M&A Earnouts, Risk Allocation, and Post-Closing Incentive Conflicts
The Delaware Supreme Court’s en banc ruling in J&J v. Fortis clarified that earnout provisions are governed strictly by their contractual language, rejecting the use of an implied covenant of good faith to alter risk allocation. The case involved a $2.35 billion earnout tied to FDA approval for Auris Health’s robotic surgery platform, with the court overturning a lower‑court award of over $1 billion in damages. Data from 2020‑2025 shows earnouts account for roughly one‑quarter of total M&A value, with average deal size rising to $266 million in 2025, especially in healthcare and technology. The decision underscores that parties must anticipate foreseeable contingencies, as risk‑allocation cannot be renegotiated after a deal closes.
Private Equity Is Coming for Law Firms—And the Rules Aren’t Ready
In January 2026 personal‑injury firm Dudley DeBosier announced a partnership with Orion Legal, using a management services organization (MSO) to let a private‑equity vehicle run its technology, billing and marketing while attorneys retain firm ownership. The move mirrors a broader...
Sidley Discusses Limits to Caremark Claims
The Delaware Court of Chancery in Marchner v. B. Riley Financial reaffirmed that Caremark claims are limited to cases where directors have actual knowledge of illegal conduct, not merely poor investment outcomes. The court held that board oversight duties focus...
Time to Rethink and Revitalize Shareholder Proposals
Rule 14a‑8, the SEC’s eight‑decade‑old shareholder proposal rule, has become an over‑regulated, ineffective mechanism that rarely yields successful proposals. Since its inception, only two proposals have secured majority support, while the SEC’s merit‑based exclusions have hampered ESG and DEI initiatives....
Arnold & Porter Discusses SEC Approval of Nasdaq Proposal to Expand Trading Hours
On April 10, 2026 the SEC approved Nasdaq’s request to extend its trading hours from the current 16‑hour schedule to a 23‑hour, five‑day week. The new framework consolidates the pre‑market, regular and post‑market sessions into a continuous Day Session (4 AM‑8 PM...
Sullivan & Cromwell Discusses GENIUS Act Implementation
On April 7 the FDIC released a notice of proposed rulemaking to implement the GENIUS Act, outlining requirements for permitted payment stablecoin issuers (PPSIs) that are subsidiaries of insured depository institutions. The proposal caps reserve assets at 40% per institution,...
Simpson Thacher Discusses Basel III Endgame Evolution
On March 19, 2026 U.S. banking regulators released a second set of Basel III Endgame proposals that overhaul capital rules for banks of all sizes. The package lowers risk‑weightings for corporate loans—95% for most banks and as low as 65% for...
Shareholder Voting Power
Jonathon Zytnick’s new paper quantifies shareholder voting power, showing that owners with as little as 20‑30% of a company’s stock can effectively dominate corporate votes. By applying political‑science voting‑power metrics to U.S. public‑company data, the study finds median voting power...
Sullivan & Cromwell Discusses Warnings to Bank CEOs About Cybersecurity Risks of Anthropic’s New AI Model
On April 7, 2026 Treasury Secretary Scott Bessent and Fed Chair Jerome Powell held a closed‑door meeting with CEOs of the nation’s largest banks to warn about the cybersecurity threats posed by Anthropic’s new AI model, Claude Mythos Preview. Anthropic...
When Tailored Bank Supervision Becomes Structured Delay
The paper argues that the U.S. size‑tiered bank supervision system creates hidden grace periods during supervisory transitions, delaying the enforcement of stricter standards. Silicon Valley Bank’s move from the regional‑bank program to the large‑bank portfolio illustrates how liquidity rules, rating...
SEC Chair Atkins Discusses the Commission’s Return to Its Core Mission
SEC Chair Paul S. Atkins marked one year in his third term by outlining the agency’s “A‑C‑T” strategy to return the SEC to its statutory mission of investor protection, market integrity and capital formation. He highlighted three pillars—Advance, Clarify, Transform—including...
Return of the Saturday Night Special, Courtesy of the SEC
The SEC issued an exemptive order that halves the mandatory cash tender‑offer period from 20 business days to 10, citing market efficiency and technology. The change dovetails with Delaware’s §251(h) medium‑form merger rule, allowing a friendly acquirer to close a...
Rule 14a-8 Permits Precatory Proposals, and the SEC Can’t Just Say It Ain’t So
Shareholder proposals under SEC Rule 14a-8, most of which are advisory, have reshaped corporate governance by pushing issues like board structure, diversity, and lobbying disclosure. SEC Chair Paul Atkins has floated a reinterpretation that would let companies exclude these precatory...
RoughriderCoin and the Limitations of Stablecoins in Public Banking
The GENIUS Act, effective July 2025, gives states a limited regulatory lane to oversee stablecoin issuers with assets under $10 billion. Using this carve‑out, the Bank of North Dakota announced a partnership with fintech firm Fiserv to launch RoughriderCoin, a state‑backed stablecoin...
Humans, Machines, and the Corporate Veil
A new empirical study revisits Macey and Mitts' 2014 veil‑piercing analysis by deploying modern AI tools—Claude 3.7 Sonnet and an XGBoost stacked ensemble—alongside a replicated naïve Bayes model. The machine classifiers achieve agreement rates above 90%, surpassing the original 76.6%...
Sullivan & Cromwell Discusses Proposed FSOC Changes to Nonbank SIFI Designation Guidance
On March 25, 2026 the Financial Stability Oversight Council voted unanimously to propose amendments that would largely revert its non‑bank SIFI designation guidance to the 2019 framework. The proposal reinstates an activities‑based risk assessment, requires a cost‑benefit analysis before any...
Self-Binding Corporations
Corporate charters for giants like Boeing and Google are unusually brief, offering only a generic permission to engage in any lawful activity and omitting any substantive policy guidance. A new paper proposes that companies embed concrete provisions—such as data‑privacy standards...
Paul Weiss Discusses Ninth Circuit Dismissal of Securities Fraud Claims on Loss Causation Grounds
On Feb. 6, 2026 the Ninth Circuit unanimously affirmed a district court’s dismissal of securities‑fraud claims against Comerica, holding that the alleged 7.4% two‑day stock drop was too modest, typical, and quickly reversed to satisfy loss‑causation. The court applied its three‑factor...
Paul Weiss Discusses Third Circuit Ruling on Exclusive CFTC Jurisdiction Over Sports-Related Event Contracts
On April 6, 2026 the U.S. Court of Appeals for the Third Circuit ruled that the Commodity Futures Trading Commission (CFTC) has exclusive jurisdiction over sports‑related event contracts offered by prediction‑market operator Kalshi, deeming them "swaps" under the Commodity Exchange...
Intellectual Property Collateral and the Governance of Innovation Finance
Firms in technology, healthcare and life‑sciences now derive most of their market value from intangible assets such as patents, software and data, prompting lenders to treat intellectual‑property (IP) rights as primary collateral. 90% of S&P 500 valuation is tied to intangibles,...
Rethinking Materiality in the Debate Over ESG
Debates over ESG disclosures expose a deeper doctrinal gap: the lack of a clear definition of materiality in securities law. Professor Karen Woody proposes a taxonomy that divides materiality into substantive, regulatory and procedural categories, showing how each influences disclosure...
Gibson Dunn Discusses Delaware Supreme Court’s Revival of Nationwide Noncompete
The Delaware Supreme Court reversed a Chancery Court ruling that dismissed an 18‑month, nationwide noncompete in Payscale Inc. v. Norman. The high court held that well‑pleaded allegations linking the covenant’s scope and duration to legitimate business interests can survive a...
Future Equity, Present Value: The Law and Economics of SAFEs
The Simple Agreement for Future Equity (SAFE) was introduced by Y Combinator in 2013 to replace convertible notes, stripping away debt features while preserving the ability to convert into preferred stock later. SAFEs quickly became the standard for seed‑stage financing...
Finite Ventures
The article introduces "finite ventures" – business entities with a predefined lifespan – as an underused corporate‑governance tool. It shows that limited‑life structures are already common in private‑equity funds, venture‑capital funds, SPACs, and historic enterprises like the East India companies....
From “Dexit” To “Dentry”: Merger Agreements Amid the Debate Over Where to Incorporate
The debate over "Dexit" – corporations leaving Delaware – appears to be reversing as Delaware retains dominance for merger agreement law. While many firms consider Nevada or Texas for incorporation, most public‑company deals still choose Delaware contract law and its...
Davis Polk Discusses SEC’s Application of Securities Laws to Crypto
The SEC released a commission‑level interpretive release, jointly endorsed by the CFTC, that outlines when federal securities laws apply to crypto assets. It introduces a five‑category taxonomy—digital commodities, collectibles, tools, stablecoins, and digital securities—and clarifies that non‑security tokens can still...
Are Bidder-Initiated Takeovers Opportunistic?
The authors test whether bidder‑initiated takeovers exploit private information to overpay with inflated shares, contrasting that view with a rational payment‑design hypothesis. Analyzing 2,968 U.S. public acquisitions from 2000‑2020, they find bidders launch only half of deals and stock financing...
How Australia’s Financial Accountability Regime Aims to Strengthen Corporate Accountability
Australia’s Financial Accountability Regime (FAR) expands corporate liability beyond boards, targeting senior managers across banks, insurers and pension funds that represent roughly one‑third of the S&P/ASX 50 market cap. The regime imposes statutory duties of honesty, integrity, due care and...
Rethinking Private Ordering: The Financial Disclosure Quandary
The SEC has delegated full rulemaking authority over U.S. financial disclosure to the private‑sector Financial Accounting Standards Board (FASB), creating a full‑delegation private‑ordering model. This arrangement places standard‑setting power in the hands of accountants who also must comply with the...
Sullivan & Cromwell Discusses FDIC Rescission of Policy Statement Limiting Participation of Private Investors in Failed-Bank Acquisitions
On March 19, the FDIC rescinded its 2009 Statement of Policy that limited private‑equity participation in failed‑bank acquisitions, aiming to broaden the pool of bidders and reduce resolution costs. The move follows a pilot program that pre‑qualifies nonbanks for asset...
How Legal Systems Can Avoid the Pitfalls of Mass Arbitration
In early 2020 a San Francisco judge forced DoorDash to honor its own arbitration clause after more than 5,000 drivers filed individual demands, spending over $1 million in fees while the company balked at $12 million in administrative costs. The case illustrates how...
Davis Polk Discusses Federal Banking Agency Guidance on Capital Treatment of Tokenized Securities
The Office of the Comptroller of the Currency, the Federal Reserve Board and the FDIC issued FAQs clarifying that tokenized securities receive the same capital treatment as their traditional counterparts only when they confer identical legal rights. The guidance defines...
Fairness and the SEC’s Competing Regulatory Paradigms
The SEC’s recent rulemaking has come under heightened scrutiny for relying on fairness arguments without solid empirical evidence, especially in its cost‑benefit analyses. Critics focus on the Alternative Uptick Rule, a short‑selling restriction triggered by a 10% daily price drop,...
Davis Polk Discusses DOJ Self-Disclosure Policy for Criminal Cases
On March 10, 2026 the Department of Justice released its first department‑wide corporate enforcement policy for criminal cases, offering companies a declination—no fines or monitors—if they voluntarily self‑disclose, fully cooperate, and remediate without aggravating circumstances. The policy also defines a...
How Antitrust Law Is Taking on Big Oil
Michigan Attorney General Dana Nessel filed a landmark antitrust lawsuit in January 2026 accusing major fossil‑fuel companies of colluding to suppress electric‑vehicle adoption and renewable heating solutions. The complaint pivots from traditional climate‑liability claims to the Sherman Act and Michigan...
What Do Courts Mean by “Corporate Democracy”?
The forthcoming article surveys more than 250 judicial opinions that invoke the phrase “corporate democracy,” revealing that courts consistently treat the concept as a narrow, procedural construct. Courts focus on two core principles: fair, competitive director elections and limited shareholder...
Paul Weiss Discusses Surveillance Pricing and Algorithmic Pricing
Surveillance pricing—using personal data to set individualized prices—is drawing heightened scrutiny from state regulators. New York’s Section 349‑a now mandates a clear disclosure when algorithms rely on consumer data, while California’s proposed AB 2564 would outright ban the practice and impose...
How Reverse Breakup Fees Can Affect Antitrust Approval
In early 2026, Paramount acquired Warner Bros. Discovery by offering a $7 billion reverse breakup fee that would be paid if antitrust regulators blocked the merger. Reverse breakup fees—buyer‑paid penalties for failed deals—have become common, appearing in high‑profile transactions such as...
Davis Polk Discusses Agency Guidance on Capital Treatment of Tokenized Securities
The OCC, Federal Reserve and FDIC released FAQs clarifying that tokenized securities that confer identical legal rights to their paper counterparts are treated the same under U.S. capital rules. This "eligible tokenized security" designation means the same risk weights, haircuts...
How Moelis’ Void/Voidable Distinction May Affect Advance Notice Bylaw Challenges
The Delaware Supreme Court in *Moelis & Company v. West Palm Beach Firefighters’ Pension Fund* clarified that corporate provisions that could be remedied through a charter amendment are “voidable,” not “void,” thereby allowing equitable defenses such as laches. This nuanced...
Liability Management’s Limited Runway: Corporate Restructuring Today
Recent research on coercive, non‑pro rata liability management exercises (LMEs) shows they provide only a brief, fragile runway for distressed firms. Within a year, fewer than half avoid a second default, and after two years just 22 % remain out of...
The Role of Independent Advisers in Issuer Governance and IPO Pricing
Companies planning IPOs increasingly hire independent advisers to oversee underwriting and pricing. A new working paper covering U.S. and European IPOs from 2010‑2023 finds that adviser involvement correlates with lower first‑day returns and tighter offer‑price adjustments, without affecting underwriting spreads...
John C. Coffee, Jr.: Event Contracts and Prediction Markets
Legal scholar John C. Coffee highlights how prediction‑market platforms like Polymarket and CFTC‑regulated Kalshi have allowed traders to profit from bets on U.S. military action and leadership changes in Iran. The Commodity Futures Trading Commission (CFTC) possesses authority under Rule 40.11...
Why Corporate Charters?
The essay challenges the continued reliance on publicly filed corporate charters, especially in Delaware where retrieval is costly and slow. It traces charter evolution from 19th‑century incorporation formalities to today’s streamlined but opaque system. The author argues that charters serve...
Why the MM Theorem Is Not a Special Case of the Coase Theorem
A new paper argues that the Modigliani‑Miller (MM) theorem and the Coase theorem are conceptually distinct and neither is a special case of the other. The authors highlight that MM relies on strong‑form market efficiency, no taxes and fixed investment,...
What Start-Up Lawyers Should Know About Bankruptcy
A forthcoming book chapter maps the bankruptcy considerations that start‑up lawyers must weigh for social enterprises. It introduces a “Mission, Form, Fundraising, Growth, Downturn” framework to help companies preserve purpose during financial distress. The author highlights how corporate form, fiduciary...
Latham & Watkins Discusses the FCA’s Enforcement Strategy
The FCA has moved to a more selective enforcement model, aiming for “impactful deterrence” by concentrating on cases likely to succeed quickly. In the first half of 2025 it opened 23 new operations, with a notable emphasis on senior‑manager accountability...
Banking, Technology, and Instability
The article warns that the rapid rise of banking‑as‑a‑service (BaaS) is reshaping the traditional bank‑IT outsourcing model by having fintech firms outsource core banking functions to partner banks. While BaaS promises faster, cheaper digital experiences, it operates in a regulatory...
Cleary Gottlieb Discusses Significant Developments in DOJ Enforcement Priorities
In 2025 the DOJ Criminal Division overhauled its white‑collar enforcement strategy, issuing a White Collar Enforcement Plan that identifies ten high‑impact priority areas—from government fraud and customs evasion to digital‑asset crime. The Department also revised the Corporate Enforcement and Voluntary...
The Pros and Cons of IPOs and SPAC Mergers
The article examines whether fast‑growing firms should go public via a traditional IPO or a SPAC merger, emphasizing the role of forward‑looking statements. SPAC deals historically allow more detailed projections, which can attract both sophisticated and unsophisticated investors. The SEC’s...