The Antitrust Division Finds the Nails

– By Stephen Díaz Gavin

Just yesterday (Monday, November 20th), as Stephen Diaz-Gavin’s article “For Want of a Nail: The AT&T – Time Warner Merger” was posted on Legal Bytes, the Antitrust Division of the U.S. Department of Justice (“DOJ”) filed a lawsuit opposing the merger in the U.S. District Court for the District of Columbia, asking that the proposed merger and related transactions be permanently enjoined.  The lawsuit is a significant departure from U.S. antitrust policy in recent years, which has generally permitted vertical mergers and, as we pointed out in our original post, highlights the problems in not having availed themselves of the FCC’s  public interest review to address the concerns about the merger, publicly.  AT&T  immediately responded that it will defend the merger, but win or lose, one thing is a sure thing – approval of AT&T’s $85.4 billion entry into the content production business — is no longer a sure thing. You can read the full text of the DOJ Complaint and again, if you have any questions feel free to contact Stephen Díaz Gavin directly. Of course, you can always contact me, Joe Rosenbaum, a Partner at Rimon in New York or any of the lawyers at Rimon with whom you regularly work.

 

All Good Things Must . . . .

–          Dror Futter

So far this year, offerings of blockchain based tokens have raised over $3 billion and for a long time regulators seemed to be ignoring these Initial Coin Offerings (ICOs).  Indeed, some commentators asserted they were outside the scope of government regulation.

This past summer, the Securities and Exchange Commission (SEC) began to take aim.  While the SEC has not yet provided detailed guidance as to which tokens would be categorized as securities and which considered “utility tokens” (outside the SEC’s jurisdiction), the SEC has indicated such tokens can be securities, basing its determinations on a ‘facts and circumstances’ analysis.  Having said that, SEC Chairman Jay Clayton reportedly deviated from prepared remarks earlier this month and said: “I have yet to see an ICO that doesn’t have a sufficient number of hallmarks of a security.

Since the summer, China and South Korea have banned ICOs, while  Canada, the UK, Switzerland, Australia and most recently the EU, issued SEC-like guidance stressing that tokens may be securities and as a result, subject to the oversight of securities regulators.

In addition, the first lawsuits related to ICOs have now been filed, reminding us that regulatory action is far from the only legal risk faced by ICO sponsors of ICOs.   In one of the current lawsuits,  only one of the claims is for the sale of unregistered securities, while other claims include allegations of fraud, false advertising and unfair competition under State law. Civil suits by disappointed investors and class action lawsuits relating to large scale offerings are likely to increase in the months and years ahead.

While recent developments don’t foretell the end of ICOs, they highlight more than the typical significant legal and regulatory risks associated with early stage venture investing.  Indeed, investors may not be able to rely on the same types of legal protections they might obtain when acquiring conventional securities.  Even after the initial issuance of these ‘tokens,’ their resale could raise even more issues and compliance may affect liquidity and valuation.  In an uncertain regulatory environment, risk mitigation is an important element of counseling clients, but hardly a basis for avoiding risk altogether and clients and their lawyers have good reason to be cautious. In fact, even creating an impression that an ICO has been ‘blessed’ by lawyers may not make it clear that opinions have a significant level of assumptions, qualifications and caveats well beyond routine legal opinions.

This posting was adapted and extracted from a more detailed Client Alert written by Dror Futter, a New York-New Jersey based Partner at Rimon, P.C.  You can read the entire alert, entitled “Spoiler Alert: ICOs – The “Good Times” May Be Ending,” and if you need more information, feel free to contact Dror Futter  directly. As always, if you need any assistance you can always contact me, Joe Rosenbaum, a New York based Partner at Rimon,  or any of the lawyers at Rimon with whom you regularly work.

OFAC Targets Sports & Entertainment Figures

Jill Williamson, Partner, Rimon, P.C.

On August 9, 2017, the Office of Foreign Assets Control (OFAC) at the U.S. Treasury Department, issued a Press  Release and identified Mexican national Raul Flores Hernandez and the Flores Drug Trafficking Organization (Flores DTO) as Significant Foreign Narcotics Traffickers pursuant to the Foreign Narcotics Kingpin Designation Act, also known as the Kingpin Act. OFAC also designated a large number of individuals and 42 entities for involvement with, and acting as fronts for, Raul Flores Hernandez.

Many of these individual and entities are in the sports and entertainment industries, including  professional soccer player, Rafael Marquez Alvarez (Rafa Marquez), Mexican singer Julio Cesar Alvarez Montelongo (Julion Alvarez), Mexican Soccer Club Club Deportivo Morumbi and the Grand Casino Guadalajara.

As of the issuance date of these designations, no U.S. persons, companies, nor any individuals in the US, are allowed to conduct transactions with these individuals or entities.  Penalties under the Kingpin Act can run as high as $10MM per violation, with individual violators subject to imprisonment for up to 30 years.  Even civil penalties for inadvertent violations can run over $1M per violation.  It is worth noting that OFAC violations are based on strict liability.

If you would like more information, a better understanding or need guidance regarding compliance with these regulations, contact Jill M. Williamson, a Rimon Law Partner based in Washington, DC. Of course you can always contact me, Joe Rosenbaum, or any of the lawyers at Rimon with whom you regularly work.