June 14, 2016

Free Stock! Did T-Mobile Say “Free Stock”?

Free stock! As noted in this Wired article, loyal T-Mobile customer may be eligible for a share of free stock starting last Tuesday if they refer a new customer (two shares if they’ve been a customer for 5 years). Here’s T-Mobile’s prospectus for this “Stock Up Rewards Plan.”

Free stock as a marketing ploy for companies with loyal customer bases is not exactly new – a few existed even before the Internet (eg. Dr. Pepper did one in the early ’80s). But they are rare – and for good reason. These FAQs that I drafted long ago lay out some of the concerns (and here’s a WaPo article about potential tax issues – and an old WilmerHale memo about the SEC cracking down on freebie offerings).

A prime example of unexpected problems comes from the first online free stock offering, which was conducted by in April 1998. Reportedly, the company subsequently had difficulty locating the people who received free stock when it sought to conduct an exchange offer – primarily because the only contact information it had for many stockholders was e-mail addresses (many of which had changed and didn’t have forwarding information).

Interestingly, Loyal3 is helping to administer this freebie stock promotion for T-Mobile. As you might recall from this blog, Loyal3 is the entity that has been helping companies to create “Customer Stock Ownership Plans” – these are plans that run through on an app for your smart phone, tablet, etc. This is an alternative solution to giving away the stock for free…

Here’s other innovative stuff from the ’90s: Spring Street Brewing, Wit Beer (Wit Capital), tracking stock, David Bowie bonds, SOES bandits, online brokers and Pearl Jam!

XBRL: SEC Announces “Inline XBRL”

Yesterday, the SEC announced that it will allow companies to voluntarily file structured financial statement data in a format known as “Inline XBRL.” From what I gather from the SEC’s press release, this will enable filers to use XBRL in their HTML filings rather than be forced to file their XBRL as an exhibit to a filing. It’s supposed to reduce costs & improve the quality of filings…

Transcript: “Legal Opinions – The Hot Issues”

We have posted the transcript for our recent webcast: “Legal Opinions: The Hot Issues.” This was a great & highly informative program!

Broc Romanek