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April 1, 2020Joseph T. McClure
A New Trend in Securities Fraud: Punishing People Who Do Bad Things
This article seeks to articulate a distinct view of federal securities law as it is increasingly used in non-traditional enforcement actions commenced to punish corporate bad behavior. This paper argues that these non-traditional enforcement mechanisms should be viewed with skepticism. This skepticism should not be misinterpreted as cynicism, as the author believes that these non-traditional enforcement actions are beneficial vehicles to accomplish the admirable governmental objective of “punishing people who do bad things.” However, the author recognizes that such use of securities law does not fall into a category of clearly defined criminal law and carries a significant risk of abuse. The author also recognizes the “admirable governmental objective” may be thwarted when it comes to private companies. Finally, the author is uneasy with the societal values conveyed when the government sanctions corporate misbehavior in the name of protecting shareholders from deception.
March 10, 2017Jerry Galvan
When is Equity Financing Appropriate and Available?
A question that often arises from emerging growth company clients is when to raise capital through the sale of its equity securities? At this point, the client has determined that it needs capital to accelerate its business and that traditional debt is either not available or desirable. These same clients generally have some revenue (or a path to revenue), but organic revenue growth will not keep pace with the client’s objectives.
March 10, 2017Carol Bavousett Mattick
When is Equity Financing Appropriate and Available - Another Take
In many ways, equity capital needs to come first. In other words, a client's business needs to result in a balance sheet that has some equity holders' equity. Assets need to exceed liabilities. Historically, a business would do this by making profits and re-investing them in its operations. However, in this paper, we are considering equity investment by outsiders, people other than founders.
March 4, 2016J. R. Morgan
Secondary Liability Under Federal and State Laws
In conclusion, Texas attorneys should look beyond TDRPC Rule 1.15(a)(1) to consider when they should withdraw from the representation of a client. While a private right of action is no longer a primary concern under federal law, federal government enforcement actions are a growing risk. The Texas Securities Act is not as likely to be a risk for attorneys operating in the normal course of offering legal services. However, other states' blue sky laws may be of much more concern for Texas attorneys with issuer clients based in other states or offering securities to potential investors in other states.