Capital Markets

Delaware Court Addresses De-SPAC Merger Claims

by Stanley Keller, Michelle Earley, Rob Evans, Alan Levin, Eugene McDermott, Julie Young and Kendal Hendrickson | Jan 12, 2022 | Disclosure Requirements, M&A, Shareholder Litigation, SPACs

In an important decision, the Delaware Court of Chancery, in In re Multiplan Corp. Stockholders Litigation, 2022 WL 24060 (Del. Ch. Jan. 3, 2022), in denying the defendants’ motion to dismiss, addressed claims against the sponsor and other insiders of a special purpose acquisition company or “SPAC” for breach of fiduciary duties in connection with a de-SPAC merger. As we mentioned in our QuickStudy, “SPACs and the Implications for D&O Insurance,” the Multiplan decision was highly anticipated and is significant because it was the first time the Delaware courts had to grapple with the unique structure of SPACs and determine how to apply fundamental principles of Delaware fiduciary duty law to them.

Delaware Court Provides Guidance on Director Liability for Distributions

by Stanley Keller, Michelle Earley, Rob Evans and Eugene McDermott | Dec 9, 2021

Companies often make distributions to their stockholders as dividends and stock buybacks. For private equity-backed companies, it is not unusual to see leveraged recaps in which the company borrows money and makes distributions to the private equity investors.

Delaware Clarifies That Statutory Appraisal Rights Can Be Waived

by Stanley Keller, Rob Evans and Eugene McDermott | Oct 14, 2021 | Corporate Governance, Delaware, M&A

Controlling stockholders sometimes seek to limit the ability of new investors in their company to ‎interfere with future exit transactions. They may do this by requiring the new investors to agree ‎to vote in favor of a transaction proposed by the controlling stockholder (a “drag-along ‎agreement”) or to expressly waive any appraisal rights because those rights can create uncertainty ‎for an exit transaction.

Delaware Clarifies Its Rules Governing Stockholder Derivative Actions

by Stanley Keller, Rob Evans and Eugene McDermott | Oct 13, 2021 | Corporate Governance, Delaware, Shareholder Litigation

Derivative actions play an important role in policing corporate insider conduct and compliance by directors and controlling stockholders with their fiduciary duties. A derivative action enables a stockholder, upon satisfaction of applicable requirements, to bring litigation on behalf of the corporation challenging, for example, conflict of interest transactions, the adequacy of consideration in a merger or the board’s attention to the corporation’s legal compliance.

Locke Lord QuickStudy: SEC Signals Heightened ESG Focus

by Gerald Pels, Gislar Donnenberg and Michelle Earley | Oct 1, 2021 | Corporate Governance

On September 22, 2021, the SEC released its Sample Letter to Companies Regarding Climate Change Disclosure (“Letter”). The Letter is not only important for what it will seek, but for what it portends. The Letter invokes the 2010 Climate Change Guidance[1] (“Guidance”) which provided an overview of potential disclosure obligations related to climate change, including the impact of climate change legislation and rulemaking, business trends, and physical impacts.

Nasdaq Introduces Board Diversity Requirements

by Stanley Keller, Michelle Earley, Rob Evans, Eugene McDermott and Tim Roberts | Aug 17, 2021 | Corporate Governance, Disclosure Requirements, NASDAQ

On August 6, 2021, the U.S. Securities and Exchange Commission approved Nasdaq’s proposed rule regarding diversity of boards of directors.[1] The approved rule requires that most companies listed on Nasdaq (i) “[p]ublicly disclose board-level diversity statistics using a standardized template,” and (ii) “[h]ave or explain why they do not have at least two diverse directors.”[2]

Charges Against Nikola Founder Provide Reminder to Use Caution in All Public Statements and Offer Governance Lessons

by Eugene McDermott, Stanley Keller, Michelle Earley and Rob Evans | Aug 3, 2021 | Corporate Governance, Enforcement Actions, Rule 10b-5

On July 29, 2021, both the SEC and the U.S. Attorney for the Southern District of New York announced charges against Trevor Milton, the founder, former CEO and former executive chairman of Nikola Corporation, a company engaged in the development of electric trucks. The complaint and indictment allege a series of misleading and inaccurate public statements by Milton on social media and elsewhere leading up to and after the company’s merger with a special purpose acquisition company (SPAC) through which Nikola became a public company, which included related private placements (PIPEs).

SEC Reminds Companies That Earnings Management Can Have MD&A Consequences

by Stanley Keller, Michelle Earley, Rob Evans and Eugene McDermott | May 5, 2021 | 1934 Act Filings, Disclosure Requirements, Enforcement Actions, MD&A

In a settled enforcement action against Under Armour Inc. announced on May 3, 2020 the SEC reminded companies that managing earnings, even if accounted for correctly, can have MD&A implications triggering disclosure obligations. According to the SEC order, Under Armour, in order to meet analyst projections and sustain its 20% quarter over quarter revenue growth record, pressured customers to move purchases forward into the current quarter, and did this for a number of consecutive quarters.

SEC Provides Reminder that Form 12b-25 is a Disclosure Document

by Stanley Keller, Michelle Earley, Rob Evans and Eugene McDermott | Apr 30, 2021 | 1934 Act Filings, Disclosure Requirements, Enforcement Actions

The SEC’s Division of Enforcement announced on April 29, 2021 settled enforcement ‎actions against eight companies for failure to adequately disclose the reasons for their inability to ‎timely file their Form 10-Ks or Form 10-Qs when filing a Form 12b-25 (commonly known as ‎‎“Form NT”) to extend the time to file those reports.‎

Join Us for a Complimentary Webinar: Gearing up for Privacy & Cybersecurity in 2021

Apr 6, 2021

Organizations continue to face new issues, regulations and threats relating to privacy and cybersecurity. Over the next few months, Locke Lord lawyers will tackle some of your most pressing concerns in a series of complimentary webinars discussing practical, real-world challenges facing organizations, including compliance, business operations, data incidents, and investigations, litigation and enforcement. Sign up below for each program that interests you or sign up for the entire series.

Delaware Court Addresses De-SPAC Merger Claims

Delaware Court Provides Guidance on Director Liability for Distributions

Delaware Clarifies That Statutory Appraisal Rights Can Be Waived

Delaware Clarifies Its Rules Governing Stockholder Derivative Actions

Locke Lord QuickStudy: SEC Signals Heightened ESG Focus

Nasdaq Introduces Board Diversity Requirements

Charges Against Nikola Founder Provide Reminder to Use Caution in All Public Statements and Offer Governance Lessons

SEC Reminds Companies That Earnings Management Can Have MD&A Consequences

SEC Provides Reminder that Form 12b-25 is a Disclosure Document

Join Us for a Complimentary Webinar: Gearing up for Privacy & Cybersecurity in 2021

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