March 29, 2019

A New Addition to the Pantheon: Winklevoss Cap. Fund v. Shaw

I don’t know if law students still do this, but when I was in law school, there were certain volumes that we would pull from the library’s stacks, set down on their spines & watch automatically fall open to the page of a particularly well-read case. This wasn’t because the case in question involved issues of great legal interest – instead, it was because the case involved issues of great prurient or comedic interest (read the dissent).

Anyway, I think we may have a new addition to the pantheon from – of all places – the Delaware Chancery Court. Behold Winklevoss Capital Fund v. Shaw, (Del. Ch.; 3/19), a case that has touches of both prurience & comedy. It recounts the saga of America’s most unlikeable twins’ ill-fated investment in “Treats!” – “a print & digital magazine depicting nude and semi-nude photography of models and celebrities.” So, what could go wrong with an investment in online sleaze? It turns out that the answer is “plenty.”

While the opinion is far from pornographic, it will do nothing to enhance any remaining faith you might have in the future of humanity & you may hate yourself for reading it. In short, it’s kinda fun. Don’t take my word for it – Steven Davidoff Solomon (a.k.a. “The Deal Professor”) has been having a good time tweeting snippets from it.

Escheatment: “They’re Baaaack!”

Look, don’t shoot the messenger here, okay? But if you thought escheatment issues were in the rearview mirror after the courts slapped Delaware around for its thuggish aggressive approach to unclaimed property audits, it looks like you were mistaken. This Morris Nichols memo says that enforcement is back with a vengeance. Here’s the intro:

For those who thought the State of Delaware had gone out of the unclaimed property business—think again. After a 2017 overhaul of Delaware’s unclaimed property laws and an increased emphasis on voluntary compliance with those laws, Delaware is sending out dozens of “invitations” to companies to enter its’ Abandoned or Unclaimed Property Voluntary Disclosure Agreement Program (the “VDA Program”). Ignoring this invitation guarantees that a company will get audited by the state.

Delaware is also beginning to review companies’ reporting histories and their annual unclaimed property filings for accuracy and completeness and is strictly enforcing timelines and deadlines for companies under audit. All of this is a signal to Delaware companies that, while voluntary compliance is preferred by the state, audit—with assessed interest and penalties—is a very real consequence and an alternative that Delaware can and will pursue.

The memo highlights a number of reasons why companies might want to take advantage of Delaware’s VDA program – including the waiver of interest and penalties, and the fact that VDAs can be resolved more quickly than an audit & without involving other states.

Fast Act S-K Cleanup: A “Cheat Sheet”

If the 251-page adopting release for the SEC’s latest round of Fast Act S-K cleanup changes has you a bit befuddled, this recent Bass Berry blog may be just what you need. Not only does it summarize the changes, but it also includes a helpful “cheat sheet” in the form of a chart laying out the rules that have changed, the specific changes, & the reasons for them. Want more help getting your arms around the rule changes? We’re posting tons of memos in our “Disclosure Reform” Practice Area.

By the way, not everyone at the SEC is singing from the same hymnal when it comes to the new rules. Commission Jackson dissented from the SEC’s decision to adopt them, and issued a statement setting forth the reasons for his opposition.

John Jenkins