Business

Old Statute, New Tricks, and the Spirit of the Law

By: Santiago Herrera*| Guest Writer

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US Securities and Exchange Commission headquarters in Washington, D.C. The Trust Indenture Act of 1939 (“TIA”) is administered by the Securities and Exchange Commission. By D Ramey Logan – Own work, CC BY 4.0, https://commons.wikimedia.org/w/index.php?curid=36799399

The Trust Indenture Act (TIA) is a depression-era statute that was passed to protect retail investors and minority bondholders from majority bondholders and insiders who occasionally operated in collusion with the issuer to the detriment of minority bondholders and outsiders.

This is the purpose or spirit of the TIA: protecting the little guy.  Minority bondholders, however, are not always “little guys” in today’s financial markets.  Far from it.  Sometimes they are specialized distressed-debt funds or event-driven funds which buy minority positions—sometimes at a deep discount—to exert pressure on an anticipated debt restructuring, hoping to drive the price of the minority position up, and thus turn a profit on the investment. Continue reading »

Credit Rating Agencies Dodge Investors’ Lawsuits

By: Brad Fleming*| Guest Writer

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The “Big Three” credit rating agencies (CRAs)—Moody’s, Standard and Poor’s (S&P), and Fitch Ratings—have come under intense scrutiny in the wake of the global financial crisis.

Meant to provide investors and regulators with credit ratings which weigh the riskiness of various kinds of securities, companies, and governments, CRAs have instead exacerbated the financial crisis by skewing assessments to please their clients instead of providing accurate credit ratings.  In turn, these reckless credit ratings helped the financial system undertake far more risk than it could safely handle. Continue reading »

Coal Titans’ Bankruptcies May Cost Taxpayers

By: Rachel Raimondi*| Guest Writer 

https://upload.wikimedia.org/wikipedia/commons/0/05/Coal_mine_Wyoming.jpgAs the coal industry faces declining demand and struggles to recover from several “ill-timed multibillion-dollar acquisitions,” it becomes increasingly likely that taxpayers will be on the hook for exorbitant environmental cleanup costs.

Continue reading »

Driving With No Hands: How Tesla’s Autonomous Vehicle System Escapes Liability

By: Khalif Timberlake*| Guest Writer 

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As driver assistant technologies have developed, liability from vehicle accidents has increasingly become a topic of discussion. Exactly who should be responsible when these technologies fail and a person or property is damaged? Tesla Motors is widely considered one of the leading companies pioneering the trail of autonomous vehicle operations. Its system, named “Autopilot” can control steering, braking, and acceleration when activated. It uses a combination of cameras and sensors around the vehicle to determine its proximity to other objects and to map the road around the vehicle. Tesla vehicle owners have posted numerous videos online demonstrating showing Autopilot in use. Continue reading »

Arbitration: A Double-Edged Sword for Start-Up Employees

By: Michael Fleming*| Guest Writer 

https://pixabay.com/en/business-signature-contract-962364/For many, start-ups represent an opportunity to become a part of the next Uber, Venmo, Tinder, or to the most auspicious, Apple or Google.  Employees are willing to work longer than normal hours not only to be a part of something bigger, but also because they are rewarded with perks like daily catered lunches, company sponsored happy hours, and lavish trips.  In 2013, over 47% of college graduates were working for companies who employed less than 100 employees. A start-up’s mission goal, the culture, the pay scale, and the perks are simply too tempting for a college graduate to turn down. Continue reading »

UNIT APPRECIATION RIGHTS When Cash Does Not Equal Ownership

By: Khalif Timberlake*| Guest Writer 

https://media.licdn.com/mpr/mpr/p/8/005/0b7/185/175f506.jpgAs publicly traded companies (“PTC”) continue to grow both in revenue and profits, non-publicly traded companies (“NPTC”) have found themselves competing for employees. For many employees, an important factor when choosing where to work is compensation. One form of compensation in which PTC have historically prioritized are stock grants and also stock options. In essence, PTC either award stock or present a favorable price at which to buy stock in the company for a particular employee. Largely reserved for key executive employees, such compensation increasingly became an attractive incentive for employees. The benefits also favored companies, for now the employees had an additional incentive to increase the value of the company. The utilization of stock options and grants has incentivized competing employers within the same markets to offer alternative employee packages to maintain and attract desired employees. This usually resulted in an increase in other forms of compensation areas such as base salary, vacation time, insurance benefits etc. Continue reading »

Beer Serious: 500 Years of Beer Regulation

By: Libby Casale*| Guest Writer 

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There is a German word, bierernst, which literally translates to “beer serious.”  And in Germany, beer is serious business.  Beer purity laws, known as Reinheitsgebot, govern what specifications beer must conform to in Germany.  The law is celebrating its 500th birthday this year.

Duke Wilhelm IV of Bavaria issued the regulation in 1516, and some regard it as the oldest currently valid consumer protection law in the world.  The law was aimed at quality in sixteenth century breweries.  Beer was a dietary staple, and breweries in the sixteenth century were not very hygienic.  Brewers often added questionable ingredients, such as wood shavings and roots to their beers.  The laws also helped protect consumers from high prices. Continue reading »

USA Binges Pokémon Go while World Waits

By: Rachel Raimondi*| Guest Writer 

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It’s beginning to look a lot like the ‘90s.

On July 6, Pokémon Go launched using smartphone cameras to create an “augmented reality” in which animated, mystical creatures originally introduced in 1996 are displayed in real-life settings like parks, offices and living rooms.  GPS puts players’ human avatars on a real map of their surroundings and encourages local exploration and exercise on the quest to “catch ‘em all.” Continue reading »

Insider Trading & Gambling Debts Taint Phil Mickelson

By: Dominic Interlicchia*| Guest Writer 

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On May 19, 2016, U.S. Attorney Preet Bharara announced insider trading charges against Billy Walters, a well known Las Vegas sports gambler, as well as insider trading charges against Tom Davis.  Davis is the former chairman of the board of Dean Foods, the largest provider of fresh milk in the United States.  Andrew Ceresney also announced Phil Mickelson as a relief defendant to repay the benefits he received from the stock deal as well as interest. Continue reading »

Episode II: The Cloud Wars

By: Rachel Raimondi*| Guest Writer 

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On June 13, Microsoft announced it would take over LinkedIn in a $26.2 billion cash deal; it’s biggest acquisition to date.  Microsoft plans to merge its “professional cloud” with LinkedIn’s “professional network,” to put users’ LinkedIn profiles at the center of standard Microsoft products like Outlook, Excel and Skype.

Additionally, Microsoft wants LinkedIn’s data about companies’ workers for use with its digital assistant, Cortana.  CEO Satya Nadella described the Cortana experience to investors, saying:

“Just imagine you’re walking into a meeting, and Cortana now wakes up and tells you about the people you’re meeting for the first time, but tells you all the things that you want to know before walking into meeting someone.” Continue reading »