Articles

The Wheels Are Falling Off the Privilege Bus: What Deal Lawyers Need to Know to Avoid the Crash

66(4): 901 - 918 (August 2011)
Over the last several years, the rise of electronic discovery, the increasing focus of in-house counsel on business roles, and increasing complexity of mergers and acquisitions have expanded significantly the volume and type of potentially privileged documents created in connection with mergers and acquisitions. Despite the commonly-held perceptions of clients and deal-lawyers alike, many communications sent to or from lawyers are not privileged. In addition, courts?and in particular, the Delaware Court of Chancery?are taking a closer look at the privilege determinations being made by litigants before them. These shifts have important practical impacts on lawyers and clients. This article examines these circumstances and recent decisions in the courts to provide practical advice for deal lawyers.

The Wreck of Regulation D: The Unintended (and Bad) Outcomes for the SEC's Crown Jewel Exemptions

66(4): 919 - 942 (August 2011)
Regulation D is?or at least should be?the crown jewel of the Securities and Exchange Commission?s regulatory exemptions from the registration requirements of the Securities Act of 1933. It offers businesses?especially businesses with relatively small capital requirements?fair and efficient access to vital, external capital.

In this article, I present data derived from deep samples of recent Form Ds filed with the Commission. The data show that Regulation D is not working in the way the Commission intended or in a way that benefits society. The data reveal that companies attempting to raise relatively small amounts of capital under Regulation D overwhelming forego the low transaction costs of offerings under Rules 504 and Rule 505 in favor of meeting the more onerous (and more expensive) requirements of Rule 506. Additionally, these companies overwhelmingly limit their relatively small offerings to accredited investors, which dramatically reduces the pool of potential investors.

This unintended and bad outcome is the result of the burdens imposed by state blue sky laws and regulations, and this has to a large degree wrecked the sensible and balanced approach of the Commission in Regulation D.

Reclaiming Regulation D requires the elimination of state authority over all Regulation D offerings. State regulators, however, have proven to be aggressive and effective in protecting their turf. Although the Commission has the ability?and I believe the duty?to solve this problem for the benefit of the economy, it has a history of an unwillingness to take on state regulators, even in instances where state regulations essentially destroy the Commission?s sensible and balanced regime for capital formation. Congress also could solve the problem by expanding federal preemption to cover all offerings made under Regulation D.

Fair Summary II: An Update on Delaware's Disclosure Regime Regarding Fairness Opinions

66(4): 943 - 962 (August 2011)
In May 2008, the authors published an article discussing the general principles behind Delaware cases involving disclosure regarding fairness opinions and the financial advisors that provide them. This Article updates that prior article and discusses the evolution of Delaware law on this topic. Principally, this Article discusses developments in three areas: disclosure regarding the financial advisor?s analysis, disclosure regarding management?s projections, and disclosure regarding the financial advisor?s potential conflicts. Included are analyses of the most recent Delaware cases, including transcript rulings, as well as general discussions of other issues relating to Delaware?s fiduciary duty of disclosure.