Corporate Defense and Disputes

Important developments in U.S. securities law, white collar criminal defense, regulatory enforcement and other emerging issues impacting financial services institutions, publicly traded companies and private investment funds

SEC Punts NASDAQ Diversity Decision

After receiving extensive outside pressure from a variety of sources, include Senate Republicans, the SEC announced last week that it is deferring its decision on whether to approve a Nasdaq proposal to require “diverse” members on companies’ boards. The SEC is also simultaneously awaiting the confirmation of its new Chairman, Gary Gensler, which is still pending before the Senate. It seems unlikely that the Commission will decide on the rule before the new Chairman is installed. We will continue to follow for additional updates.

U.S. Climate Finance Summit: Regulators Call for ESG Disclosures; Investors Demand Them

On February 18, 2021, the Institute of International Finance (“IFF”) hosted the U.S. Climate Finance Summit, at which both John Coates, Acting Director of the SEC’s Division of Corporation Finance, and Federal Reserve Governor Lael Brainard made statements in favor of companies providing fulsome ESG disclosures.  These pronouncements underscore the Summit’s larger goal of supporting a “pro-growth, pro-markets transition to a sustainable, low-carbon economy.”  Continue Reading

SPAC Securities Class Action Comes for Private Equity Sponsor

Pharmaceutical and biotech companies, with proprietary and potentially lucrative products, have been popular targets for SPAC sponsors. Unfortunately, one such private equity sponsor may have its hands full after its managing partner was publicly named in a securities class action. Continue Reading

Three Critical Questions That Will (Hopefully) be Answered by the SEC’s Lawsuit against Ripple

In late December 2020, the SEC filed a litigated action in the U.S. District Court for the Southern District of New York against Ripple Labs Inc. and two of its executive officers (collectively, “Ripple”), alleging that Ripple raised over $1.3 billion in unregistered offerings of the digital asset known as XRP. Ripple opted not to file a motion to dismiss the complaint, and based on recent filings it appears that the parties do not believe a pre-trial settlement is likely.

Read the full post on Proskauer’s Capital Commitment blog.

SPAC Securities Class Action Comes for Recently Public Health Care Company

Clover Health is an insurance company focusing on Medicare Advantage that uses its proprietary software platform to offer PPO and HMO plans to eligible consumers.  It fits the mold for many would-be SPAC acquisitions: a technology company with its own platform (known as the Clover Assistant) servicing a growing industry (health care).  Chamath Palihapitiya must have thought so as well, as Clover Health announced its plans to merge with his SPAC – Social Capital Hedosophia Holdings Corp. III (“SCH”) – on October 6, 2020.  The business combination was completed three months later, on January 7, 2021.

However, less than one month later, a sole plaintiff filed a purported federal securities class action against Clover Health Investments, SCH, and relevant officers and directors in the United States District Court for the Middle District of Tennessee.  In his complaint, the plaintiff highlighted an analyst report alleging Clover Health and Mr. Palihapitiya “misled investors about critical aspects of Clover’s business in the run-up to the company’s SPAC go-public transaction” and that Clover Health was under active investigation by the Department of Justice for allegedly improper business practices.  Based on these allegations, the complaint contends Clover Health failed to disclose material information, causing its public statements to be materially false and misleading.

Clover Health has not yet filed its response, and the Court has not made any statements about class certification.

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Senate Republicans Attack NASDAQ’s Board Diversity Rule

On February 12, 2021, the Republican members of the Senate Committee on Banking, Housing, and Urban Affairs wrote a letter to the Acting Chair of the SEC bashing a recently proposed rule of Nasdaq that would promote corporate diversity for listed companies. Continue Reading

Stumbling Through Securities Law Challenges for COVID-19 Vaccine Developers

As the world waits to overcome the COVID-19 pandemic, publicly traded pharmaceutical companies waging in that fight are facing the multifaceted challenge of developing COVID-19 responses, informing the public of their progress, and managing legal challenges related to their efforts. Enter AstraZeneca.

AstraZeneca partnered with Oxford University to develop a COVID-19 vaccine in April 2020, which it later called “AZD1222.” On May 21, 2020, the company announced that the United States government was providing more than $1 billion for the development, production and delivery of the vaccine. Over the course of the next six months, the company continued to make public announcements on further financial support agreements and interim development results on its vaccine progress. Continue Reading