Monthly Archives: April 2024

April 30, 2024

DOJ Continues Efforts to Increase Self-Reporting of Misconduct

In mid-April, the DOJ launched a Pilot Program on Voluntary Self-Disclosure for Individuals — the latest in a string of sweeping DOJ policy changes aimed at encouraging voluntary disclosure of misconduct and holding the real “bad guys” accountable. We’ve previously covered those developments here, on and on Here are related DOJ announcements since early 2023, as a reminder:

– The voluntary self-disclosure policy for corporations
– The pilot program on compensation incentives and clawbacks
– The M&A voluntary self-disclosure safe harbor
– The pilot whistleblower rewards program

While aimed at individual reporting, this latest pilot program is still focused on corporate wrongdoing. This DLA Piper alert addresses what GCs and compliance officers need to know and notes that this can be “an additional tool at their disposal to encourage their companies to invest in the development of trusted reporting channels and other compliance controls that prevent and detect misconduct – and allow the company to address, remediate, and disclose the misconduct, if appropriate – before an individual is incentivized to make reports outside of the company.”

DOJ’s message to companies is clear: Investing in building a culture of trust that rewards ethical behavior, and penalizes those who break the rules, is paramount. Further, if employees do not trust that their concerns will be taken seriously, addressed appropriately, and valued by the company, they may bring their concerns elsewhere – and the individual, not the company, will receive the benefit of the disclosure. These “sticks” also require companies to ensure they carefully assess when it may be appropriate to avail themselves of the DOJ’s incentives to come forward before their employees do.

If an individual engaged in misconduct but discloses and cooperates, they may receive a Non-Prosecution Agreement if certain criteria, detailed in the alert, are met. CEOs & CFOs do not qualify, and the Pilot Program will initially only apply to disclosures involving certain types of criminal conduct involving corporations:

1. Violations by financial institutions, their insiders, or agents, including money laundering, anti-money laundering, registration of money transmitting businesses, fraud statutes, and fraud against or compliance with financial institution regulators
2. Violations related to the integrity of financial markets undertaken by financial institutions, investment advisors, or investment funds by or through public companies or private companies with 50 or more employees, or by any insiders or agents of such entities
3. Violations by or through public or private companies related to foreign corruption and bribery, including violations of the Foreign Corrupt Practices Act, Foreign Extortion Prevention Act, and money laundering statutes
4. Violations by or through public or private companies with 50 or more employees related to healthcare fraud or illegal healthcare kickbacks committed
5. Violations by or through public or private companies with 50 or more employees related to fraud against, or deception of, the US in connection with federal contracts, and
6. Violations committed by or through public or private companies related to the payment or bribes or kickbacks to domestic public officials.

The alert concludes with action items for companies to consider beginning with reviewing existing compliance policies and procedures.

We’re posting this and related resources in our “Compliance Programs” Practice Area.

Meredith Ervine 

April 30, 2024

Non-Competes: Chamber Challenges FTC Ban

The memos started rolling in last week as after the FTC approved an expansive ban on the use of non-competes, with limited exceptions. As expected, at the end of the week, the US Chamber of Commerce filed suit in the U.S. District Court for the Eastern District of Texas challenging the rule.

As reported by HR Dive, the lawsuit argues that the FTC lacks authority to issue substantive regulations regarding unfair methods of competition, invokes the “major questions” doctrine and claims the ban is impermissibly retroactive — since the rule largely renders existing non-competes unenforceable, with an exception for “senior executives” as defined in the rule. This Simpson Thacher alert describes the potential timing for a decision:

The Court overseeing the Chamber’s lawsuit has set a schedule that would permit the Court to issue an order on the merits of the Chamber’s legal challenge before the Rule’s effective date. Assuming no changes to the schedule, the Court could therefore declare the Rule unlawful before the rule comes into effect.

Stay tuned! We’re posting memos in our “Non-Compete Agreements” Practice Area.

Meredith Ervine 

April 30, 2024

March-April Issue of Deal Lawyers Newsletter

The March-April Issue of the Deal Lawyers newsletter was just posted and sent to the printer. This issue includes the following articles:

– Lessons From the Activision-Microsoft Merger
– Delaware Chancery’s Moelis II Decision Provides Cautionary Tale for Boards and Activists
– Sears and (the Limited Scope of) Controlling Stockholder Fiduciary Duties
– Delaware Chancery Reminds Us That Directors Generally May Not Share Confidential Information With Stockholders Who Nominated Them

The Deal Lawyers newsletter is always timely & topical – and something you can’t afford to be without to keep up with the rapid-fire developments in the world of M&A. If you don’t subscribe to Deal Lawyers, please email us at or call us at 800-737-1271.

– Meredith Ervine

April 29, 2024

Delaware: Tesla Asks “Should I Stay or Should I Go Now?”

“If I go, there will be trouble; if I stay, it will be double.” I’m not sure if the lyrics to the Clash song reflect the risk/reward analysis of redomestication of a Delaware corporation, but the Tesla board seems to have concluded that the trouble of changing Tesla’s state of incorporation to Texas is less than the trouble of having its affairs continue to be governed by Delaware law.

On the Proxy Season Blog, I recently shared that Tesla has filed its preliminary proxy statement, and it includes a proposal requesting that shareholders ratify Musk’s 2018 pay package that the Delaware Chancery Court ordered rescinded. The blog shares some interesting tidbits from the disclosure, including that even Tesla isn’t sure how this ratification will be treated under Delaware law.

Filed less than three months after Musk previewed moving Tesla’s state of incorporation on X, the proxy also includes a proposal for redomestication. It notes that Tesla’s “outside directors as well as management had previously explored the possibility of a redomestication (though without coming to a decision one way or the other),” but begins the detailed description of the work done by the board, the special committee and its advisors with the February 4 board meeting after Musk’s social media post. Here are some highlights of the process description:

– The special committee was comprised of one member who was not on the board at the time of the 2018 grant. A second member had stepped down after the committee’s authority was expanded to include consideration of whether Musk’s 2018 award should be ratified.

– It engaged four special advisors — outside counsel, Delaware counsel, a corporate law and governance expert and a financial advisor.

– From its formation on February 10 to its final approval meeting on April 16, the special committee held 16 meetings that took more than 26 total hours and engaged in work outside meetings for more than 200 hours.

– That work included interviews of the seven other directors and five members of management, a visit to Tesla’s headquarters by counsel, a conversation with the external auditor and reviews of reports from a governance expert & financial advisor, numerous legal decisions, letters from stockholders, and academic articles.

– The proxy justifies the tight turnaround by saying that the committee assessed the timeline with its counsel, determined that the proposal should be considered at Tesla’s annual meeting for greater shareholder participation, and felt it took the time it needed since the company agreed to the special committee’s request to move the date of the annual meeting by a month after “negotiation over various potential dates.”

Meredith Ervine 

April 29, 2024

Delaware: “Should You Stay or Should You Go Now?”

This Delaware question seems to be part of the current corporate zeitgeist — not just because of Musk. This Wilson Sonsini alert notes that a conversation has emerged recently about Delaware as the favored state of incorporation and that many clients have inquired about this. Clients cited the number of recent cases with unexpected results, a perception that Delaware judges have an increasingly suspicious attitude toward corporate players, that Delaware case law can pose particular challenges for companies with influential founders or stockholders and the active plaintiff’s bar.

The alert concludes with the expectation that Delaware is likely to remain popular after listing numerous reasons Delaware has been “a favored state of incorporation for over a century.” Those include:

– A talented, responsive, and knowledgeable judiciary.
– An up-to-date and carefully considered statute.
– Developed case law.
– A nimble and user-friendly Secretary of State’s Office.
– Delaware law’s flexibility.
– Delaware’s sophisticated bar and Delaware law as a known currency.

For us corporate folks, here’s more on the Delaware judiciary, some of which you probably know and some of which you may not:

The Court of Chancery […] consists of seven judges, increased from five judges in 2018 to handle the court’s ever-growing workload. There are no juries or punitive damages. The Delaware Superior Court is the other trial court in Delaware, with jurisdiction over business disputes that do not come within the ambit of the Court of Chancery—for example, many types of contract disputes involving claims for money damages. The five judges who serve on the Complex Commercial Litigation Division of the Delaware Superior Court are experienced and routinely decide business disputes quickly, and parties can elect to proceed without a jury trial.

The judges come from Delaware’s generally respected and sophisticated bar—and often its corporate bar. As a result, the judges are generally well versed or expert in corporate law from the moment they take the bench. In contrast to the approach of many other jurisdictions, Delaware judges are not elected and are instead appointed and vetted through a careful process: candidates apply to become judges; candidates are screened by Delaware’s Judicial Nominating Commission, which consists of Delaware lawyers and officials and makes recommendations to the Delaware governor; Delaware’s governors are known for carefully evaluating and selecting judges; and any judicial nominee selected by the governor must be confirmed by the Delaware Senate.  Delaware’s judges serve 12-year terms.

The Delaware courts also act quickly. […] There is a direct right of appeal from the trial courts to the Delaware Supreme Court and, in certain circumstances, appeals can be heard on an expedited basis in a matter of weeks or even days. Even in less exigent cases, the Delaware courts often hear cases in months rather than years.

The alert suggests that companies considering other states of incorporation carefully consider relevant counterpoints to their concerns about Delaware and, for other states, to understand the “substance of the corporate law” and the “landscape of their courts.” To that end, the alert discusses a non-exhaustive list of considerations for Texas, Nevada and California. Delaware corporations considering a reincorporation should also consider the Chancery Court’s decision in TripAdvisor (although that’s been granted interlocutory review).

Meredith Ervine 

April 29, 2024

SEC Small Business Capital Formation Advisory Committee to Discuss Crowdfunding

Late last week, the SEC announced that the Small Business Capital Formation Advisory Committee will meet next Monday, May 6. The public can watch the live meeting via webcast on

As the agenda notes, the Committee will discuss whether there are potential changes to Regulation Crowdfunding that could improve the exemption and hear from speaker USC Professor Melody Chang, PhD on the experiences of women and racial minority business owners who participated in Reg CF.

In the afternoon, following remarks from Valerie Szczepanik, Director of the SEC’s Office of Strategic Hub for Innovation and Financial Technology (FinHub), addressing the regulatory landscape for cryptocurrency and token offerings, committee members will consider how to encourage angel investments.

Meredith Ervine 

April 26, 2024

The (Almost) Heart-Healthy Securities Lawyer

A few years ago, I shared observations as I was heading out on parental leaves for my son and my daughter. Now, I’m gearing up for a different reason – thoracic surgery. Medical leaves are a reality for many, yet they’re rarely discussed openly. Here are my learnings in case they’re helpful to anyone else out there:

1. There is no perfect time. I know my career will endure a 6-week pause. That said, it’s tempting to try to wait for the “perfect time.” Right now is inconvenient because my practice has momentum, everything is going well, there are lots of events I want to attend and people I want to see. When it comes to things like this, there is never an ideal moment. But when it comes to your quality of life, you’ve got to play to win. Which brings me to…

2. Don’t neglect your health. Although this is a condition I’ve had my entire life, years of running and yoga helped me mask (but not eliminate) my symptoms. I had planned to just make do. But earlier this year, a friend’s health scare prompted me to revisit medical results that I’d brushed off, and to get a second opinion. Things were more severe than I realized. I’m facing surgery now on my own terms, ensuring a healthier future.

3. Medical issues are not a sign of weakness. I worried people would think less of me – or maybe not want to work with me? – if I wasn’t the picture of perfect health. This was the case even though I know I’ve never felt that way about others. In fact, some of the strongest and most admirable people I know are the ones who have been dealt a difficult hand in life with their physical circumstances. Strength does not mean having everything go your way. That’s just luck. Luck eventually runs out for everyone – and that’s a good thing! Because it gives us all empathy. Which is a reminder that…

4. My colleagues and clients are wonderful (and yours are too). I hate imposing on people and for various reasons, I was nervous about sharing my need to take leave. Come to find out, my colleagues at Fredrikson and CCRcorp have given me nothing but authentic support and resounding well-wishes. They are selflessly jumping in to ensure that the trains keep running and that clients will be well-supported during my absence. John even offered to take my parents to a baseball game when they are there with me in Cleveland for the procedure! (my dad loves the Guardians.) My clients also have been incredibly understanding and do not seem to be writing me off. If you are facing a similar situation, I think you will find this to be true as well.

5. Redefine “balance” and “success.” A lot of us have a hard time stepping away from work when deadlines are looming or when we’re working on something interesting. When I returned to private practice last year, many folks in our community shared thoughtful advice about how to find a better balance, which I very much appreciated, and which I’ve been using to plan my days and my overall approach. I used to operate on the assumption that things would shake out, on balance, if I worked overtime whenever the work was there and focused on “life” when there was a break in the action. That strategy served me very well early in my career and has helped me learn and grow, so I’m not saying it’s wrong. But “balance” looks different in these middle years, and “success” currently means building up a team to deliver great results. That’s all fine for now, and maybe in 10 years there will be another round of new meanings.

I (still) know I’m not alone on this journey of balancing life & lawyering. I’d welcome more emails to with any experiences & “lessons learned” that you want to share. I’m extremely grateful to John, Dave, Meredith, all of our CCRcorp HQ folks, and all of my Fredrikson colleagues, for being very good at what they do, and willing to handle some “extras” for the next month or two. Thank you also to my clients and friends for their patience with me! See you all soon.

Liz Dunshee

April 26, 2024

Women Governance Trailblazers: Maryrose Sylvester

In this 21-minute episode of the “Women Governance Trailblazers” podcast, Courtney Kamlet & I interviewed Maryrose Sylvester, who is an Independent Director at Vontier Corporation, Flex, Waste Management, and Harley-Davidson and previously served in executive and leadership roles at General Electric for over 30 years. We discussed:

1. Maryrose’s transition from the corporate world to the public company board world, and how she evaluates board service opportunities.

2. What traits are essential to bring to the boardroom.

3. Methods for staying informed as a director on the latest industry trends and the broader business environment.

4. The most valuable lessons Maryrose has learned from board service.
Advice for women who aspire to become directors.

5. Effective approaches to communicating and collaborating with fellow board members and with management teams.

6. How directors can measure and evaluate their own performance and impact as a board member.

7. What Maryrose thinks women in the corporate governance field can add to the current conversation on the societal role of companies.

To listen to any of our prior episodes of Women Governance Trailblazers, visit the podcast page on or use your favorite podcast app. If there are “women governance trailblazers” whose career paths and perspectives you’d like to hear more about, Courtney and I always appreciate recommendations! Shoot me an email at

Liz Dunshee

April 26, 2024

Women Governance Trailblazers: Cassidy Donohue

Normally I spread out these podcast blogs, but since AI is moving at the speed of light and I am going out on a brief medical leave, I don’t want this episode to become obsolete before you see it. Check out this 17-minute episode of “Women Governance Trailblazers” – Courtney Kamlet & I interviewed Cassidy Donohue, who is Product Manager at Troop. Previously, Cassidy served as a Research Analyst for Engine No. 1 and as Lead Researcher for Accountable: The Rise of Citizen Capitalism. We discussed:

1. Cassidy’s background and career path – and what drew her to the field of corporate governance.

2. How Troop is setting out to change proxy voting through technology, including how the tools differ from traditional proxy voting recommendations and voting reports.

3. How Troop ensures that recommendations are correct.

4. Communication suggestions for companies and their advisors as investment stewardship teams enhance their use of AI to analyze proxy statements and make voting decisions.

5. Cassidy’s predictions for the fields of corporate governance and asset stewardship.

6. What Cassidy thinks women in the corporate governance field can add to the current conversation on the societal role of companies.

To listen to any of our prior episodes of Women Governance Trailblazers, visit the podcast page on or use your favorite podcast app. If there are “women governance trailblazers” whose career paths and perspectives you’d like to hear more about, Courtney and I always appreciate recommendations! Shoot me an email at

Liz Dunshee

April 25, 2024

Fraud Report: Now’s No Time for Compliance Complacency

John blogged earlier this month about the governance implications of the DOJ’s fraud enforcement initiatives. A report issued last week by the U.S. Government Accountability Office signals that federal agencies’ focus on fraud is not going to diminish anytime soon. Here’s why:

No area of the federal government is immune to fraud. We estimated that the federal government could lose between $233 billion and $521 billion annually to fraud.

Given the scope of this problem, a government-wide approach is required to address it. The Office of Management and Budget, working with agencies and the oversight community, should develop guidance to improve fraud-related data—providing a more uniform approach to what data is collected and how.

Also, Treasury should identify methods to expand government-wide estimates of fraud—prioritizing higher-risk program areas.

The GAO made several recommendations and is tracking progress on its fraud risk management page.

When it comes to Artificial Intelligence, the report notes:

Artificial Intelligence Creates Opportunities for Improved Fraud Detection but Also for Fraud. We have previously reported that artificial intelligence has created opportunities for improved oversight and fraud detection. Artificial intelligence can use algorithms and models to reveal anomalous patterns, behaviors, and relationships—with speed, at scale, and in depth—that was not possible previously. Despite these opportunities, artificial intelligence can also pose new risks to agencies and others, such as by creating fake images to assist with developing falsified documentation or to create fake audio to assist in impersonation schemes.

This might be “food for thought” for companies that are considering their own AI risk profiles – and risk factor disclosures.

Liz Dunshee