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Private Ruling Endorses Taxpayer-Friendly Reading of “Qualified Small Business” Under Section 1202

On September 5, 2014, the Internal Revenue Service (“IRS”) released Private Letter Ruling 201436001 (the “Ruling”), which found that a company providing products and services primarily within the pharmaceutical industry was a...more

Proposal for Tick-Size Pilot Program Submitted to SEC

In response to an order from the Securities and Exchange Commission (SEC) in June, on August 26, 2014, the SEC announced that it had received a proposal from the national securities exchanges and the Financial Industry...more

Texas Supreme Court Draws Distinction Between Loyalty Agreement and Non-Compete

In many industries, it is common to pay incentives in the form of restricted stock options payable in the future if certain conditions are satisfied. In Exxon-Mobil v. Drennen, decided on August 29, 2014, the Texas Supreme...more

New York ALJ Rejects Retroactive Application of Statute

State courts generally have allowed legislatures a fair amount of flexibility in adopting retroactive statutes, but a recent New York case held that, under the circumstances presented, the retroactive application of a statute...more

Buyer Beware: How to Ensure the Valid Issuance of BVI Company Shares

Subscribers for shares in a British Virgin Islands (BVI) company usually assume that such shares have been validly issued and they are quick to point to their share certificate or even the share register of the BVI company as...more

FINRA and Exchanges Submit Tick Size Pilot Plan

FINRA and the exchanges have complied with an SEC order to establish a national market system plan to implement a targeted 12-month pilot program that will widen minimum quoting and trading increments (tick sizes) for certain...more

U.S. Supreme Court Issues Important Decision Affecting Fiduciaries of ESOPs

In a recent decision, Fifth Third Bankcorp v. Dudenhoeffer, 189 L.Ed. 2d 457 (2014), the U.S. Supreme Court vacated the “presumption of prudence” previously given to fiduciaries of employee-owned stock ownership plans (ESOPs)...more

Julie Friedman v. Dara Khosrowshahi, et al., C.A. No. 9161-CB (Del. Ch. Jul. 16, 2014) (Bouchard, C.)

In this memorandum opinion, the Court of Chancery granted the defendants’ motion to dismiss a stockholder’s complaint, challenging the accelerated vesting of the CEO’s restricted stock units based on an alleged violation of...more

Acquisitive Reorganization Under Section 367(b)

This outline discusses, in plain English, the regulatory provisions called into play under IRC § 367(b) on acquisitive mergers and other non-divisive corporate reorganizations. A Section 367(b) acquisitive reorganization...more

Supreme Court Sets New Standards for ERISA Stock-Drop Cases

In the Fifth Third Bancorp v. Dudenhoeffer decision issued June 25, 2014, the Supreme Court unanimously rejected the “Moench presumption”, a presumption of prudence for employer stock held in an ESOP or a 401(k) plan company...more

Negotiating the Option Pool

Many people think a high(er) valuation is the Holy Grail. Those people are (often) wrong. In pursuit of a high(er) valuation, founders often unwittingly give up valuable ownership percentage points by agreeing to a...more

Delaware Formally Adopts Proposed Statutory Amendments Governing Mergers Following the Completion of a Tender Offer

The governor of Delaware recently signed into law previously proposed amendments to Section 251(h) of the Delaware General Corporation Law (“DGCL”), which make Section 251(h) more accessible to deal parties by...more

What Does the Supreme Court’s Ruling in Fifth Third Bancorp v. Dudenhoeffer Mean for ESOPs and Other Retirement Plan Fiduciaries?

Fiduciaries of qualified retirement plans, including Employee Stock Ownership Plans (ESOPs), have generally been entitled to a presumption that they have acted prudently in offering employer stock as an investment alternative...more

Protecting Your Founder Equity

Even though you may have the urge to share the potential success with everyone that has helped you along the way and to tell them all about it, there is a right way to do this with both co-founders and non-founders to avoid...more

Quarterly Investment Update - 2nd Quarter 2014

Stock Market Commentary - Global equity markets gained higher ground in the second quarter with volatility falling to levels not seen since 2007. The S&P 500 delivered a 5.2% return for the quarter and has now...more

FINRA Sanctions a Broker for Violating Japanese Insider Trading Law

On July 2, 2014, FINRA announced that it barred a former equity trader from the securities industry based on its finding that he violated Japanese insider trading law by trading in the securities of a Japanese company listed...more

Controversial Florida Case Blocks Creditor from Enforcing Judgment Against Foreign Assets

A recent opinion from Florida's Fourth District Court of Appeal held that a Florida court does not have jurisdiction to compel a judgment debtor to turn over stock certificates located outside the state of Florida to satisfy...more

Hart-Scott-Rodino 2013 Annual Report: Filings Decreased, Transactions Investigated Increased and Enforcement Continues for...

On May 21, 2014, the Federal Trade Commission and the Department of Justice published the Hart-Scott-Rodino Annual Report Fiscal Year 2013 (for the period from October 1, 2012 to September 30, 2013). The Annual Report...more

SEC Orders Securities Exchanges and FINRA to Develop Tick Size Pilot Plan

The Securities and Exchange Commission has issued an order directing certain national securities exchanges and the Financial Industry Regulatory Authority, Inc. to jointly develop and file with the SEC a national market...more

Sale of Clippers Will Cost Sterlings Significant Income Taxes

People who do not think that Donald Sterling is being impacted sufficiently by the NBA fine and being forced to sell the Los Angeles Clippers are not taking into account the significant federal and California income taxes...more

Giving Stock to Your Employees — How and How Much?

Equity grants can be an attractive alternative to cash when compensating employees, consultants, and service providers. Beware, though: if not structured properly, equity grants can cause some nasty consequences for the...more

IRS Begins Section 409A Compliance Initiative

The Internal Revenue Service (IRS) is getting ready to ramp up enforcement of Section 409A of the Internal Revenue Code. The federal agency recently announced the launch of a new project to assess the level of taxpayer...more

U.S. Supreme Court Decision Will Lead to Intense Scrutiny of ESOP Fiduciaries

The United States Supreme Court issued a decision yesterday that will result in significant changes to employee stock ownership plan ("ESOP") administration and design, which could jeopardize the viability of stand-alone...more

Ravenswood Investment Co., L.P. v. Winmill & Co., C.A. No. 7048-VCN (Del. Ch. May 30, 2014) (Noble, V.C.)

In this decision in a proceeding pursuant to 8 Del. C. § 220, the Court of Chancery held that a corporation cannot condition a stockholder’s access to its nonpublic financial statements on the stockholder’s agreement not to...more

Common Issues Related to the Sale of Gifted Stock

One of the more challenging aspects of managing a development office at a college or university is managing the sale of a gift of company stock. While there is no set criteria for determining when to accept such a gift, or...more

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