Federal Securities Law Source is published by Porter Wright’s Corporate and Securities Practice Group. The blog is devoted to highlighting current issues in securities laws, discussing the ramifications of those issues for today’s businesses and providing bottom-line takeaways for busy owners, managers and executives. We designed this blog so readers can quickly and easily learn about developments affecting investors, issuers, securities markets and governing organizations.

Recent Blog Posts

  • How to avoid registration under the Investment Company Act of 1940 By Mark Koogler    One of the worse situations a company may face to be determined to be an investment company under the Investment Company Act of 1940, as amended (the act). If determined to be an investment company, the company is subject to the full regulation under the act. In addition, a company may inadvertently become an investment company; in such a case, all of its contracts are potentially voidable and it cannot engage in any other business. Generally, companies inadvertently... More
  • SEC seeks to regulate transactions utilizing cryptocurrencies under federal securities laws By Nathan Sisodia    Any person who regularly monitors the U.S. financial markets has likely noticed the recent emergence of digital currency, also referred to as “cryptocurrency,” in recent months. For example, the price of bitcoin, the most widely known form of cryptocurrency, surged from a price below $800 per bitcoin in 2016, to a remarkable $17,000 per bitcoin recently in 2017. Despite this potential volatility, the acceptance of cryptocurrencies as legitimate forms of currency is likely; as evidenced by an array... More
  • How to structure a joint venture By Mark Koogler    Joint ventures should be considered as an alternative to an acquisition if the acquiring party feels it does not have the experience or the business risk appetite to do it individually. They have the benefit of allowing parties to have greater success working together on a specific project than if they did it themselves. Benefits of a joint venture There are many benefits of entering into a joint venture. Some of them include: Allowing the parties to share management experience and... More
  • Boilerplate provisions in a contract By Mark Koogler    The term “boilerplate” refers to standardized language in a contract that usually appears at the end of the agreement (often in a section titled “miscellaneous” or “general terms”). While boilerplate provisions are common clauses in a contract, they should always be checked carefully and tailored to the particulars of the situation as they will address important issues that will be determinative of the parties’ rights with respect to the business contract. You should remember that every clause in... More
  • Methods to minimize indemnification obligations By Mark Koogler    Because most indemnification claims are made by a buyer, the seller seeks to limit its indemnification obligations. Some ways in which the indemnification obligations can be limited include: Materiality of breach or claim amount Caps on indemnification Baskets Payment adjustments for insurance proceeds or tax benefits Sellers often like to include materiality qualifiers in the indemnification clause as to the claim amount and the type of claim. These qualifiers serve the purpose of limiting the right of the buyer to indemnification. In the... More
  • Litigation provisions v. arbitration provisions in business contracts By Mark Koogler    Arbitration is an increasingly popular method of resolving disputes, but drafters of business contracts need to be aware that arbitration may not be suitable for every dispute. The question of whether or not to arbitrate often comes down to when you want to decide arbitration is right – before or after a dispute. Many people decide to include an arbitration clause during the negotiation of the business contract. The parties may decide to include an arbitration clause in their... More
  • Delaware limits appraisal rights, but at what cost? By Chas Kidwell and Kyle Schrodi    Back in August 2016, Delaware amended Section 262 of the Delaware General Corporation Law to address the rise of the appraisal arbitrage strategy where certain sophisticated investors would find a target company that is involved in a merger or acquisition, buy stock in the target company, and then invoke appraisal rights under Section 262. The main goal of the strategy is to strong-arm management to settle for a higher sale price in order to avoid... More
  • Rate increases for issuers registering securities By Ryan Steele    New rates will take effect at the beginning of the next fiscal year, Oct. 1, 2017, for public companies and other issuers to register their securities with the U.S. Securities and Exchange Commission (SEC). The SEC announced on Aug. 24, 2017, that the fiscal year 2018 fees to register securities will be set at $124.50 per million dollars. This is up from the $115.90 per million dollars fee for fiscal year 2017. The 7.4 percent increase is significantly less... More
  • Some thoughts on mimicking a corporate governance structure in Ohio LLCs By Lev Martyniuk    Part One It is quite common for members of a recently formed LLC accustomed to a corporate governance structure (that is, one having directors, a board of directors and officers versus members and managers) to direct their attorney to draft their operating agreement so that the LLC will have a corporate governance structure too. The intention being to permit the members to continue to use the governance structure with which they are most familiar. (Some clients even enjoy holding... More
  • Reminder: SEC exhibit hyperlink and format rules become effective Sept. 1, 2017 By Christina Otero    Effective for filings on and after Sept. 1, 2017, registrants will be required to include a hyperlink to each exhibit identified in the exhibit index of periodic reports, current reports and registration statements. For registration statements, the rule applies to the initial registration statement, and to each subsequent pre-effective amendment. The SEC adopted the final rules on March 1, 2017. According to the SEC’s adopting release, the rules are intended to address the inefficient and time-consuming search required to... More