Securities Regulation: Mandatory Disclosure, Capital Formation, and the IPO Process
Capital Formation and Securities Regulation. This course analyzes the regulations governing the capital formation process in the United States. The course explains the process by which companies register securities with the SEC in order to go public, and the reporting obligations that arise once companies are publicly traded. The course also analyzes the process by which companies raise capital through private placements (the dominant capital formation process in Silicon Valley), restrictions on the resale of privately placed securities, and the securities law liabilities that arise in these transactions. The course also addresses the processes by which foreign issuers commonly raise many billions of dollars in the US markets without registering their offerings with the SEC, Chinese reverse mergers which have led to a spate of litigation, and recent legislation allowing "crowdfunding" of certain enterprises. Much of the course will operate through the analysis of case studies, in particular, a close analysis of the Facebook and Google IPOs, and private placement and secondary market transaction histories preceding those public offerings. Time permitting, we will also analyze the Foreign Corrupt Practices Act (which, among other matters, requires that publicly traded firms properly account for and disclose bribes paid to foreign government officials), and disclosures related to the use of conflict minerals and to contracts with foreign governments in the extractive industries, i.e., oil and gas drilling. Special Instructions: If you have taken Law 559: Modern Securities Regulation (Sonsini) then you may not take Law 591: Securities Regulation (Grundfest). If you have taken Law 542: Modern Securities Fraud Litigation (Eth) you may take Law 591: Securities Regulation (Grundfest). Elements Used in Grading: Class attendance, participation and final exam.