More good news for companies. The California Supreme Court decided a case late last month – EpicentRx, Inc. v. Superior Court – that gives more comfort about forum selection clauses. As described in this Gibson Dunn memo, the case centered on the enforceability of a company’s mandatory forum selection clauses in its charter and bylaws. This excerpt summarizes the holding:
The California Supreme Court unanimously reaffirmed that forum-selection clauses are presumptively enforceable and rejected the argument that courts may refuse to enforce them when they would deprive plaintiffs of the right to a jury trial.
The memo explains that this decision may make parallel litigation less likely – and shares these takeaways:
• The Court explained that forum-selection clauses are presumptively enforceable, but made clear that there can be reasons of public policy to refuse to enforce them. The Court left for another day the question what those public-policy grounds for refusing enforcement might be; it decided only that the loss of a jury-trial right alone is not enough to invalidate a forum-selection clause.
• The Court suggested that the fundamental nature of a policy may be revealed by the Legislature’s inclusion of an antiwaiver provision in a statute. If a statute itself makes clear that the rights it conveys cannot be contracted away, the forum-selection clause may not be enforceable.
• The combination of forum-selection clauses and the perception that California law is more favorable to plaintiffs in certain types of cases has often resulted in parallel litigation, with one party suing in the forum chosen in an agreement and the other party suing in California. The Court’s decision may discourage the filing of California complaints where the only policy supposedly standing in the way of enforcing a forum-selection clause is the potential loss of the right to a jury trial.
• In cases where plaintiffs continue to sue in California notwithstanding a forum-selection clause pointing to another state, defendants may continue (1) filing motions to dismiss on grounds of forum non conveniens and (if unsuccessful) petitions for a writ of mandate challenging orders refusing to enforce forum-selection clauses; and (2) filing and litigating responsive suits in the forum chosen by the parties. In those cases, the parties will race in different jurisdictions to a final judgment that may have preclusive effect in the other case.
I was a little surprised to read in this recent NYT DealBook newsletter that of the 59 companies that went public in the U.S. last quarter, 41 of them were SPACs – according to data from S&P Global. I blogged last month that the SPAC/de-SPAC route has been useful for digital asset treasury companies, but these stats show there may be room in the tent for other types of companies as well. This Dealmaker newsletter from The Information (sign-up required) points to cloud providers and defense tech firms as potential de-SPAC candidates.
Meanwhile, this SPAC Insider article says that part of the reason for the SPAC resurgence is the “SPAC-truism” that they tend to thrive when the general IPO market is also improving. Additionally, it attributes this year’s first-half stats to the view that SPACs offer an attractive middle-of-the-road approach for small and mid-cap companies. Here’s more detail:
While SPACs have enjoyed two strong quarters of IPO issuance, Traditional IPOs have lagged that momentum. However, not for long. May and June saw eToro, Circle, and Chime IPO use the traditional route to great success. Interestingly, two of those deals, eToro and Circle, were previously SPAC combination companies. However, the previous administration severely curtailed any crypto-related deals leading to both of these combinations becoming terminated SPACs.
Nonetheless, going the traditional IPO route was the shot in the arm the IPO market needed. As a result, the window is opening only for large, well established companies. On the other hand, the Traditional IPO has also become the provenance of micro and nano-cap companies, which continue to see strong numbers opt for this route as well. For the small and mid-cap companies sandwiched in between these two IPO sizes, perhaps the SPAC route provides a viable option.
However, it should be noted that tariff announcements starting in April significantly curtailed all traditional IPO activity. As a result, SPACs are currently accounting for a larger share of the overall IPO market than we’ve seen in recent quarters. In fact, in Q1-2025, SPACs accounted for 26% of all IPOs, whether that was via Traditional or SPAC route. As of the end of Q2-2025, that percentage is now 39%. However, it is anticipated there should be increased traditional IPO activity in Q3 and the percentage comprised by SPACs should come down to a more normalized level.
It seems like every day there is either a boom or bust predicted for IPOs, so we will stay tuned on how this all shakes out. While I’m not advocating for one path or another here, part of any securities lawyer’s “IPO readiness toolkit” should be understanding the different options and how they might be a fit for different clients and different market conditions. Meredith had shared potential benefits of SPACs a few months ago. And we’ve shared variousthoughts over the past year about being ready to hit the ground running!
Earlier this week, the SEC shared a bit of good news for companies considering a public offering this fall. Its first filing fee rate advisory for the 2026 fiscal year says:
The fees that public companies and other issuers pay to register their securities with the Commission will decrease from $153.10 per million dollars to $138.10 per million dollars, effective October 1.
The new fee rate will be applicable to the registration of securities under Section 6(b) of the Securities Act of 1933, the repurchase of securities under Section 13(e) of the Securities Exchange Act of 1934, and proxy solicitations and specified tender offers under Section 14(g) of the Securities Exchange Act of 1934.
This Wilson Sonsini blog links to helpful instructions from the EDGAR Filer Manual – and gives a couple of practical implementation reminders:
From and after October 1, 2025, any fee calculation materials will need to be updated to reflect this new fee rate including, for example, any materials (e.g., Excel worksheets) used to calculate the fee amount for registering the offer and sale of additional shares on a Form S-8 or of company securities for a follow-on offering on a Form S-3.
This year’s annual fee rate adjustment represents the first decrease since 2021. Keep in mind, the Commission doesn’t set the fees arbitrarily. The announcement shares this rationale for the decrease (for even more detail, see the SEC’s Order):
The securities laws require the Commission to make annual adjustments to the rates for fees paid under Section 6(b) of the Securities Act of 1933, which also adjusts the annual fee rates under Sections 13(e) and 14(g) of the Securities Exchange Act of 1934 as well as Rule 24f-2 under the Investment Company Act of 1940. The Commission must set rates for the fees paid under Section 6(b) to levels that the Commission projects will generate collections equal to annual statutory target amounts.
The Commission’s projections are calculated using a methodology developed in consultation with the Congressional Budget Office and the Office of Management and Budget. The Commission determined the statutory target amount for fiscal year 2026 to be $887,800,554 by adjusting the fiscal year 2025 target collection amount of $864,721,147 for the rate of inflation.
The July-August issue of the Deal Lawyers newsletter was just sent to the printer. It is also available online to members of DealLawyers.com who subscribe to the electronic format. This issue includes the following articles:
– Long Live the Term Sheet — When Term Sheet Provisions Survive the Execution of Definitive Agreements
– Termination Fees: Breaking Up Usually Comes with a Price
– M&A Due Diligence: What You Miss Can Cost You
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 info@ccrcorp.com or call us at 800-737-1271.
Yesterday, I shared a couple of reasons why the distinction between alleged omissions versus alleged misleading statements is an important one for securities litigation – and therefore should also be an important concept for disclosure lawyers to understand at the front end. One way this issue can arise in practice is when a company is considering whether to provide earnings guidance – and if so, how precisely.
As Meredith blogged earlier this year, some companies ceased providing guidance during the early stages of this year’s tariff announcements – but as time went on, the more common practice shifted to modifying the way in which guidance was presented, with very few companies precisely quantifying the expected impact of tariffs.
This Woodruff Sawyer blog from Lenin Lopez points out that this builds on a trend that began during pandemic times:
It’s important to note that during and after the COVID-19 era, companies across industries chose to resist the pressure to guide precisely. Instead, many now provide narrative commentary or broad ranges—an approach better suited to the current operating environment, which has been and continues to be characterized by evolving regulatory and political dynamics, longer commercialization runways, and so much more.
As an example, we have seen life science companies increasingly issue milestone-driven updates tied to clinical trials or US Food and Drug Administration (FDA) engagement, rather than revenue forecasts. Artificial intelligence and semiconductor companies, meanwhile, may offer qualitative guidance reflecting customer demand and capacity trends, rather than committing to specific quarterly bookings or earnings.
This pivot to a more cautious approach may be attributed, in part, to some companies getting punished by the market after guidance surprises that led to stock price drops, and plaintiffs’ firms filing securities class action lawsuits as a result.
Lenin shares a couple of striking data points to emphasize that a significant portion of securities class action suits follow a company’s lowering or withdrawal of guidance. He points out that projections that missed the mark can also be fodder for government enforcement actions, especially if the SEC is prioritizing “fraud.” Lenin also provides a few best practices to balance demands of “the Street” with the risks of litigation and enforcement, including suggested responses to help maintain discipline in analyst Q&As and recommendations for modeling risks that could affect projections. Check out his blog for more detail!
For additional resources on this topic, members also can visit our “Earnings Guidance” Practice Area. If you do not have access to the Practice Areas and all of the other practical guidance that is available here on TheCorporateCounsel.net, try a no-risk trial now. Our “100-Day Promise” guarantees that during the first 100 days as an activated member, you may cancel for any reason and receive a full refund. If you need assistance, send us an email at info@ccrcorp.com – or call us at 800.737.1271.
With the President hyping it up on social media that the government’s acquisition of Intel stock will not be the last we see of its equity stake in Corporate America (see this Reuters article and this WSJ article about remarks from Kevin Hassett, the National Economic Council director), all eyes are on the first few companies who are striking deals. Yesterday, Intel filed this Form 8-K to disclose details of its agreement with the Department of Commerce – through which the US Government is becoming the company’s largest stockholder, with a 9.9% interest.
In addition to providing a description of the transaction, which I’m sure many folks are reading with interest, the 8-K updates the Company’s previously disclosed risk factors to reflect the deal’s conditions and impact. Here are a few that jumped out from the Item 8.01 disclosure:
•The transactions are dilutive to existing stockholders. The issuance of shares of common stock to the US Government at a discount to the current market price is dilutive to existing stockholders, and stockholders may suffer significant additional dilution if the conditions to the Warrant are triggered and the Warrant are exercised.
•The US Government’s equity position in the Company reduces the voting and other governance rights of stockholders and may limit potential future transactions that may be beneficial to stockholders. The transactions contemplated by the Purchase Agreement may result in the US Government becoming the Company’s largest stockholder. The US Government’s interests in the Company may not be the same as those of other stockholders. The Purchase Agreement requires the US Government to vote its shares of common stock as recommended by the Company’s board of directors, subject to applicable law and exceptions to protect the US Government’s interests. This will reduce the voting influence of other stockholders with respect to the selection of directors of the Company and proposals voted on by stockholders. The existence of a significant US Government equity interest in the Company, the voting of such shares either as directed by the Company’s board of directors or the US Government, and the US Government’s substantial additional powers with respect to the laws and regulations impacting the Company, may substantially limit the Company’s ability to pursue potential future strategic transactions that may be beneficial to stockholders, including by potentially limiting the willingness of other third parties to engage in such potential strategic transactions with the Company.
•The Company’s non-US business may be adversely impacted by the US Government being a significant stockholder. Sales outside the US accounted for 76% of the Company’s revenue for the fiscal year ended December 28, 2024. Having the US Government as a significant stockholder of the Company could subject the Company to additional regulations, obligations or restrictions, such as foreign subsidy laws or otherwise, in other countries.
As this NYT article notes, the government isn’t acting like a traditional hedge fund activist in the arrangements it has struck to-date – and the typical playbook doesn’t apply. One wrinkle is considering how director duties play out. This 2017 article discusses director duties in the context of the government ownership interests that resulted from TARP.
Public communications & disclosure may also need extra thought. Outside of its SEC filings, Intel is of course praising the deal, and its stock rose the day the deal was announced. While it’s not a novel concept to be enthused about a deal while also having to warn investors of the downsides, it’s less common to include quotes from other companies in the press release. And companies may need to take into account not only the threat of securities litigation from traditional stockholders, but also the pros & cons of this new flavor of “government backing” – and how their comments (or lack of comments) might impact the company’s ranking on the loyalty list.
They say that “good things come to those who wait.” I sure hope that’s the case when it comes to getting a Director in place for the SEC’s Division of Corporation Finance!
In an informal, anecdotal poll, nobody I talked to could remember it taking this long to get someone into the position. For the last two administration changes, the announcements landed in June of 2021 (Renee Jones) and May of 2017 (Bill Hinman) – but there are lots of factors that make things different this time around.
Last week, the SEC named a new Director for the Division of Enforcement, so maybe we’ll also hear soon about Corp Fin. Until then, it is good to know that Cicely LaMothe continues to serve well as Acting Director. And despite the other common saying about waiting – “a watched pot never boils” – I’ll continue to check the SEC’s newsroom each day…
You might recall that in the Macquarie case last year, SCOTUS said that a company’s “pure omission” to disclose information concerning known trends required by Item 303 of Regulation S-K could not serve as the basis for a private securities fraud claim. This was a big win for companies. But as John cautioned when the case came down, plaintiffs could potentially get creative with casting disclosures as “misleading half-truths” to get around the Macquarie limitation.
As a non-litigator, I had not fully appreciated how this plays out procedurally. At the class certification stage, plaintiffs still want to show a case involves omissions, because in omissions-based class certifications, the plaintiffs don’t have to prove reliance and resulting damages. So, according to this Sullivan & Cromwell memo, it is more good news for companies that the 6th Circuit Court of Appeals recently narrowed the path to class certification for “mixed” cases that allege both omissions and misrepresentation.
In In re: FirstEnergy Corp Securities Litigation, the court held that plaintiffs have to show that the case “primarily” involved omissions in order to get the benefit of the easier certification standard. The court also articulated a narrow 4-part test to determine whether statements are “omissions” and whether the standard is met. Among other things, it also said that when a company doesn’t disclose misconduct but makes generic and aspirational statements about its ethics and governance, that’ll be considered a misrepresentation – which makes it harder for the class to be certified. The S&C memo explains what the case as a whole means for companies:
Defendants in securities fraud actions should carefully scrutinize whether a complaint truly alleges omissions under the factors the Sixth Circuit identified. Indeed, in light of the Supreme Court’s holding in Macquarie Infrastructure Corp. v. Moab Partners, L.P. that “pure omissions” are not cognizable under Section 10(b) of the Exchange Act and that plaintiffs instead must identify a statement that is false or misleading,[16] it is not clear how, if at all, the Affiliated Ute presumption could ever apply.
The decision also provides a critical defense in so-called event-driven securities litigation. In such cases, plaintiffs often try to transform any negative company event (such as a data breach) into securities fraud by pointing to generic statements touching on the subject of that negative event (such as committing to protect client data). Following the Supreme Court’s 2021 decision for S&C client Goldman Sachs in Goldman Sachs Group, Inc. v. Arkansas Teacher Retirement System,[17] which clarified that the “generic nature of a misrepresentation” is “important evidence of a lack of price impact” under the Basic presumption,[18] plaintiffs have tried to seek shelter under the Affiliated Ute presumption in event-driven cases. The Sixth Circuit’s decision cuts off that path.
The plaintiffs in this case will get another bite at the apple to move forward under the “misrepresentation” class certification standard – but the S&C memo points out that in several recent cases, defendants have succeeded in rebutting the Basic presumption by showing an absence of price impact. In other words, they’ve showed that the alleged misrepresentations did not actually impact the market price of the stock.
All that said, you do still need to think about “known trends” and potential “omissions” allegations when you’re drafting disclosure. As John blogged last year, the Macquarie decision didn’t affect the SEC’s ability to bring an enforcement action, and the class certification piece obviously doesn’t apply in that context either.
When the DOJ resumed foreign bribery investigations and released updated FCPA Enforcement Guidelines, the narrowed focus of enforcement on “matters that relate to U.S. strategic interests” caused the DOJ to close “nearly half of its foreign-bribery investigations to align with new guidelines.” Earlier this month, the DOJ unsealed its first FCPA enforcement action and issued its first declination since resuming enforcement. The updated guidelines directed FCPA investigations and enforcement actions to focus on a non-exhaustive list of four factors.
This WilmerHale alert notes that the “conduct involved in the indictment and in the declination does not appear to squarely fit into the four named factors, suggesting that the FCPA Unit will not be strictly confined by these factors in practice.” It describes the circumstances surrounding the indictment and the declination and then shares key takeaways for companies, a few of which are below:
– Given the DOJ’s stated prioritization of cartels and TCOs, the recent indictment may be an indication that conduct in Mexico and elsewhere in Latin America will receive greater scrutiny by U.S. law enforcement authorities. Companies should ensure that appropriate compliance resources are devoted to their activities in the region.
– Interestingly, there is no explicit indication in the indictment that the relevant companies were competing with U.S. companies or that U.S. companies were harmed in any way, despite the June Guidelines’ emphasis on limiting undue burdens on American companies that operate abroad. And, as noted above, any alleged connections to cartels seem unrelated to the conduct at issue.
– Similarly, the declination bolsters the conclusion that the DOJ will continue to pursue enforcement actions for conduct that falls outside the factors outlined in the June Guidelines.
– Finally, the declination demonstrates that the DOJ will continue to issue declinations under the CEP for companies that self-disclose potential FCPA violations, fully cooperate, remediate and disgorge profits relating to the improper conduct.
When it comes to resolutions for personal improvement, it is a toss-up for me whether I’m most ambitious around New Year’s Day or Labor Day. I’ve never really shaken that “back to school” feeling of September being the start of a “new year” – with all of the new & improved routines that entails. With that in mind, the latest episode of the “Mentorship Matters with Dave & Liz” podcast is very well-timed for anyone who is recommitting to “business development” improvements this fall.
In it, Dave and I had a helpful conversation with Stefanie Marrone – who is a Client Development Director at Goodwin and runs The Social Media Butterfly blog – about “building your network & personal brand.” Let me tell you, I have a lot of room for improvement on this topic! But Stefanie breaks it down to be fun and manageable. In this 37-minute episode, we discussed:
1. How mentors have shaped Stefanie’s career, including her views on building a personal brand and the power of social media.
2. Why it is important for attorneys to focus on building a personal brand, and key brand-building steps to take at any stage of their career.
3. How to use LinkedIn and other forms of social media to build a personal brand and develop business as an attorney.
4. Common mistakes that lawyers make on LinkedIn, and how can they fix those mistakes to become “power users.”
5. Steps young lawyers can take to build their professional network in a way that will ultimately be useful to them for business development as a more senior lawyer.
6. How Stefanie’s LinkedIn presence has changed her life and career, and key lessons we can learn from her success with social media.
Thank you to everyone who has been listening to the podcast and sending feedback, and thanks to the terrific guests who have joined us so far! If you have a topic that your think we should cover or guest who you think would be great for the podcast, feel free to contact Dave or me by LinkedIn or email.
Also remember that members can listen to all of the podcasts from TheCorporateCounsel.net team & friends on our archives page! We’ve posted over two dozen episodes this year – and there are a lot of timeless classics to revisit from prior years as well.
