Startups and Emerging Companies

  • June 2019

    What Is A Co-Sale Right?

    It’s not uncommon for preferred investors to require that startup founders enter a co-sale agreement. Co-sale rights give investors the right to join in a transaction when the founders sell their stock to a third-party. Co-sale rights, also called tag-along rights, allow investors to sell their shares on the same terms as the founders.
  • April 2019

    Lawmakers Reintroduce Bill To Exclude Digital Currencies From Definition of Security

    Federal lawmakers are re-upping efforts to exclude digital currencies from the definition of a security.
  • April 2019

    SEC Provides Clarity For Digital Token Sales

    The Securities and Exchange Commission earlier this month issued detailed guidance to companies that want to sell digital tokens, providing clarity on the application of federal securities laws to digital assets.
  • April 2019

    SEC Issues First-Ever No Action Letter For Digital Token Sales

    The Securities and Exchange Commission, in an unprecedented move, has given its blessing to a private jet startup to sell digital tokens without SEC oversight.
  • March 2019

    Delaware Supreme Court Upholds Dismissal of Trade Secrets Case Against PR Fund

    Amit Singh, a shareholder in Stradling’s Corporate and Securities practice group, authored an article for Preferred Returns Newsletter, the ABA’s Private Equity and Venture Capital Committee’s publication, regarding the Delaware Supreme Court’s recent dismissal of a trade secrets case against a private equity fund. brought suit against ABS Capital alleging the firm has misused confidential information by investing in its competitor.
  • March 2019

    Founder's Stock: Should You Subject It To Vesting Before A Venture Financing?

    When the founders of a company invest in their business - either with money or their intellectual property - they get in return what is known as “founder’s stock,” a form of stock in the company that comes with voting rights.

    Founder’s stock is often subject to a vesting schedule. That means if the founder leaves the company before the stock is fully vested, the company has the right to buy back unvested shares either at cost or at fair market value, whichever is lower.
  • March 2019

    Putting A Cap On Participating Preferred Stock

    Participating preferred stock - which entitles the investor to a preferential payment upon liquidation, as well as a share of the remaining liquidation proceeds with common stockholders - has some critics, namely those who say it allows the holder to double-dip into the company gains. A common way to limit the dilution of value caused by participating preferred stock is to set a cap on the participation amounts.
  • March 2019

    Crypto Firm Escapes Fine After Self-Reporting Unregistered ICO

    The SEC has settled charges a Washington D.C.-based crypto startup’s Initial Coin Offering was an unregistered securities offering without an applicable registration exemption. The SEC did not impose penalties against the company, Gladius Network LLC, which self-reported the ICO.
  • March 2019

    FTC Announces Revised HSR Notification Thresholds For 2019

    The FTC recently announced annual changes to the reporting thresholds for the Hart Scott Rodino Antitrust Improvements Act, increasing the thresholds by approximately 6.6% over 2018.

    The HSR Act established the federal pre-merger notification program, which provides the FTC and the U.S. Department of Justice with information about large mergers and acquisitions before they occur.
  • February 2019

    Delaware Supreme Court Affirms MAE Ruling Allowing Fresenius To Terminate Akorn Merger

    The Delaware Supreme Court has upheld a landmark lower court decision that allowed Fresenius Kabi AG to walk away from a planned $4.75 billion merger with Akorn Inc. based on the existence of a material adverse effect.

  • February 2019

    House Bill Would Exclude Digital Currencies From Definition Of A Security

    Two members of the U.S. House of Representatives have introduced a bill that would exclude digital currencies from the definition of a security, an effort from lawmakers to provide bright line rules and regulatory clarity to the cryptocurrency industry.
  • January 2019

    SEC Publishes Final Rule Expanding Regulation A To Reporting Companies

    The SEC recently adopted final rules that will allow reporting companies to utilize the Regulation A exemption from registration, a change that will provide those companies with additional flexibility when raising capital.
  • December 2018

    SEC Further Clarifies Some Tokens May Not Be Securities

    The SEC continues to further clarify its position with respect to blockchain tokens and regulation. Speaking at a House committee hearing last year, a SEC official acknowledged the possibility that some types of “utility tokens” may not be securities.

  • December 2018

    A Federal Judge Just Chin-checked the SEC. Here’s What It Means.

    San Diego-based Amit Singh, a shareholder in the firm's corporate and securities and emerging growth practice groups, was interviewed by BlockTelegraph regarding the SEC’s first ever loss in an ICO case. The article, “A Federal Judge Just Chin-checked the SEC. Here’s What It Means.” covers the case in which a federal judge denied the SEC a preliminary injunction against Blockvest LLC after previously granting a temporary restraining order on the same issue.
  • November 2018

    Capital Formation Deal Elusive as Senators Race Against Clock

    San Diego-based Amit Singh, a shareholder in the firm’s M&A and Emerging Growth practice groups, was quoted in the article, “Capital Formation Deal Elusive as Senators Race Against Clock,” published by Bloomberg Law – Securities Law News on November 30. The article covered the bipartisan package of capital formation bills, also known as the Jobs Act 3.0, that passed the House in July and is trying to make its way to the Senate floor.
  • November 2018

    ICO Mania Cools Amid Regulatory Crackdown, Crypto Plunge

    San Diego-based Amit Singh, a shareholder in the firm’s M&A and Emerging Growth practice groups, was quoted in the article, “ICO Mania Cools Amid Regulatory Crackdown, Crypto Plunge,” published by Law360 on November 30. The article covered the recent decline in ICO offerings and fundraising coinciding with increased regulatory scrutiny by the SEC, which penalized two issuers for unregistered ICOs earlier this month.
  • November 2018

    California To Require Security Features For IoT Devices

    California Gov. Jerry Brown recently signed cyber security legislation that requires manufacturers of internet connected devices (IoT) to equip these devices with reasonable security features. California broke new ground with the legislation, becoming the first state in the country to regulate Internet connected devices.
  • May 2018

    Amit Singh Quoted in Law360 Article Regarding ICOs

    San Diego-based Amit Singh, a shareholder in Stradling's Corporate and Securities practice group, was quoted in an article published in Law360, “Securities Attys Challenged By New Role As ICO Gatekeepers.” The article discussed how the SEC believes attorneys are meant to be “ICO gatekeepers” and should be held accountable for the advice they give to their clients in determining if their ICO should be registered with the SEC or not.
  • February 2018

    Crowdfund Insider Interviews Amit Singh Regarding Year End Equity Crowdfunding Report

    San Diego-based shareholder Amit Singh was interviewed by Crowdfund Insider about his Year End Equity Crowdfunding Report and asked his reasons for compiling the report, if his results were what he expected them to be and what needs to be done to boost Regulation CF activity.
  • February 2018

    A Year End Look at Equity Crowdfunding in the US: 2017

    In recent years, crowdfunding websites have become a popular way for people to solicit charitable contributions to raise money for projects. Now, companies can use crowdfunding for a whole new purpose: to offer and sell securities to the investing public. While the regulations were adopted in 2015, offerings under these rules gained significant traction in 2017. This report gives a comprehensive year end look at the equity crowdfunding that took place during 2017 in the United States.