BLT: May 2019

 

Featured Articles

Business & Corporate

Treasury Enforcement Actions: Civil Enforcement with Criminal Consequences

Indictments are often viewed as a death knell for a publicly traded company. As a result, whenever a government investigation involves a potential criminal penalty, obtaining a civil or administrative resolution in lieu of a criminal resolution is typically viewed as a favorable outcome for the company. Fares v. Smith[1] highlights that civil administrative actions by components of the U.S. Department of the Treasury (Treasury) can be as devastating for a company as a criminal indictment.

Business & Corporate

Freeze in Time that Saved Priority: Lapsed Financing Statement in Bankruptcy

There was a tension as to whether a secured creditor retains its priority when its financing statement lapses during a bankruptcy case. Under the “Freeze Rule,” the Maryland Bankruptcy Court concluded that a senior secured creditor maintains its priority even if its financing statement lapses during the bankruptcy case. The holding is supported by federal law and addresses a conflict between federal bankruptcy law and UCC state law.

Business & Corporate

Cannabis and Hemp: Regulatory Green Light or Still a Pipe Dream?

Recent months have been busy for banking lawyers focused on the cannabis industry and the legal and regulatory risks of providing financial services to marijuana-related businesses. Of principal note, in mid-December, President Trump signed the Agriculture Improvement Act of 2018 (the 2018 Farm Bill) into law, which lifted the federal prohibition on hemp production. This law also has significant implications regarding the legality of cannabidiol (CBD), a popular hemp derivative. This article will first explain the significance and implications of the 2018 Farm Bill, describe possible divergences in state and federal law regarding cannabis generally, and briefly touch on international developments.

Business & Corporate

On the Ice in Vancouver: Business Law in a Professional Sport Context

On March 29, 2019, Section members and guests enjoyed a most interesting presentation by guest speaker Chris Gear, the vice-president of team operations and general counsel for Canucks Sports and Entertainment, which owns the Vancouver Canucks Hockey Club and Vancouver Warriors Lacrosse Club. Chris reminded the audience of the fact that sport has become big business, and referring to the applicable laws as “sports law” is something of a misnomer; more accurately it involves the application of business law discipline to the sport context.

Business & Corporate

Even the Best Consultants Require Careful Oversight: Boeing and McKinsey Encounter the FCPA

Before the recent controversy involving The Boeing Company and its 737 MAX 8, a New York Times article suggested that actions on the part of McKinsey & Company may have exposed itself and possibly Boeing to liability under the Foreign Corrupt Practices Act (“FCPA”). However, no definitive conclusion should be drawn from the Times article. A violation of the FCPA is not necessarily involved, certainly by McKinsey and Boeing. Yet the article raises a number of important issues that merit consideration.

Business & Corporate

New Legal Guide on the Regulation of Digital Assets

The American Bar Association’s Derivatives and Futures Law Committee published a first-of-its-kind comprehensive legal guide for practitioners and their clients involved with the fast-developing markets for “crypto” or “virtual” currencies, and the many other types of digital and digitized assets that exist or are recorded on blockchain platforms. The committee’s over 300-page White Paper, “Digital and Digitized Assets: Federal and State Jurisdictional Issues,” reviews the complex web of federal and state statutes and precedents that have been applied to transactions in such digital assets.

Business & Corporate

Artificial Intelligence in Healthcare: Can It Work? Perspectives from the United States and European Union

In 2019, we are surrounded by AI—from our personal assistants Siri, Alexa, and Google Home Hub; our retailers predicting what we want before we do (think Amazon/Netflix recommended sections); and our cars that sense when braking is required in an emergency—and AI just keeps getting smarter and more accurate over time as it incorporates more data sets, meaning that AI has become more integrated and trusted within our society.

Business & Corporate

Collecting in the Wild West: Impacts and Updates for Collection Operations in the Face of Emerging Privacy Regulation in California and Washington State

After the enactment of the General Data Protection Regulation (GDPR) in Europe, privacy experts foresaw that it would be only a matter of time until similar privacy laws—ones that gave consumers more control over their personal data and the way it was used—were enacted in the United States. Several states have already either implemented new laws or are amending existing laws that surround consumer protection and the privacy of consumers’ information. Of note is the California Consumer Privacy Act (CCPA), which will go into effect on January 1, 2020.[1] Washington State, home of Amazon and Microsoft, recently introduced Senate Bill 5376, the Washington Protection Act (WPA), which will offer consumers a way to oversee and manage their personal data.

Business & Corporate

SEC Proposes Amendments to Financial Disclosures in M&A

This morning, once again without an open meeting—whatever happened to government in the sunshine?—the SEC voted to propose amendments intended to improve the disclosure requirements for financial statements relating to acquisitions and dispositions of businesses. According to the press release, the proposed changes are designed to “improve for investors the financial information about acquired and disposed businesses; facilitate more timely access to capital; and reduce the complexity and cost to prepare the disclosure.” The proposal will be open for public comment for 60 days.

Business & Corporate

The Tangled Web of SEC Rule 10b-5: Lorenzo v. Securities and Exchange Commission

On March 27, 2019, the Supreme Court held (in a 6-2 decision) in Francis V. Lorenzo v. Securities and Exchange Commission[2] that a person who (1) knowingly disseminates false and misleading statements to prospective investors and (2) acts with the intent to defraud can be held liable under subsections (a) and (c) of Securities and Exchange Commission Rule 10b-5 (Rule 10b-5), and other relevant statutory provisions, even if such person was not the “maker” of such statements.

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