Category: Publish to KM Space

Occupy LEGO Land

As the #OccupyWallStreet protests grew, it was inevitable that the movement would spread in unusual ways. That includes plastic toys.

“We must not be LEGO ‘lands’
— We must be a LEGO NATION.”

#OccupyLegoLand is a Facebook Fan Page that gives voice to LEGO minifigures. Like Occupy Wall Street, they are battling on many fronts: working in horribly exploitative conditions, war, bankers, and the release of the new iPhone.

#OccupyLegoLand aims to rebuild the world, brick by brick.


Sources:

2011 LexisNexis Corporate and Securities Law Blog Nominees

For the second year, LexisNexis is seeking your input in choosing the top blogs for their Corporate and Securities Law Community.

(Warning, this post post contains blatant self-promotion.)

Looking at the list of candidates, I see many blogs that I read regularly. But there are several on the list that I had not heard of before and need to take a look at. If you are looking for a list of business law blogs to read, the list of nominees is a great place to start.

I think many more than 25 of the nominated blogs are much better than mine, whether its on quality, popularity, or some other factors. I doubt I will make it into the top 25 so I will sit back and take the consolation prize: the honor of being nominated. (Although, I thought the same last year, but still managed to squeak into the top 25.)

Lexis Nexis invites you to comment on the announcement post:

Top 25 Business Law Blogs 2010 – Corporate & Securities Law Community

To comment, you have to register. Registration is free and supposedly does not result in sales contacts. The comment period for nominations ends on October 25, 2011. They don’t say how they will end up selecting the top 25 out of the nominees, other than it’s based on their review and your comments.

As I said last year I’m also not sure how the Lexis-Nexis Communities fits in with the Martindale Hubbell Connected platform. There seems to be whole lot of substantive information in Communities that is missing in Connected. They should still get these two sites together.

Vote for the business law blogs you feel are the best or at least look through the list to add some new sites to your reading list. Go ahead and include Compliance Building.

NOMINEES FOR THE LEXISNEXIS CORPORATE & SECURITIES LAW
TOP 25 BLOGS FOR 2011

Alston & Bird’s “M&A Blog”
by Alston & Bird’s Corporate Transactions and Securities Practice

Alston & Bird’s Securities Lit. Blog
By Alston & Bird’s Securities Litigation Group

BD Law Blog
By Joel Beck

Boardmember.com

The Business Law Blog (Dryanlaw)
by Daniel J. Ryan

Business Law Post
By Arina Shulga

Business Law Prof Blog
By Multiple Authors

California Corporate & Securities Law
By Keith Bishop

Commercial Law Blog
By by Jennifer S. Martin, L. Ali Khan, Jason J. Kilborn, Robyn Meadows, Marie T. Reilly, Marc L. Roark, Keith A Rowley, Steven Semeraro, Anthony Schutz and Jim Chen discussing a variety of Commercial Law related topics.

Compliance Building
by Doug Cornelius

Conference Board Governance Blog
Editor, Gary Larkin

The Conglomerate
By Seven Law Professors blog about business, law, economics and society, including Gordon Smith, BYU Law School, Christine Hurt, Univ. of Illinois College of Law, Vic Fleischer, Univ. of Colorado Law School, Fred Tung, Emory Law School, Lisa Fairfax, George Washington Univ. Law School, David Zaring, Wharton School Legal Studies and Business Ethics Department, and Usha Rodrigues, University

Connecticut Employment Law Blog
by Daniel A. Schwartz of Pullman & Conley, LLC b

Consumer Law & Policy
Coordinators, Deepak Gupta and Jeff Sovern

Contracts Prof Blog
By Jeremy Telman

CorpGov.net
By James McRitchie

Corporate & Securities Law Blog
By Sheppard Mullin

Corporate Compliance Insights

TheCorporateCounsel.net
By Broc Romanek and Dave Lynn

Corporate Finance Law Blog
By Davis Wright Tremaine

Corporate Law and Governance
By Robert Goddard, a U.K. based Senior Lecturer at Aston Law, part of Aston Business School

The Corporate Library Blog–GMI
Published by GMI

Corporate Tool
By Josh King

Credit Slips
By Multiple Authors

David Tate’s Blog

DealLawyers.com Blog
By Broc Romanek

Delaware Corporate and Commercial Litigation Blog
By Francis G. X. Pileggi

The D&O Diary
Published by Kevin M. LaCroix

The Emerging Business Advocate
By Seaton M. Daly III

FCPA Compliance and Ethics Blog
by Thomas Fox

FCPA Professor
By Mike Koehler

Fraud Bytes
By Mark Zimbleman and Aaron Zimbleman

Harvard Corporate Governance Blog
By Harvard Law School Program on Corporate Governance

Hedged.biz
By Brian Goh, Burnham Banks, Mark Martyrossian, Mark Fleming

Hedge Fund Law Blog
by Bart Mallon

Indiana Commercial Foreclosure Law
By John Waller

Indian Corporate Law Blog
By Multiple Authors

nHouseBlog
Albish Publishing

Investor Relations Musings
by John Palizza

The Investment Fund Law Blog
by Pillsbury Winthrop Shaw Pittman

Jim Hamilton’s World of Securities Regulation

LFNP Blog
By Arthur Ryman

M&A Law Prof Blog
By Brian JM Quinn, Boston College Law School Professor

Marks on Governance
by Norman Marks

Marler Blog
By Bill Marler

Metropolitan Corporate Counsel
Publisher, Martha Driver

Nancy Rapoport’s BlogSpot
By Nancy Rapoport

NC Business Litigation Blog
By Mack Sperling of Brooks Pierce LLP

New York Business Law
Frederic R. Abramson

New York Business Litigation and Employment Attorneys Blog
By David S. Rich

No Funny Lawyers
By Jim Thomas

Northwest Litigation Blog
By Ater Wynne LLP

Perkins Coie’s MergerViewpoints
Publisher, Scott B. Joachim

PLI Securities Law Practice Center
By Kara O’ Brien

ProfessorBainbridge.com
by Stephen M. Bainbridge

Race to the Bottom (Corp Governance Blog)
a faculty and student collaborative blog published By J. Robert Brown, Jr.

retheauditors.com
By Francine McKenna

Reverse Merger Blog
By David Feldman

Robert A. G. Monks’ Blog
by Robert Monks

SEC Actions
By Thomas O. Gorman of Porter Wright

SEC Tea Party
By Robert Fusfeld

Securities Law Prof Blog
By Barbara Black

SEC Whistleblower Program
By Nick Fasulo

Small Business Trends
By Anita Campbell

Startup Company Lawyer
By Yoichiro Taku

Strictly Business
by Alexander Davie

10Q Detective
By David Phillips

The 10b-5 Daily
By Lyle Roberts

Truth on the Market
By Geoffrey Manne and Multiple Authors

UCC Food Ind. Law, Food Liability Law Blog
By Richard Goldfarb, Stoel Rives LLP

Uniform Commercial Code Litigation
By Robinson & Robinson LLP

USA Inbound Deals
by Bill Newman

US PIRG
By Ed Mierzwinski

The Venture Alley
Editors Trent Dykes, Asher Bearman of DLA Piper

Virginia Business Litigation Lawyer
By Lee Berlik

What About Clients
By Dan Hull

Workplace Prof Blog
By Richard Bales & Multiple Authors

WSJ Deal Journal

Crowdfunding

It’s hard to raise capital. The regulatory restrictions imposed by securities laws make it harder to do so. As any bright-eyed entrepreneur with a dream project will tell you, the lawyers and the securities laws make it very expensive and time consuming to raise capital for a small project.

The central goal of the Securities and Exchange Commission is to facilitate companies’ access to capital while at the same time protecting investors. More often than not, the securities laws and regulations are put in place due to some prior malfeasance. Limitations on the sale of securities are in place because there were (and still are) lots of shady characters trying to make a quick buck by de-frauding investors.

The Obama administration and the Congress think the regulatory burdens need to be removed to encourage small business capital formation. I’m going to guess that they are fans of Kickstarter, a website that allows entrepreneurs and artists to raise capital for their projects. (I’m also a fan and have contributed to some projects.)

SEC Rule 504 allows a public offering to investors (including non-accredited investors) for securities offerings of up to $1 million. There is no limit on the type of investors, so they need not be accredited investors.  There are no prescribed disclosures and no limitations on resales of the securities. The Rule generally does not allow companies to solicit or advertise their securities to the public.(Of course, the antifraud and other civil liability provisions of the federal securities laws are still applicable.)

However, these offerings are subject to state “blue sky” regulation. That means having to jump through the patchwork of state securities laws, depending where your target investors are located.

How does Kickstarter get around this? It doesn’t. Capital for Kickstarter projects cannot be for securities or lending. As a patron, you do not get your capital returned. Often, you’ll get the end product that the artist or entrepreneur was hoping to produce. (My son is patiently waiting for our pack of trebuchettes to arrive.)

Generally, the term “crowdfunding” is used to describe a form of capital raising whereby people pool money, generally as small individual contributions, to support a specific goal. Since the capital raising did not provide an opportunity for profit participation, initial crowdfunding efforts did not raise issues under the federal securities laws.

The Entrepreneur Access to Capital Act would create a new exemption for small companies, allowing them to raise up to $5 million. The limitation would be that investments are limited to the lesser of $10,000 or 10% of the investor’s annual income.

President Obama cheered for crowdfunding as part of the American Jobs Act unveiling. I failed to find and proposed legislative changes in his proposed bill.

I’m for fueling entrepreneurial growth in this country. I’m concerned that the changes could lead to an onslaught of fraud. I think Kickstarter works well because you are funding the effort. You are not seeing dollars signs.

Sources:

More from FINRA on Social Media and Mobile Devices

In January 2010, FINRA issued Regulatory Notice 10-06 in an attempt to provide guidance on the application of FINRA rules governing communications with the public to social media sites. The guidance did not provide much that was new. Largely, FINRA pointed out that the existing communication and record-keeping rules applied. Too bad that the site did not allow you to take the steps needed to comply with the existing rules.

Apparently, the guidance raised enough questions that FINRA decided to provide some additional guidance. It is not intended to alter the principles or the guidance provided in Regulatory Notice 10-06. Anyone expecting something new or innovative will be disappointed.

Q1: Does determining whether a communication is subject to the recordkeeping requirements of SEA Rule 17a-4(b)(4) depend on whether an associated person uses a personal device or technology to make the communication?

A1: SEA Rule 17a-4(b)(4) requires a firm to retain records of communications that relate to its “business as such.” Whether a particular communication is related to the business of the firm depends upon the facts and circumstances. This analysis does not depend upon the type of device or technology used to transmit the communication, nor does it depend upon whether it is a firm-issued or personal device of the individual; rather, the content of the communication is determinative. For instance, the requirement would apply if the electronic communication was received or sent by an associated person through a third-party’s platform or system. A firm’s policies and procedures must include training and education of its associated persons regarding the differences between business and nonbusiness communications and the measures required to ensure that any business communication made by associated persons is retained, retrievable and supervised.

The FINRA rules came first and they are in place for a good reason. It’s up to the firm to find a may to meet the compliance standards if they want to use third-party websites to publish information, communicate with the public, or communicate with clients.  If cloud providers want to take over company-hosted communications they need to but more effort into the record-keeping and compliance requirements of the business world.

Sources:

Report on Investment Adviser’s Use of Social Media in Massachusetts

Social Media used by Investment Advisers

There is a growing trend in the financial services industry to use social media sites for outreach to existing as well as potential customers. Noticing this trend, the Securities Division of The Office of the Secretary of the Commonwealth surveyed investment advisers registered and doing business within the Commonwealth of Massachusetts. The purpose of the survey is to determine the scope of investment advisers’ use of social media, and what, if any, record retention and supervisory procedures have been implemented or utilized by those advisers. Empirical evidence is good to have.

The Division forwarded the social media survey to 576 investment advisers registered with the Division and located in the Commonwealth and 79% of advisers have responded.

  • 44% of investment advisers used some form of social media
  • Of those not using, 10% expect to use it in the next year
  • A majority of investment advisers using social media fall within the 42-62 age bracket

The Survey also suggests that some advisers do not have policies relating to the retention or supervision of social media content, are not retaining social media content, and do not supervise the use of social media content.

  • 69% of advisers using social media claimed to not have written record retention policies related to the retention of social media content
  • 57% also did not retain all content posted on social media websites maintained (directly or indirectly), by the firm.

It should not come as  surprise that the Division concluded that additional regulatory guidance concerning the use of social media would be appropriate. We have already seen enforcement at the national level for the abuse of social media. I expect the states will be on board soon and including a review of social media as part of their examination and review process.

Sources:

Germany, Sub-Prime Mortgage Backed Securities, and Scatology

Michael Lewis continues his around the world tour of the 2008 financial crisis from the view of Germany: It’s the Economy, Dummkopf!. The story in the September issue of Vanity Fair seems to be all about excrement. We heard that there were big chunks of the mortgage securities business that were terrible. There is the famous email describing the Timberwolf as on sh*tty deal.

Lewis did great job offering some insight from Ireland, Greece, the Iceland. In this story he seems distractedby feces and Nazis. The biggest insight I took away was:

At bottom, he [Dirk Röthig, of the German financial institution IKB] says, the Germans were blind to the possibility that the Americans were playing the game by something other than the official rules. The Germans took the rules at their face value: they looked into the history of triple-A-rated bonds and accepted the official story that triple-A-rated bonds were completely risk-free.

IKB and many of the other German banks thought they were getting a good return on the mortgage-back securities with little risk, but were actually getting a sh*tty deal. I get it. But I think he belabors the metaphor.

Michael Lewis could write about the economics of a paper bag and I’m sure it would be interesting story to read. In fact, I paid for a subscription to Vanity Fair just because of his articles. This one came up a bit short. Maybe he just thought the underlying story was not interesting enough so he spiced it up with lots of stories about German scatology. He layers in some Jewish alienation in Germany for some spice in his the discussion of feces.

It’s the Economy, Dummkopf! is still worth reading and still offers a few great insights into the 2008 financial crisis.

Sources:

Remind People to Do the Right Thing

Dan Ariely continues to find small, easy ways to change behavior. This time it was his students running the experiment instead of him. Two students sent an email to everyone in the class that included a link to a website that was supposed to contain the answers to a past year’s final exam.

In half of the emails they included this statement:

P.S. I don’t know if this is cheating or not, but here’s a section of the University’s Honor Code that might be pertinent. Use your own judgment:

“Obtaining documents that grant an unfair advantage to an individual is not allowed”

Using Google Analytics, the students tracked how many people from each group visited the website with the answers. Overall, about 69% of the class visited. However, when the message included the reminder about the honor code, only 41% accessed the website.

Of course 41% is a big number. So the honor code message did not prevent cheating. But it did cause a big drop from 69%.

From a qualitative perspective, the replies to the email message indicated that those who received the honor code message were often upset and offended. And those that did not see the code were generally thankful.

Again, Ariely shows the powers of reminders when it comes to instilling ethical behavior.

Sources:

Weekend Humor: Dodd-Frank Update

Jon Stewart helps celebrate the one year anniversary of Dodd-Frank (for those of you who grew up on Schoolhouse Rocks.)

Twitter Fail and Compliance


FINRA has long regulated and limited the ability of broker/dealers to communicate with the public. One of their missions is to protect the investing public from unscrupulous securities brokers. Twitter is a communications tools and any messages posted to Twitter will need to be in compliance.

It was inevitable that we would see a FINRA regulated party make a mistake using Twitter. The time has come.

FINRA also found that during eight months in 2009, the registered representative maintained a Twitter account and had more than 1,400 followers. Without notifying a principal of her employer firm, the registered representative posted 32 “tweets” related to a particular security. The tweets were unbalanced, overly positive and often predicted an imminent price increase. In the tweets, the representative failed to disclose that she and her family held a significant number of shares of the security. FINRA concluded that this conduct violated NASD Rules 2210 (communications with the public) and IM-2210-1 (guidelines to ensure that communications with the public are not misleading), and FINRA Rule 2010 (ethical standards).

To me, this sounds exactly like the behavior FINRA is trying to prevent by imposing Rule 2210 on financial representatives.

I don’t want to overstate the effect of this Twitter failure on the discipline. The registered representative was doing some other things in violation of the rules. I would guess that once a registered representative is under investigation FINRA takes a look at that person’s social networking activity to see if they have been doing other bad things.

Sources:

Image is 2008wmonroe by Liza P
CC BY-NC-ND 2.0