that have been through a “capital markets scrub” (i.e., the due diligence performed by multiple intermediaries in the IPO process) are less risky than ones that have not. Moreover, the manner of soliciting public offerings is significantly restricted in the securities laws, whereas the means of general solicitation for Rule 506 offerings under the JOBS Act are unrestricted. Absent SEC rules that restrict the manner of general solicitation (which the SEC might not be able to adopt or enforce) or further lawmaking, telemarketing, infomercials and other practices historically associated with extreme investor risk and fraud. Communities of persons who are more likely to be accredited but not necessarily sophisticated investors, like retirees, would seem particularly vulnerable.

FINRA has recently been enforcing rules it believes require broker-dealers to conduct extensive due diligence in private placement transactions. These FINRA positions may help eliminate some of the abuses many fear from the JOBS Act to the extent broker-dealers are involved in private transactions. However, Title II of the JOBS Act expressly allows portals for the general solicitation of Rule 506 offerings to be operated by firms that are not registered broker-dealers. The JOBS Act imposes no due diligence requirements on these firms (compare to the requirements for funding portals for crowdfunding offerings, discussed below).

It is not clear that the change to Regulation D, Rule 506 required by the JOBS Act will change many SEC rules and interpretations that might limit general solicitations. These include rules and interpretations intended to ensure that offerings started as private finish as private and offerings started as public finish as public.

All of this means that on one hand, some and possibly many emerging growth companies will find it easier to raise capital from accredited investors, while on the other hand the public will likely receive many more and varied solicitations for investment opportunities that are riskier and more susceptible to fraud than has been the case for many decades.

What is crowdfunding, and what activities does the JOBS Act permit?

Crowdfunding is a form of capital raising where groups of people pool money and other resources to achieve a goal, including to fund a small business. As a result of the prohibition on general solicitation and the prior requirement for companies to register under the Exchange Act if they have over 500 holders of a class of equity securities and over $10 million of assets, crowdfunding in the U.S. through websites and social networks has generally been limited to activities where the investor does not receive securities in exchange for its final contribution.

The JOBS Act establishes the new crowdfunding exemption, which is designated as Section 4(6) of the Securities Act, with the following parameters:

• The aggregate proceeds from all investments in the issuer, including amounts sold under the crowdfunding exemption during the preceding 12 months, must be less than $1,000,000.
• The aggregate amount invested by any investor in all issuers pursuant to the crowdfunding exemption must not exceed a limit determined on a sliding scale based on net worth or annual income. The limit is 5% of net worth or annual income that is less than $100,000 (or $2,000, if greater than the 5% calculation), and 10% of net worth or annual income that is $100,000 or more. No investor may invest more than $100,000 in an issuer pursuant to the crowdfunding exemption. Income and net worth are to be calculated in the same fashion as the tests for accredited investors. Accordingly, equity in a principal residence is excluded from net worth.
• The transaction must be conducted through an intermediary that is either a registered broker-dealer or “funding portal.”
• Funding portals are not required to register as broker-dealers, but are subject to SEC registration and must be members of a national securities association, such as FINRA.
• The intermediary must provide disclosures, including disclosures related to risks and other investor education materials (as determined by SEC rules).
• The intermediary must ensure that investors review investor-education information (as determined by SEC rules).
• The intermediary must ensure that investors answer questions demonstrating that they understand the risks of investing in startups, including the risk of loss of the entire investment, and that each investor can afford such loss.
• The intermediary must provide the disclosures to the SEC and to investors at least 21 days prior to accepting any investments.
• The intermediary must take fraud-prevention measures to be determined by SEC rules, including background checks of officers, directors and 20% holders.
• The intermediary must ensure that proceeds are not released to issuers until a set target amount is reached and must allow investors to withdraw their commitment in accordance with SEC rules.
• The intermediary must take steps to be determined by SEC rules to ensure that each investor has not exceeded its crowdfunding limit in a 12-month period, which as noted above applies to all investments in all issuers under the crowdfunding exemption.
• The intermediary must take steps to ensure the privacy of information collected from investors in accordance with SEC rules.
• Intermediaries cannot pay finders fees.
• Directors, officers and partners of the intermediary may not have a financial interest in the issuer.
• The issuer must make the following mandatory disclosures to the SEC, the intermediary and investors:
  • identifying information about the issuer, including its website
  • the names of officers, directors and 20% shareholders
  • a description of the business and the anticipated business plan
  • a description of the financial condition of the issuer, with scaled requirements depending on the target amount of the offering.
    • For offerings of $100,000 or less, the income tax return for the last completed year and financial statements certified by the principal executive officer to be true and correct
    • For offerings of $100,000 to $499,999, financial statements reviewed by an independent public accountant
    • For offerings over $500,000, financial statements audited by an independent public accountant
  • the intended use of proceeds
  • the target offering amount, the deadline to meet the target offering amount, and regular updates regarding the progress of the issuer toward the target
  • the price or the method of determining the price, and if the price is not fixed, a reasonable opportunity for the investor to rescind its commitment once the price is determined
  • detailed information about the capital structure of the issuer, the securities being offered and the risks associated with those securities
  • how the securities being offered are being valued, and how they might be valued in the future in connection with a corporate transaction
• The issuer may not advertise the terms of the offering except for notices which direct investors to the intermediary.
• The issuer may not compensate finders except in accordance with SEC rules that will ensure the recipient clearly discloses such compensation.
• The issuer must file annual reports of results of operations and financial statements with the SEC and provide to investors, in accordance with SEC rules.
• No resales are permitted for one year except to the issuer, an accredited investor, a member of the investor’s family or pursuant to a registered offering.
• The exemption is available only for U.S. issuers that are not investment companies and are not subject to periodic reporting under the Exchange Act.
• The issuer and its directors, partners, principal executive officer, principal financial officers and controller/principal accounting officer will be liable to investors for any material omissions or misstatements unless they can sustain the burden of proof that they did not know, and in the exercise of reasonable care, could not have known, of such untruth or omission.

It appears that securities sold under the crowdfunding exemption will be “restricted securities” and will therefore subject to Rule 144 restrictions for public resales. It appears that the one-year restriction on resale described above applies to private as well as public resales.

Investors who purchase securities in transactions under the crowdfunding exemption do not count against the holders of record test that triggers reporting obligations for companies under Section 12(g) of the Exchange Act. Moreover, offerings under the crowdfunding exemption pre-empt state blue-sky qualification laws (though the SEC must make information available to the states to facilitate state enforcement of anti-fraud laws). States may require notice filings, but only a state in which purchasers of an aggregate of 50% or more of the securities being offered reside may charge a fee in connection with such notice. States also may not regulate funding portals except for enforcement of anti-fraud laws.

Within 270 days after the enactment of the JOBS Act, the SEC is required to adopt rules for the crowdfunding exemption, including rules disqualifying “bad boys” from using the exemption.

Will crowdfunding be a viable means for emerging growth companies to raise capital?

The crowdfunding exemption ultimately passed into law is more restrictive in many ways than existing Rule 504 under Regulation D. Rule 504 permits an issuer to raise up to $1 million during a 12-month period with no mandatory disclosures, no investor qualifications and no limits on individual investments. Rule 504 also has no limits on general solicitation and does not restrict resales so long as the offer is qualified in at least one state. Offerings under Rule 504 are not pre-empted from state regulation.

The crowdfunding exemption in the JOBS Act appears more restrictive than Rule 504 in every respect except:

• the $1,000,000 limit in the crowdfunding exemption may not be subject to integration with future offerings, whereas the Rule 504 limit is subject to integration with future offerings;
• Rule 504 offerings are subject to state regulation, so offerings need to be qualified or determined to be exempt in each state in which the offering will occur; and
• shareholders who purchase securities under Rule 504 are included in the count of record holders for mandatory Exchange Act registration.

In our experience, few emerging growth companies use Rule 504 because the $1,000,000 limit is too low to meet anticipated funding needs and because of the costs and delays of the blue-sky process. We question whether emerging growth companies would find the crowdfunding exemption attractive, and whether intermediaries will find the business sufficiently profitable to justify the regulatory burden.

What is the new Regulation A-like exemption and what does it mean?

Regulation A currently provides an exemption from registration for offerings of up to $5 million per year by non-reporting companies. Regulation A requires the submission of a simplified offering document to the SEC, which the SEC comments upon. Regulation A permits “testing the waters” communications. Securities sold under Regulation A are not “restricted securities,” so the investor may immediately sell such securities publicly, at least theoretically. Issuers who sell securities under Regulation A do not automatically become subject to reporting under the Exchange Act. Regulation A offerings are subject to state blue-sky qualification laws. Regulation A is rarely used because of the low $5 million offering cap and the associated regulatory burdens.

The JOBS Act requires the SEC to amend Regulation A or adopt a new exemption to increase the offering cap to $50,000,000 of securities sold in the prior 12 months in reliance on the exemption. Within 2 years of the enactment of the JOBS Act, and for every 2 years thereafter, the JOBS Act directs the SEC to review the offering cap and allows the SEC to increase it. The exemption permits “testing the waters” communications and permits offering the securities publicly, providing that securities sold in the offering are not restricted securities. The exemption requires issuers availing themselves of the modified exemption to file audited financial statements with the SEC annually and allows the SEC to impose additional conditions, including periodic reporting requirements. The exemption is available for equity securities, debt securities, convertible debt securities and guarantees.

Securities sold under the modified exemption are added to the list of covered securities under NSMIA, but only if they are offered and sold on a national securities exchange or offered and sold only to “qualified persons” as the term is defined by the SEC. NSMIA was adopted in 1996 and pre-empted state blue-sky qualification laws for securities sold to qualified persons. The SEC proposed a definition for “qualified persons” in 2001, but never adopted a definition. If the SEC does not adopt a definition in connection with the amendments to Regulation A required by the JOBS Act, issuers would have to choose between blue-sky compliance and becoming listed on a stock exchange, assuming they qualify for listing. Becoming listed on a stock exchange would in turn require issuers to report under the Exchange Act, which may eliminate many of the advantages of Regulation A over a registered public offering. The JOBS Act does however require the Comptroller General to conduct a study on the impact of blue-sky laws on Regulation A offerings and report on its findings within three months after enactment of the JOBS Act.

Depending on the regulations the SEC adopts, this new exemption may become a viable means for a company to conduct a “mini-public offering” and have a public trading market in its securities. The continuing market for reverse mergers into public shell companies, sometimes referred to as alternative public offerings, demonstrates a demand for small companies to establish public markets in their securities. The ability to raise up to $50 million publicly and the potential not to be subject to Exchange Act reporting could make the new Regulation A-type exemption a superior alternative public offering method.

Note however that the JOBS Act does not exclude holders of securities sold under this exemption from the count of holders for Exchange Act registration. Unless the SEC adopts rules to do so, companies that use this exemption may find that they quickly become subject to Exchange Act reporting. Many companies may impose contractual trading restrictions to prevent this from happening.

What are the changes to the triggers for Exchange Act registration and what do they mean?

Section 12(g) of the Exchange Act and its related rules required a company with more than $10 million in assets and more than 500 holders of record of any class of its equity securities to register under the Exchange Act and begin complying with disclosure and financial reporting compliance obligations applicable to public companies.

Effective immediately, the JOBS Act increases the holder threshold to 2,000 holders, provided no more than 500 are unaccredited investors. The JOBS Act also excludes from the “held of record” test securities held by persons who received them pursuant to employee compensation plans and securities held by persons who purchased them in transactions under the crowdfunding exemption. Within 120 days after enactment of the JOBS Act, the SEC must determine if new enforcement tools are needed to enforce the anti-evasion provisions of the rule, and report its recommendation to Congress.

The holder of record threshold for banks and bank holding companies has increased to 2,000, with no limit on the number of unaccredited investors.

As a result of these changes, the many companies that have in recent years come close to or exceeded the prior 500-holder limit will have substantial room to add more investors without needing to accelerate an IPO or register under the Exchange Act without an IPO. This change will also expand the practicality of the more liberal private offering rules under the JOBS Act.

With companies able to maintain their status as non-reporting companies for longer, and with more holders that may want liquidity, we may see more demand for secondary markets trading in private placement securities.

What should I do now?

Companies and entrepreneurs who rely on outside capital should immediately consider what these legal changes might mean to their capital raising plans. The considerations are complex and will be different for every company. We urge companies and entrepreneurs to consult with legal counsel before changing any of their plans and actions in response to the JOBS Act. Companies that believe they will benefit from attracting a larger number of investors will need to consider the disadvantages of a large shareholder base, including increased administrative cost, more difficulty with certain fundamental transactions like sale of the company or restructuring, and potentially becoming less attractive to traditional investors like venture capital funds.

Private companies that already have a substantial shareholder base should think about what possibilities are now open to them given more headroom on the number of holders. In some cases, changes may be needed to shareholder and investor agreements either to facilitate or prevent secondary markets in their shares.

Given some of the delays for required rulemaking and uncertainties as to how markets will react to these changes, the provisions of the JOBS Act will generally mean evolutionary rather than revolutionary changes to capital raising plans for most issuers for the time being. But revolutionary changes may not be far off.

What if you have questions?

For any questions or more information on these or any related matters, please contact any attorney in the firm’s corporate practice group. A list of such attorneys can be found by clicking Lawyers on this page.

John Tishler (858-720-8943, jtishler@sheppardmullin.com), Louis Lehot (650-815-2640, llehot@sheppardmullin.com), Edwin Astudillo (858-720-7468, eastudillo@sheppardmullin.com), Jason Schendel (650-815-2621, jschendel@sheppardmullin.com), Camille Formosa (650-815-2631, cformosa@sheppardmullin.com) and Nina Karalis (858-720-7466, nkaralis@sheppardmullin.com) participated in drafting this posting.

Disclaimer

This update has been prepared by Sheppard, Mullin, Richter & Hampton LLP for informational purposes only and does not constitute advertising, a solicitation, or legal advice, is not promised or guaranteed to be correct or complete and may or may not reflect the most current legal developments. Sheppard, Mullin, Richter & Hampton LLP expressly disclaims all liability in respect to actions taken or not taken based on the contents of this update.

 

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[1] The JOBS Act is not clear whether the relief from summary financial information applies to the IPO registration statement, though such relief seems consistent with Congressional intent given the provisions relating to later registration statements and Exchange Act reports.

[2]We note that public companies also rely on Rule 506 to issue securities in PIPE transactions, and PIPE transactions could opened to general solicitation, with investors in those transactions receiving securities that have a safer and generally shorter path to liquidity.

 

Source:
http://www.corporatesecuritieslawblog.com/capital-markets-president-obama-signs-jobs-act-landmark-reform-for-small-and-emerging-growth-companies-now-law.html

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Transgender Family Law in the Courts

Advocates for the transgender community say this segment of the population faces an extremely difficult time in court because of bias and misunderstanding, especially in cases of parental rights and protection for transgender youth. Lawyer2Lawyer co-host and attorney, Bob Ambrogi breaks down the difficulties the transgender community faces every day with Attorney Jennifer L. Levi, the director of GLAD's Transgender Rights Project and Attorney Elizabeth E. Monnin-Browder from Ropes & Gray and a former GLAD attorney. Jennifer and Liz also discuss their new book, Transgender Family Law: A Guide to Effective Advocacy.

Source: http://legaltalknetwork.com/podcasts/lawyer-2-lawyer/2012/05/transgender-family-law-in-the-courts/

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SORA, No Imposition There

There is little question now that Eric Wilson, a sailor convicted as one of the Norfolk Four in the rape (and murder, though wilson was acquitted of the latter) of the wife of another sailor, should never have been convicted. DNA and another person's confession made the point.  But he served his sentence, and was then conditionally pardoned by Virginia Governor Tim Kaine. who found sufficient doubt of guilt, though not absolute proof of innocence.

The upshot was Wilson was done with his sentence, but remained a convicted rapist.  And convicted rapists, of course, are sex offenders who must register.  Being innocent and all, this didn't sit well with Wilson, and so he sought to have his conviction overturned by habeas corpus. The problem, obviously, was the establishment of jurisdiction for the habe, since his sentence was over.

The solution was his sex offender registration. Or at least it seemed to be, until the Fourth Circuit in a divided opinion smacked him down.

The district court dismissed Wilson’s petition for lack of jurisdiction, holding that because Wilson had fully served the sentence for his rape conviction, he was no longer "in custody," as required by § 2254(a).

We affirm.  While it appears that Wilson has mounted a serious constitutional challenge to his conviction, in which he vigorously asserts his innocence, we conclude that the sex offender registration requirements of Virginia and Texas are collateral consequences of his conviction that are independently imposed on him because of his status as a convicted sex offender and not as part of his sentence.  We also note that the sex offender registration requirements and related consequences do not impose sufficiently substantial restraints on Wilson’s liberty so as to justify a finding that he is in the custody of state officials.

The notion of custody for habeas corpus purposes is defined as a substantial restraint on a person's liberty, which would seem a fair definition.  

To satisfy § 2254’s jurisdictional requirement that he be "in custody" at the time he filed his petition, see 28 U.S.C. § 2254(a) (granting jurisdiction to the district courts to entertain "an application for a writ of habeas corpus in behalf of a person in custody pursuant to the judgment of a State court" (emphasis added)), Wilson alleged that the sex offender registration requirements of Virginia and Texas law impose sufficiently substantial restraints on his liberty so as to amount to custody.

Parole? Custody.  Supervised release? Custody. After all, they can tell you what to do, where to go and make you pee in a cup. They can require you to go to rehab or job training, and inspect your home at will.  That's a pretty substantial restraint on liberty, right?

But not being required to comply with the requirements of sex offender registration laws.  Sure, they can require you to notify the police when you move into a jurisdiction, and can forbid you from living in most parts of town. They can require you to stay away from places where other person's walk freely, and go nowhere near children. They can limit your use of the internet or force you to include on your Facebook status that you're a sex offender.

And this is not a restraint on liberty.

The reason is summed up in two words: Collateral consequences.  The legal fiction that laws that may have been passed long after sentence was imposed and completed, laws that dictate the performance of some of the most fundamental aspects of one's life, laws that control how one exists in society for potentially the rest of one's life, are not part of the punishment for the conviction of a crime. Instead, by characterizing them as "civil" rather than criminal, they are magically not punishment but collateral consequences.

In dissent, Judge James Wynn is clearly disturbed by the fact that the decision slams shut the court doors to an innocent man.  After running through the caselaw, without reliance on the facile distinction provided by the legal fiction of collateral consequences, he concludes:

I question the majority opinion’s decision to follow the Ninth Circuit’s decade-old summary decision in Henry. Uncontestably, the in-person reporting requirements applicable to Wilson in Virginia and Texas "significantly restrain [Wilson’s] liberty to do those things which in this country free [people] are entitled to do," and, consequently, the majority opinion should squarely address the question of whether, in the Fourth Circuit, "[s]uch restraints are enough to invoke the help of the Great Writ."

Judge Wynn argues to break away from the fiction, at least within the Fourth Circuit where the court is under no constraint by holding from other circuits.  Judge Wynn looks to what the sex registration laws demand rather than the denomination of civil, and concludes the obvious, that they are a huge restraint on the liberty "to do things which in this country free [people] are entitled to do."  And once stripped of the fiction, that's the hard question.

Even so, Judge Wynn's concern isn't about the legal fiction of sex offender registration laws, but about how they foreclose redress by Wilson due to this substantial claim of innocence:

Our hands are not tied here; no precedent forecloses the relief sought in this case. Rather than blindly adhering to formalist procedural concerns, we should instead be guided by the equitable principles that traditionally govern the law of habeas corpus, Munaf v. Geren, 553 U.S. 674, 676 (2008), and by the Supreme Court’s mandate to construe the "custody" requirement liberally, particularly in cases involving deprivations on liberty, credible claims of actual innocence, and an absence of forum for redress.

The problem left on the table is that it's not just about Eric Wilson, or about defendants with substantial proof of actual innocence.  Rather, it's about a concept that was fundamentally flawed from the outset, where in society's fit of fear and outrage, they created a horrendous an ex post facto system of punishment, called it a civil regulation, and the courts shut their eyes to all reason and stamped it approved.

Whether they understood its ramifications at the time, or its expansion to such heinous crimes as public urination, or the piling on of additional restrictions that would ultimately leave registered sex offenders with neither a place to live or a chance to be law-abiding productive citizens, is unclear.  Yet that's been the end result of this fiasco.

It's cases like Eric Wilson's, because of the sympathy generated by an innocent man wrongfully convicted, that have the potential to change minds, to bring the slightest chance of reason to a fiction gone insane.  And if the court can't find it worth its while to come clean on behalf of a guy like Wilson, then there is little hope the insanity will ever come to an end.

H/T Doug Berman

© 2012 Simple Justice NY LLC. This feed is for personal, non-commercial & Newstex use only. The use of this feed on any other website is a copyright violation. If this feed is not via RSS reader or Newstex, it infringes the copyright.

Source: http://blog.simplejustice.us/2012/08/16/sora-no-imposition-there.aspx?ref=rss

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Putting the Web to Work for You

Have you ever wanted one action on the Web automatically trigger another action? For example, if you post a tweet, it automatically becomes a LinkedIn or Facebook update or if you star a blog post in Google Reader, it automatically gets added to your Evernote account. IFTTT (If This, Than That) is a web service does exactly that. In this episode of the Kennedy-Mighell Report, Dennis Kennedy and Tom Mighell discuss web automation and IFTTT, how it might make your life a little easier, and the role this type of service might play for the busy lawyer.

Source: http://legaltalknetwork.com/podcasts/kennedy-mighell-report/2012/08/putting-the-web-to-work-for-you/

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Second Circuit Addresses Hybrid Convertible Securities and the "Debt Previously Contracted" Exceptions to Section 16(b) of the Securities Exchange Act of 1934

In Analytical Surveys, Inc. v. Tonga Partners, L.P., 2012 WL 1970389 (2d Cir. June 4, 2012), the United States Court of Appeals for the Second Circuit addressed (among other things) the scope of two exceptions that apply to liability for short-swing profits under Section 16(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78p(b): the exception for derivative securities that do not have a fixed price and the exception for securities acquired in connection with a “debt previously contracted.” The Court concluded that the exception for derivative securities that do not have a fixed price does not apply to hybrid securities exercised at a floating price and that the “debt previously contracted” exception only applies to “mature debts.”

Analytical Surveys, Inc. (“ASI”) filed suit against Tonga Partners, L.P. (“Tonga”) seeking to recoup profits Tonga earned on the sale of ASI stock. ASI’s lawsuit arose out of two senior secured convertible notes, one entered in 2003 (the “2003 Note”) and one in 2004 (the “2004 Note”).

Under the 2003 Note, Tonga loaned to ASI $1.7 million with a maturity date in 2005. Under the terms of the 2003 Note, Tonga could, at any time, convert part or all of the 2003 Note’s principal into ASI stock. The stock’s price could be calculated by: (1) a fixed price dependent on the time of conversion or (2) a floating price dependent on ASI’s average stock price in a defined period prior to conversion. At maturity, the balance on the 2003 Note would automatically be converted into shares.

The 2003 Note also contained a default provision that would allow Tonga to accelerate the amount of debt remaining on the 2003 Note. In October 2003, ASI trigged this default provision, but Tonga chose not to exercise its rights.

Instead, Tonga and ASI negotiated the acquisition of a new note, the 2004 Note. The 2004 Note was similar to the 2003 Note, but had a later maturity date, and, unlike the 2003 Note, gave Tonga the option to convert balance into shares or accept cash payment. Approximately five months after acquiring 2004 Note, Tonga converted the outstanding balance into shares of ASI’s common stock and then proceeded to sell all of those shares for a substantial profit.

ASI filed suit, seeking disgorgement of almost $5 million in profits earned by Tonga, under Section 16(b) of the Securities Exchange Act. Pursuant to Section 16(b), an issuer’s insiders — defined as those with a beneficial ownership interest of more than 10% in an equity security — are prohibited from profiting from a purchase-and-sale or sale-and-purchase of the issuer’s securities within a six-month period. The purpose of this rule is to deter insiders from taking advantage of inside information by forcing such insiders to disgorge those profits back to the issuer. This general rule applies even where the insider acted in good faith and did not actually take advantage of any inside information in his or her purchase and sale of the issuer’s stock.

There are some exceptions to the bright-line rule of disgorgement. For example, Section 16(b) does not apply to financial instruments that can be exercised or converted into the issuer’s stock “at a price that is not fixed.” Nor does Section 16(b) apply to securities “acquired in good faith in connection with a debt previously contracted.” Tonga argued that these exceptions (as well as others) applied in this case.

Tonga first argued that the 2004 Note was not a purchase but was an “amended version” of the 2003 Note. The Second Circuit rejected this argument, noting that the 2004 Note was materially different from the 2003 Note. The later maturity date of the 2004 Note gave Tonga “more time” to determine whether and when to convert the Note into shares. So too, the option provided in the 2004 Note (but not the 2003 Note) to convert the balance to stock or convert to cash at maturity “gave Tonga latitude” to take advantage of inside information.

The Court rejected Tonga’s contention that the form of the 2004 Note — a convertible security that could be either exercised at either a fixed price or floating price, a “hybrid derivative” — fell outside Section 16(b)’s “purchase” requirement. Fixed price convertible securities fall within Section 16(b), whereas convertible securities with a floating price do. No Second Circuit case, however, addressed whether a “hybrid derivative” exercised at a floating price fall within Section 16(b).

The Second Circuit concluded that a “bifurcated approach” was required. Under a “bifurcated” approach, the acquisition of a hybrid instrument “purchase,” and the conversation of the instrument at a lower floating price is a separate “purchase” of any additional shares. Why? The opportunity to rely on inside information to time the date of exercise represents “an insider’s additional opportunity” over and above the initial insider opportunity in acquiring the hybrid derivative. Applying this “bifurcated” approach, the Court ordered Tonga to disgorge approximately $5 million in profits.

Tonga also argued that the “mature” debt in question was the debt owed on the 2003 Note, which was enforceable because of ASI’s default. The Court again disagreed, holding that ASI’s default “permitted,” but did not require, Tonga to accelerate the 2003 Note. Tonga, however, had never demanded acceleration, and, as a result, the 2003 Note “had not matured at the time that ASI issued the 2004 Note.” The acquisition of the 2004 Note, therefore, was not made ‘in connection with a debt previously contracted’ for the purpose of § 16(b).”

Analytical Systems provides some clarity with respect to what counts as a “purchase” under Section 16(b). Hybrid derivative securities exercised at a “floating” price are not merely subject to Section 16(b), but are subject to such an examination twice: once at the time of acquisition and again at the time it is exercised. Likewise, the “debt previously contracted” provision only applies where a debt is really and truly “mature”; the mere possibility that a debt could be treated as mature is itself insufficient, a debt is only “mature” if the parties treat it as such.

For further information, please contact John Stigi at (310) 228-3717 or Martin White at (415) 774-3233.

Source:
http://www.corporatesecuritieslawblog.com/securities-litigation-second-circuit-addresses-hybrid-convertible-securities-and-the-debt-previously-contracted-exceptions-to-section-16b-of-the-securities-exchange-act-of-1934.html

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Judge's connections with counsel warrant new trial

A Washington state judge apparently didn't think it was necessary to tell a defendant in a property dispute that he had a decade-long connection with the plaintiff's counsel that included partnering with her in a law firm and using her services when he was arrested for driving under the influence.

Source: http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202567765872&rss=nlj

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What's New in the Structured Settlement Industry for 2012

On Ringler Radio, host Larry Cohen welcomes Ross Duncan, the newly appointed Chairman of the Board of Ringler Associates. Ross and Larry discuss the current status of the settlement industry and the direction Ringler Associates is headed in 2012. In addition, Ross explains how to adapt to changes in the industry, how his colleagues can benefit from Ringler's new website and his personal goals for the year.

Source: http://legaltalknetwork.com/podcasts/ringler-radio/2012/02/whats-new-in-the-structured-settlement-industry-for-2012/

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Legal Talk Network Live at LegalTechNY 2012-LexisNexis’ Loretta Ruppert on Launch of Firm Manager

Loretta Ruppert, from the Business of Law Software Solutions within LexisNexis, which represents software that helps law firms with their business challenges, talks about the launch of Firm Manager. Be sure to watch the interview, hosted by Legal Talk Network producer, Kate Kenney.

Source: http://legaltalknetwork.com/podcasts/special-reports/2012/02/legal-talk-network-live-at-legaltechny-2012-lexisnexis-loretta-ruppert-on-launch-of-firm-manager/

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Blending Special Needs Trusts and Structured Settlements

For severely injured plaintiffs and their families, the combination of special needs trusts and structured settlements can help provide financial security to secure future needs. Ringler Radio host Larry Cohen and co-host, Carmella Limongelli discuss this beneficial combination of financial solutions with Attorney Jay J. Sangerman, an expert in special needs trusts. Listen and find out when a special needs trust should be considered and what features the trust should have to qualify as a self-settled special needs trust.

Source: http://legaltalknetwork.com/podcasts/ringler-radio/2012/04/blending-special-needs-trusts-and-structured-settlements/

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It Was Time To Part Company After The First Flash

Assuming everything this woman says is true, you just have to scratch your head. As reported by www.timesonline (Beaver, Pennsylvania):

The owner of a Moon Township landscaping business has been charged with exposing himself to a female passenger in his car. Moon police have charged 72-year-old Armando Zucchero of 233 Ewings Mill Road, owner of Zucchero Landscaping, by mail with indecent exposure.

So what happened?

The woman said she was walking home to Ridgewood Drive from the Giant Eagle on University Boulevard when Zucchero pulled over near the Sunoco station and offered her a ride. Thinking he was a neighbor of hers, the woman got into the vehicle, police said.

However, even after she realized Zucchero was not the neighbor, the woman was not suspicious because he knew her name and names of her neighbors, she told police. The woman told Zucchero he could drop her off in front of the old Texaco station at University and Moon-Clinton Road, but Zucchero offered to drive her closer to home to Foxwood Road, according to the police report.

A little strange, right?

Zucchero kept driving past Foxwood, however, and as they passed the Appian Way Lounge, she told police, Zucchero exposed himself. She said he then drove all the way to the Dependable Drive-In before turning around and driving back to the Appian Way Lounge, where Zucchero offered to buy her a drink and she accepted, the report said.

Very creepy, and WTF is up with accepting the drink?

Inside the bar, the woman said Zucchero gave her his business card and asked her if she had any friends before offering her $20 and pointing toward his crotch, which she took to mean he wanted sex, the report said.

Even more creepy. So she took off or asked for help, right? Nope.

The woman then said she had to leave and Zucchero again offered a ride, which she accepted.

Oh no you did not just take that ride!

Once in the vehicle, though, the woman said Zucchero again exposed himself, and she jumped out of the moving vehicle and traveled different paths and trails home so he could not follow her, the report said.

So after all that, you decide it's time to get away while in a moving car? Wow. So how did they identify the suspect?

When giving her description to police, the woman said she believed the man who had exposed himself was her elementary school bus driver sometime around 1986 to 1991 who knew her name even though she had never given it to him.

Based on the business card and description, police on Wednesday contacted Zucchero, who denied knowing the woman, offering her money for sex or ever being a bus driver.

Truly a strange case. It'll be interesting to see how it plays out. You'll find the source here.

Source: http://rss.justia.com/~r/LegalJuiceCom/~3/iqcBCfuZDPM/it_was_time_to_part_company_af.html

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The Equity Gap: A Special Report on Women in the Partnership

Are big firms committed to promoting women into the equity partnership? Our study of the largest U.S. firms shows that women represent just 15 percent of equity partners. At just five firms surveyed, women make up more than 25 percent of equity partners.

Source: http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202563861081&rss=nlj

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Communities Find Relief From Voting Rights Act

A former enforcer of the 1965 Voting Rights Act, J. Gerald Hebert now helps local governments that have overcome histories of election bias win release from federal oversight of their elections.

Source: http://www.npr.org/2012/08/11/158381541/communities-find-relief-from-voting-rights-act?ft=1&f=1070

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A Radical or Rational SCOTUS Session?

After one of the most historic United States Supreme Court sessions in years, emotions ran high and charges of radicalism ran amuck as the Justices handed down rulings on immigration enforcement, national healthcare, campaign finance law, stolen valor and more. But in the end, did SCOTUS simply uphold the law of the land? Lawyer2Lawyer co-hosts and attorneys, Bob Ambrogi and Craig Williams, get the legal facts behind the decisions from New York University School of Law Professor Roderick Hills, Jr. and Temple University Beasley School of Law Professor Jan Ting.

Source: http://legaltalknetwork.com/podcasts/lawyer-2-lawyer/2012/07/a-radical-or-rational-scotus-session/

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How Solos Can Build an International Law Practice

Are you looking to build your international law practice? New Solo host, Attorney Kyle Guelcher, a solo practitioner and the most recent Chair of the Young Lawyers Division of the Massachusetts Bar Association, joins Attorney Charles Whittier from the Whittier Law Firm, to talk about how solo attorneys can develop international law as a private practice area. Charles shares his insights on how a new lawyer can build an international law practice, avoid controversy in international advertising, and the risks and benefits of practicing international law.

Source: http://legaltalknetwork.com/podcasts/new-solo/2011/11/how-solos-can-build-an-international-law-practice/

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Montana high court okays corporate personhood ballot initiative, strikes down tax referendum

[JURIST] The Supreme Court of Montana [official website] on Friday ruled [decision, PDF] that its state's November ballots may include Initiative 166 [text, PDF], a nonbinding policy statement that would direct the state's congress to support an amendment to the US Constitution [text] asserting that corporations are not people and money does not qualify as speech. The goal of the endeavor is to counteract the 2010 US Supreme Court [official website] decision of Citizens United v. Federal Election Commission [text,...

Source: http://jurist.org/paperchase/2012/08/mt-high-court-okays-corporate-personhood-ballot-initiative-strikes-down-tax-referendum.php

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The Law and the Liability of Eugenics

For decades, a program called Eugenics gave state boards the right to deem someone "unfit to procreate." The outcome of this was 66,000 Americans were selectively sterilized between the late 1920’s and the 1980’s. Lawyer2Lawyer co-host and attorney J. Craig Williams welcomes Professor Alfred Brophy, from the University of North Carolina School of Law and Attorney James Bowden from Waller Lansden, to discuss this controversial practice, the US Supreme Court’s shocking decision on eugenics and why forced sterilization "is" technically constitutional.

Source: http://legaltalknetwork.com/podcasts/lawyer-2-lawyer/2012/02/the-law-and-the-liability-of-eugenics/

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Liability in the Costa Concordia Cruise Ship Tragedy

The capsizing of the luxury cruise ship, Costa Concordia, off the coast of Italy has created a torrent of possible criminal charges against the captain and civil litigation against the cruise line company in courtrooms around the world. Lawyer2Lawyer co-hosts and attorneys, Bob Ambrogi and J. Craig Williams, along with Attorney Joseph McFaul, special counsel for Sedgwick LLP in Irvine, California, sort through the plethora of legal issues associated with this cruise ship tragedy.

Source: http://legaltalknetwork.com/podcasts/lawyer-2-lawyer/2012/01/liability-in-the-costa-concordia-cruise-ship-tragedy/

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The Kid Gets It

Well, not quite a kid, as Jim von der Heydt came to law school after having taught English at Phillips Exeter Academy (where rich parents rid themselves of their baby at their earliest opportunity).  But now that he's going into his third year of law school, a "rising" 3L as it's now pretentiously called, he gets to be a kid again (and will therefore be called "the kid" hereinafter).

For some inexplicable reason, Dan Markel invited the kid to post at PrawfsBlawg about his experience as submissions editor at Cleveland State Law Review.  Yes, apparently there is a law school called Cleveland State, and far be it for me to tell anyone in Ohio that Cleveland is not a state.  The point of the kid's posts are to advise scholars as to what he, as Lord of Submissions, thinks of their efforts.  He began at the beginning, with cover letters, which he takes seriously despite common wisdom that nobody actually reads them.

From this ignominious start, the kid took a fascinating turn.  His second post, Reaching the Merits, raises a fundamental, and often ignored, lesson for all lawyers, and most people:

To every issue there is a "threshold issue"; before any question is asked there are motions in limine; the countervailing facts are not yet ripe for consideration; can subject-matter jurisdiction be addressed before prudential standing, or do we even need to reach that question? 

The post opens with a story about a woman who demands to speak with the lama in Tibet, with guard after guard, until she finally talks her way through.  The punchline is:

There, in the holy of holies, adorned with wisps of emergent satori, is the lama.

"Sheldon," she says.  "Come home!"

The point of her quest is to tell Sheldon to come home. The point of the joke is that she has to find a way to go through all the guards to ask the question.  Get it?  The kid goes on to relate his tale to his argument about the relevance of cover letters, which is of no interest per se and so will be summarily ignored.

As criminal defense lawyers, our primary focus is the answer to the basic question, guilty or not.  However, we ignore what it takes to get to that question at our peril.  In reality, the journey to the merits is far more important in most cases than the answer to the question, as we rarely get to the bottom line of a jury verdict, and most cases are resolved along the way.

I hasten to expand upon the kid's point, that the journey involves everything, from the obvious (like the quality of motions) to the obscure (the shoes you wear).  While not every detail will impact the outcome, any detail might, even if it shouldn't, and to ignore a detail that can be controlled so that it either eliminates a stumbling block or facilitates forward motion is foolish.  Whatever can be made to serve the cause should be.

And the kid gets it.

In a comment to the kid's post, however, a different story appears.  First, Orin takes issue with both the cover letter message and the structure of the post:

The problem is that most articles editors say that cover letters are irrelevant and that they never read them. So if you're asking us for the best cover letter, no responses may in fact be our "Zen" answer.

(Incidentally, you might also find that you get more of a response if the reader knows what the post is about in the first paragraph, above the break. If you make readers work their way through a lot of writing before you get to the point, relatively few readers will still be reading by then.)

Posted by: Orin Kerr | Aug 3, 2012 6:01:09 PM

So most articles editors say letters are irrelevant? Do any of them say that a well-honed, persuasive cover letter diminished the chance of an article being accepted? Then there's no harm in writing a great letter, as the worst that can happen is that it will be ignored, while the best that can happen is that the articles editor will find it wonderfully compelling and desperately want to publish your article.  And this is a problem?

In passing, I note that I read the post, even though I rarely get past the first paragraph of most posts at Prawfs. 

The next comment was even more disturbing.

Unfunny joke and turgid post.

Sorry.

Posted by: Barbara Seville | Aug 3, 2012 8:08:14 PM

Initially, whether a "joke" is funny or not is a matter of personal opinion.  Whoever Barbara Seville is (and I was unable to figure it out), to take the time to post a comment that she didn't find the post funny is a monumentally douchy move. It wasn't patently offensive. It wasn't dangerous or destructive. It's not to your liking? Who cares, you pompous, narcissistic fool.

But the real irony is calling the post "turgid."  Turgid is the stock in trade of academics, for whom pedantism is the air they breath.  The post was no more turgid than pretty much anything else posted at a law prof blog, and given that it opened with a joke (even if unfunny to someone who thinks the blawgosphere owes her humor that matches her personal sensibilities), it's about as unturgid as it gets.

Sadly, the kid responded to the second comment with acquiescence,

Agreed.

It's in the nature of shaggy-dog stories to be shaggy, but the argument got woolly as well.

I'll have more organized thoughts on legal academia's neglect of juries, and the complexity of "fact-finding," in a later post.

Posted by: Jim von der Heydt | Aug 3, 2012 9:14:46 PM

While it's understandable that a "rising 3L" would be reluctant to tell a commenter to blow it out her butt, the time to decide whether your post is shaggy or woolly is before you hit publish, not afterward. There's no shame in telling a pompous, narcissistic fool to get lost.

As to Orin's comment, the kid did much better:

"relatively few readers will still be reading by then"
Yes, those are the ones I was writing for. The others will ignore the post (with, apparently, one exception).

In the same way, editors that value the cover letter will value a good one, and editors that don't will ignore one. It's hard to see the merit in ignoring the former, even if there are fewer of them.

Posted by: Jim von der Heydt | Aug 3, 2012 9:19:01 PM

Exactly.  Like I said, the kid gets it.

© 2012 Simple Justice NY LLC. This feed is for personal, non-commercial & Newstex use only. The use of this feed on any other website is a copyright violation. If this feed is not via RSS reader or Newstex, it infringes the copyright.

Source: http://blog.simplejustice.us/2012/08/04/the-kid-gets-it.aspx?ref=rss

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London 2012: Hang on to Your Laptop (Wall Street Journal)

Share With Friends: | | Law - Video Stories, RSS Feeds and Widgets via Feedzilla.

Source: http://news.feedzilla.com/en_us/stories/law/video/238426042?client_source=feed&format=rss

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Stephen Fehr on the States' Fiscal Crisis

Stephen Fehr, the Project Director at the Pew Center on the States, discusses the current states' fiscal crisis in the United States with Professor Alasdair Roberts. Learn more about Mr. Fehr and the Pew Center at http://bit.ly/tdGKJq.

Source: http://legaltalknetwork.com/podcasts/suffolk-law/2011/11/stephen-fehr-on-the-states-fiscal-crisis/

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ICC outlines first-ever reparation plan for victims

[JURIST] The International Criminal Court (ICC) [official website; JURIST backgrounder] announced Tuesday that it would begin implementation of a plan to provide reparations [press release] to the victims of convicted war criminal Thomas Lubanga Dyilo [case materials]. Funds will be collected for the court by Trust Fund for Victims [advocacy website] based on reparation claims by victims, and the court will then have to approve a payment before a victim can be compensated. Reparations will be paid to both direct...

Source: http://jurist.org/paperchase/2012/08/icc-outlines-first-ever-reparation-plan-for-victims.php

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Defense Attorneys Turning to Social Media

Lead counsel for accused murderer George Zimmerman calls social media an unavoidable component of high profile cases. So, should blogging, posting and tweeting become standard practices in defense strategies? Lawyer2Lawyer co-hosts and attorneys, Craig Williams and Bob Ambrogi, debate the pros and cons, as well as the legal and ethical issues of social media with Dr. Amy Singer, founder of Trial Consultants Inc., and Attorney Scott Greenfield, Of Counsel at Hull McGuire, PC.

Source: http://legaltalknetwork.com/podcasts/lawyer-2-lawyer/2012/05/defense-attorneys-turning-to-social-media/

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Remote Working Options for Lawyers

The convergence of technology has created a “tipping point” for remote work options for attorneys. Law Technology Now, host and editor-in-chief of ALM’s Law Technology News, Monica Bay analyzes the key advantages of remote work options, which is also June’s Law Technology News’ cover story, Unleashed, with Albert Barsocchini, senior director, strategic consulting at NightOwl Document Management Services and Marc Osborn, senior director, communications for LexisNexis Legal & Professional.

Source: http://legaltalknetwork.com/podcasts/law-technology-now/2012/06/remote-working-options-for-lawyers/

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Tour de France begins

The  "Super Bowl" of cycling, the Tour de France, has begun. It's a joy to see how the cycling teams work together. While there is serious competition amongst the teams, there is still civility and respect for one another. Lawyers would do well to see this as an example for their own conduct.

The Belgium countryside is exquisite; one scene pictured 3 frisky horses reacting to the passage of almost 200 cyclists (and the entire entourage) right in front of them. What a site!

Source: http://feeds.lexblog.com/~r/LawBizBlog/~3/iCKXfTQjnlk/

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Super Bowl edition: Vince Lombardi, Civil Rights Pioneer

Professor David Yamada, Director of the New Workplace Institute at Suffolk Law, talks about legendary NFL coach Vince Lombardi as an early pioneer for civil rights. Read Professor Yamada’s blog at http://newworkplace.wordpress.com.

Source: http://legaltalknetwork.com/podcasts/suffolk-law/2012/02/super-bowl-edition-vince-lombardi-civil-rights-pioneer/

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Tour de France begins

The  "Super Bowl" of cycling, the Tour de France, has begun. It's a joy to see how the cycling teams work together. While there is serious competition amongst the teams, there is still civility and respect for one another. Lawyers would do well to see this as an example for their own conduct.

The Belgium countryside is exquisite; one scene pictured 3 frisky horses reacting to the passage of almost 200 cyclists (and the entire entourage) right in front of them. What a site!

Source: http://feeds.lexblog.com/~r/LawBizBlog/~3/iCKXfTQjnlk/

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2011 Intellectual Property Year in Review and Outlook for 2012 – Part I: Patents

IP Counsel host, Attorney Peter Lando, partner at the firm of Lando & Anastasi, LLP, welcomes Craig Smith, partner at Lando & Anastasi, to discuss important patent cases and court decisions in 2011 from the United States Supreme Court and the Court of Appeals for the Federal Circuit covering a wide range of issues, including patentable subject matter, inventor rights, inducement of patent infringement, damages, and inequitable conduct. Peter and Craig also discuss major cases on the dockets of the Supreme Court and Federal Circuit in 2012 that will be followed closely by practitioners and the business community.

Source: http://legaltalknetwork.com/podcasts/ip-counsel/2012/02/2011-intellectual-property-year-in-review-and-outlook-for-2012-part-i-patents/

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International Law Opportunities at Suffolk University Law School

Professor Christopher Gibson, Associate Dean, & Ian Menchini, Director of Electronic Marketing and Enrollment Management discuss the many opportunities available through Suffolk Law's International Law program. Learn more at http://bit.ly/I95LF3.

Source: http://legaltalknetwork.com/podcasts/suffolk-law/2012/04/international-law-opportunities-at-suffolk-university-law-school/

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Custom Alerts: My dream. Your reality.

My dream is now a reality. Lawyer at the coffee shop with a smartphone. An email summarizes a court case that was handed down this morning. The opponent doesn't know about it. One click. Up pops the whole opinion. Read...

Source: http://www.lawmemo.com/blog/2012/04/custom_alerts_m.html

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Illinois Becomes Third State to Pass Social Media Privacy Law

On Wednesday, Illinois became the third state to pass a law on social media privacy, prohibiting employers from requiring employees or job applicants to provide access to their social media accounts.

Source: http://blogs.wsj.com/law/2012/08/02/illinois-becomes-third-state-to-pass-social-media-privacy-law/?mod=WSJBlog

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The Return of Black Lung and the Law

A recent investigation found the rate of miners diagnosed with Black Lung Disease is surging after nearly three decades of decline. Some blame lenient regulations, lax enforcement, even manipulation of air samples from mines. Lawyer2Lawyer co-hosts and attorneys, Bob Ambrogi and Craig Williams, get the reasons behind this shocking increase and a breakdown of Black Lung litigation from Chris Hamby, the author of the Center for Public Integrity report, and Attorney Stephen Sanders, the director of Appalachian Citizens’ Law Center.

Source: http://legaltalknetwork.com/podcasts/lawyer-2-lawyer/2012/07/the-return-of-black-lung-and-the-law/

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Predictive Coding: A Rose by Any Other Name

One of e-discovery’s hottest topics today is predictive coding. So what exactly "is" predictive coding? On Digital Detectives, co-hosts Sharon D. Nelson, Esq., President of Sensei Enterprises, Inc. and John W. Simek, Vice President of Sensei Enterprises, welcome guest Dan Gallivan, one of the founders and Chief Technology Officer for Gallivan Gallivan & O’Melia , to discuss technology-assisted review, also known as predictive coding. Dan shares his thoughts on this new technology replacing keyword search, common areas of misunderstanding and Judge Peck’s role as a flag bearer for predictive coding.

Source: http://legaltalknetwork.com/podcasts/digital-detectives/2012/03/predictive-coding-a-rose-by-any-other-name/

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The Lost Art of the Online Discussion

For many years, we used email and listservs for private and public discussions. Today, the last thing we want to do is add a high-volume email list to our overloaded email inboxes. Yet, we still have the need for discussions of all kinds. What are good ways to have discussions using technology today? In this episode of The Kennedy-Mighell Report, Dennis Kennedy and Tom Mighell discuss today’s options for discussions, how to select the right forum for discussions, and whether we can improve the quality of the discussions we have with others.

Source: http://legaltalknetwork.com/podcasts/kennedy-mighell-report/2012/07/the-lost-art-of-the-online-discussion/

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Legal Jobs Report: July

July saw 1,400 legal services jobs added to the economy, according to the Labor Department

Source: http://blogs.wsj.com/law/2012/08/03/legal-jobs-report-july/?mod=WSJBlog

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The Penn State Football Scandal

With former defensive football coach Jerry Sandusky accused of raping children and university officials charged with covering up the crimes, the Penn State child sex abuse scandal raises countless legal questions. Could the university be held liable? Could other university officials, including legendary coach Joe Paterno face criminal charges? What laws need to be changed to prevent this from happening again? In this edition of Lawyer2Lawyer co-hosts and attorneys, Bob Ambrogi and J. Craig Williams along with Professor Marci Hamilton of the Cardozo School of Law and Attorney Philip Masorti, Senior Partner at Masorti-Sullivan P.C. discuss the complexities of this growing scandal.

Source: http://legaltalknetwork.com/podcasts/lawyer-2-lawyer/2011/11/the-penn-state-football-scandal/

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THE PRACTICE: How mandamus and interlocutory appeals interact

Courts weighing mandamus when petitioner hasn't pursued an immediate appeal often look at gravity of order's error.

Source: http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202564559736&rss=nlj

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Old School Marketing in the Legal World

With the popularity of social media on the rise within the legal profession, has old school marketing taken a back seat? Jared Correia, the host of The Legal ToolKit and Law Practice Management Advisor with Mass. LOMAP, joins Attorney Christopher Strang, partner at the Boston law firm, Desmond, Strang & Scott LLP and Robert Simpson, President/CEO of Waverider Communications, to talk about the pros of old school marketing, including: the importance of developing and implementing a strategy, the power of networking and how lawyers can successfully market themselves in both non-traditional and traditional modes.

Source: http://legaltalknetwork.com/podcasts/legal-toolkit/2012/04/old-school-marketing-in-the-legal-world/

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Tampering with documents in connection with a merger investigation can land you in jail!

By Robert Magielnicki and Malika Levarlet

One does not usually associate the possibility of criminal penalties with the Hart-Scott-Rodino Act premerger review process. However, on May 3, 2012, the U.S. Department of Justice ("DOJ") announced that an executive of a South Korean company agreed to plead guilty to obstruction of justice charges and to serve five months in prison for altering documents filed with the DOJ and the Federal Trade Commission ("FTC") in connection with a proposed merger.

This plea agreement is the latest development in a civil merger investigation initiated by the Antitrust Division of the DOJ of the proposed acquisition by automated teller machine maker Nautilus Hyosung Holdings Inc. ("NHI") of a competing manufacturer of ATM systems, Triton Systems of Delaware Inc., in 2008. The Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR"), as amended, requires companies contemplating mergers and acquisitions valued above certain thresholds to make premerger filings with the DOJ and the FTC. The federal antitrust agencies have authority to investigate and challenge the proposed transactions under Section 7 of the Clayton Act, if the transactions may substantially lessen competition. Before the Antitrust Division reached a decision regarding whether to challenge the transaction, the parties abandoned it.

In the two-count felony charge, the DOJ stated that Kyoungwon Pyo, in his role as senior vice president for corporate strategy of Hyosung Corporation, an affiliate of NHI, altered and directed subordinates to alter numerous corporate documents before they were submitted to the DOJ and the FTC in conjunction with the premerger HSR filings. The DOJ further alleged that, after the Antitrust Division opened a civil investigation of the proposed acquisition, Pyo falsified additional documents in response to a document request with the intention of impairing their integrity and availability for use in an official proceeding. According to the DOJ "the alterations misrepresented and minimized the competitive impact of the proposed acquisition."

On October 20, 2011, after voluntarily disclosing that numerous documents had been altered before being submitted to the government and agreeing to cooperate in the ongoing investigation, NHI pleaded guilty to two counts of obstruction of justice and paid a $200,000 criminal fine for its role in the document tampering. Following his employer, Pyo has agreed to plead guilty and to serve five months in prison for his conduct in a plea agreement which is subject to court approval. Pyo is charged with obstruction of justice, which carries a maximum penalty of 20 years in prison and a criminal fine of $250,000 for individuals.

This case marks the first time obstruction of justice charges have followed a civil merger investigation. The DOJ release is available at: http://www.justice.gov/atr/public/press_releases/2012/282873.htm  

For more information on the applicable HSR thresholds please consult: http://www.antitrustlawblog.com/2012/01/articles/article/higher-filing-thresholds-for-hsr-act-premerger-notifications-and-interlocking-directorates-announced/  

or contact: Bob Magielnicki at rmagielnicki@sheppardmullin.com; Jennifer Driscoll- Chippendale at jdriscoll-chippendale@sheppardmullin.com or Malika Levarlet at mlevarlet@sheppardmullin.com

Source:
http://www.corporatesecuritieslawblog.com/antitrustmerger-control-tampering-with-documents-in-connection-with-a-merger-investigation-can-land-you-in-jail.html

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Pennsylvania's Voter ID Law Faces Court Challenge

Several groups are challenging Pennsylvania's law requiring voters to show an approved photo ID at their polling place. Opponents claim it could prevent thousands of people — mostly poor and minorities — from voting in November. But the law's backers say it's needed to ensure the integrity of elections.

Source: http://www.npr.org/2012/07/30/157580696/pennsylvanias-voter-id-law-faces-court-challenge?ft=1&f=1070

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