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SEC and DOJ Enforcement Actions Aim to Bring SPAC Market Back to Earth - 07.30.2021

What do space exploration, electric cars, and Lady Gaga’s music label have in common? All three were involved in SPAC transactions this year, and all three transactions caught the attention of Gary Gensler’s SEC. These three actions all show the SEC taking a more aggressive approach to regulation, which may result in significant penalties or the interruption of SPAC mergers, reaching even beyond the Earth’s orbit.

Will Justice Thomas Bring Consistency to Cannabis Regulation? - 07.28.2021

In recent years, the majority of states have enacted laws legalizing some form of marijuana use, with eighteen states and the District of Columbia allowing the recreational use of marijuana, and another eighteen states authorizing the use of marijuana for medicinal purposes.  The federal Controlled Substances Act (the “CSA”), however, continues to classify marijuana as a Schedule I controlled substance, criminalizing virtually all production, sale, and possession of marijuana...

Investors Are Entitled to Whistleblower Protection From the SEC - 07.27.2021

Earlier this month in “Companies Better Not Tread on Whistleblowers’ Right to Report,” I discussed the U.S. Securities and Exchange Commission’s action against Collector’s Coffee, Inc. and its CEO Mykalai Kontilai, and suggested that it might indicate the expanded reach of whistleblower protections under SEC Rule 21F-17(a). This week, a federal judge in New York issued an order in that case, (Securities and Exchange Commission v. Collector’s Coffee, Inc., No. 19 Civ. 4355 (VM)) confirming that Rule 21F-17(a) protects not only whistleblowing employees, but investors as well ...

Digital Art May Be Next In The SEC’s Crosshairs - 07.15.2021

Like many other things, art and collectibles have gone digital. This year has seen explosive growth for NFTs, with NFT sales for 2021 already exceeding $2.5 billion. With the growing market for NFTs comes innovation, most notably the emergence of f-NFTs (“fractional non-fungible tokens”).  Where financial innovation goes, the SEC is bound to follow. F-NFTs are no exception. Although perhaps not intending to rain on the creative parade, in March 2021 comments, SEC Commissioner Hester M. Peirce sounded a note of caution, warning creators of f-NFTs to be careful that they are not creating securities that would be subject to regulation ... 

Will CIC Services Open the Floodgates to Tax Challenges? - 07.14.2021

Under the Anti-Injunction Act, 26 U.S.C. § 7421(a), taxpayers are barred from bringing suits “for the purpose of restraining the assessment or collection of any tax.”  Accordingly, a taxpayer wishing to challenge a tax provision is generally required either to pay the tax and bring a suit seeking a refund in federal district court or dispute an assessment in Tax Court. In this article, “Will CIC Services Open the Floodgates to Tax Challenges,” we analyze the Supreme Court’s recent decision in CIC Services, LLC v. Internal Revenue Service, which unanimously rejected the government’s invocation of the Anti-Injunction Act to preclude a challenge to an IRS Notice requiring both taxpayers and their advisors to disclose information regarding micro-captive insurance transactions.

Companies Better Not Tread On Whistleblowers’ Right To Report - 07.09.2021

Guggenheim Securities, LLC recently was fined $208,912 by the Securities and Exchange Commission for its policies prohibiting employees from contacting regulators without prior approval from the company’s legal or compliance departments ...

Litigation Funding: What Is It? How Does It Work? Is It a Good Thing? - 07.08.2021

On Thursday, July 8th, 2021, Morvillo Abramowitz counsel Curtis B. Leitner and partner Christopher B. Harwood will take part in a webinar hosted by the Dartmouth Lawyers Association. The panel entitled, “Litigation Funding: What Is It? How Does It Work? Is It a Good Thing?,” will discuss this multi-billion dollar business which is transforming how law firms and clients manage legal risk.

 

For more information, please click here.

Congress Requires DOJ To Report on Deferred Prosecution Agreements - 07.08.2021

In the wake of the financial crisis of 2008, federal white-collar criminal enforcement faced harsh criticism.  One of the chief targets of critics was the corporate Deferred Prosecution Agreement (DPA), under which a company is charged with criminal wrongdoing but not required to enter a guilty plea.  In this article, “Congress Requires DOJ to Report on Deferred Prosecution Agreements,” we discuss the practical and policy implications of a little noticed new provision which signals Congress’s heightened interest in the use of DPAs as an enforcement tool.

Morvillo Abramowitz Partner Jeremy Temkin Quoted in The Wall Street Journal - 06.30.2021

On June 30, 2021, Morvillo Abramowitz partner Jeremy Temkin was mentioned in The Wall Street Journal in an article entitled, “Trump Organization and CFO Allen Weisselberg Indicted on Tax Charges.” The article discusses the first criminal allegations stemming from New York prosecutors' probe into the former president's business affairs will be made public Thursday in court.

To read more, please click here.

A Warning About ‘Upjohn’ Warnings: A Word of Caution for Individual Employees - 06.28.2021

When conducting an employee interview as part of an internal investigation, corporate counsel typically warns the employee that counsel represents the employer and not the employee—but what if corporate counsel does not provide such an Upjohn warning? In this article, we discuss the current state of the law as reflected in cases in which employees have challenged the use of statements made to corporate counsel, and observe that the remedy afforded to an employee who did not receive an Upjohn warning is often lacking.

SEC Upends Classification of SPAC-Issued Stock Warrants - 06.23.2021

As explained elsewhere, the Special-Purpose Acquisition Company (“SPAC”) has been the subject of significant market activity, with the use of SPACs skyrocketing for several months before recently falling back to Earth. Despite the recent dip in SPAC use, according to data from Dealogic, U.S. SPACs had raised over $100 billion in 2021 alone, with the value of SPAC mergers surpassing $260 billion. In recent months, however, the number of SPACs going public has dropped precipitously, dropping from 116 listings in March down to just 18 in April and 19 in May.  

Eleventh Circuit En Banc Ruling Fails To Resolve Key Issue Regarding Victims’ Right To Confer With Prosecutors - 06.16.2021

The Crime Victims’ Rights Act gives “crime victims” a right to “confer” with government attorneys and to be “reasonably heard” in the course of federal criminal prosecutions. The Act calls on federal courts to “ensure” that victims are “afforded” these rights. (See Abramowitz and Sack, “Victims’ Rights and White Collar Defense,” New York Law Journal (July 11, 2017)). An important procedural issue has arisen under the CVRA: when does a victim’s right to confer arise – before charges are filed in court, or only afterward...

Limited-Scope Representations in Civil Cases - 06.15.2021

Traditionally, when an attorney appears on behalf of a client in a matter, federal courts have required that the attorney represent the client in all respects. In civil cases, however, courts have begun to recognize the value of limited-scope representations—i.e., representations when an attorney represents a client for only a portion of a case. In this article, we analyze Judge Jed S. Rakoff’s recent decision in Villar v. City of New York where he authorized a limited-scope representation to allow an attorney to appear solely to assist the pro se plaintiff in settlement negotiations.

Hey SIRI, Does the Fifth Amendment Protect My Passcode? - 06.09.2021

The application of the Fifth Amendment to law enforcement demands for cellphone passcodes has developed into a constitutional quagmire for the lower courts. With the Supreme Court resisting opportunities for specific guidance, right now the application of the right against self-incrimination to this overwhelmingly important modern technology depends heavily on the state or federal jurisdiction where a person is located. We explore the issue in this article: “Hey SIRI, Does the Fifth Amendment Protect My Passcode?”

Morvillo Abramowitz Partner Elkan Abramowitz Named to City & State New York's 2021 Albany Power 100 List - 06.07.2021

NEW YORK, June 7, 2021 - MAGIA is proud to announce that partner Elkan Abramowitz has been named to City & State New York's 2021 Albany Power 100 list, which ranks the most influential players in New York state politics, law, business and media.

Elkan is a trusted adviser to clients in times of crisis and is nationally recognized for his expertise in the areas of white collar criminal defense and government investigations.