Prof. Berdejo Blogs About Forthcoming Article on the JOBS Act

By Professor Carlos Berdejo

This originally appeared on the CLS Blue Sky Blog, Columbia Law School's blog on corporations and the capital markets.

Congressional consideration of further deregulation of the federal securities laws, informally labeled by some as JOBS II, makes an evaluation of the impact of the JOBS Act of 2012 particularly timely. Several of the provisions of the JOBS Act relax the level of mandatory disclosures required of “emerging growth companies” (EGCs) during the IPO process and phase in certain ongoing regulatory requirements following the completion of an IPO. In a recent article, Going Public After the JOBS Act, I gather data on IPOs during the period 2010-2013 and perform an empirical assessment of the impact the JOBS Act has had on EGCs’ access to the public capital markets.

The evidence indicates that EGCs are not only taking advantage of the scaled disclosure requirements made available to them under the JOBS Act, but are also doing so with increasing frequency. For example, during the time period I studied, 87.3% of EGCs elected to file a confidential draft Form S-1 with the SEC. But in the first three quarters following the enactment of the JOBS Act, the percentage of issuers filing a confidential draft was about 72.7%, which is substantially lower than the percentage of issuers who chose to do so during the later quarters in the sample, 90.6%. There was also a considerable increase in the proportion of issuers that elected to include two rather than the standard three years of audited financial statements – from 27.3% in the first three quarters to 44.8% in the last three quarters (the overall sample average is 41.5%). Notably, EGCs that took advantage of the scaled financial disclosure available under the JOBS Act had lower revenues, were younger, and disproportionally belonged to R&D-intensive industries, such as pharmaceuticals. It is worth noting that these figures exclude IPOs in which the initial Form S-1 was publicly filed with the SEC before the JOBS Act became effective, as including these IPOs would merely inflate the reported inter-temporal differences.

Read the complete post.

Prof. Berdejo to Publish Going Public After the JOBS Act

Professor Carlos Berdejo's article, Going Public After the JOBS Act, will be published by the Ohio State Law Journal.

Abstract:

The Jumpstart Our Business Startups Act of 2012 (JOBS Act) represents one of the most comprehensive overhauls of the securities laws in recent years. One of the principal goals of the JOBS Act is to improve access to the capital markets for smaller issuers, referred to in the act as emerging growth companies, or EGCs. To accomplish this goal, the JOBS Act seeks to reduce the costs of conducting a public offering and complying with the ensuing reporting obligations by making certain disclosure requirements voluntary for EGCs.

This Article examines whether these scaled disclosure rules have increased the number of small issuers conducting an initial public offering (IPO) of their equity securities and the extent to which these issuers have taken advantage of the various exemptions available to them under the JOBS Act. The evidence presented in this Article shows that EGCs have increasingly taken advantage of several of the scaled disclosure provisions of the JOBS Act during their IPOs. EGCs that take advantage of these scaled disclosure provisions are smaller, younger and more likely to belong to the R&D-intensive pharmaceutical industry. Notably, despite the fact that EGCs are embracing these scaled disclosure provisions, there has not been a noticeable increase in the proportion of IPOs conducted by issuers that qualify as EGCs. The Article explores two interrelated explanations for these seemingly contradictory findings.

First, the evidence indicates that the benefits of the JOBS Act may not be as significant as may have been expected. While the direct costs of conducting an IPO have not decreased for EGCs following the enactment of the JOBS Act, indirect costs may have actually increased. In addition, by their second fiscal year, over forty percent of issuers that went public as EGCs no longer qualify for such status, a fact that limits the expected ongoing benefits of the JOBS Act at the going public decision stage. Second, certain issuers that qualify for EGC status may be choosing to pursue private offerings, which certain provisions of the JOBS Act facilitate. Changes in the mix of small issuers going public following the enactment of the JOBS Act suggest such a shift in the pattern of going public decisions across firms.

Prof. Pollman to Publish A Corporate Right to Privacy

Professor Elizabeth Pollman will publish the article A Corporate Right to Privacy in a forthcoming edition of the Minnesota Law Review. Earlier this summer, she published a blog post about the article on the Conglomerate.

Abstract:

The debate over the scope of constitutional protections for corporations has exploded with commentary on recent or pending Supreme Court cases, but scholars have left unexplored some of the hardest questions, and the ones that offer the greatest potential for better understanding the nature of corporate rights. This Article analyzes one of those questions—whether corporations have, or should have, a constitutional right to privacy. First, the Article examines the contours of the question in Supreme Court jurisprudence and provides the first scholarly treatment of the growing body of conflicting law in the lower courts on this unresolved issue. Second, the Article examines approaches to determining the scope of corporate constitutional rights and argues that corporate privacy rights should be evaluated not by reference to the corporate form itself or a notion of corporate personhood, but rather by reference to the privacy interests of the various people involved in the corporation and their relationship to the corporation. Further, because corporations exist along a spectrum—from large, publicly traded corporations constituted purely for business purposes to smaller organizations with social, political, or religious purposes—the existence of a corporate privacy right will and should vary.

Fifty Years After the Civil Rights Act: Celebrating the Latest Milestone on the Journey Toward Racial Equity in Health Care

By Professor Brietta Clark

Fifty years ago this July, President Lyndon B. Johnson signed into law the Civil Rights Act of 1964. The Civil Rights Act was viewed by many as a powerful symbol of the nation's commitment to racial equality. It was the most comprehensive civil rights law enacted up to that point - tackling discrimination in employment, education, voting, public accommodations, and federally funded programs, such as those financing health care. And although health care discrimination has not typically garnered as much attention as discrimination in other settings, inequality in health care was seen as a serious problem that the Civil Rights Act was needed to address.

People understood that good health was integral to one's ability to realize the other opportunities protected by the Act, such as finding employment, getting an education, and being an engaged citizen. In addition, discrimination in health care was pervasive and often had dire consequences. Many hospitals and physicians refused to treat Blacks because of their race; this included women in labor, patients with serious illnesses that could have debilitating effects, and even people in need of emergency, life-saving treatment. Indeed, civil rights leader Dr. Martin Luther King, Jr. is reported to have said that "Of all the forms of inequality, injustice in health care is the most shocking and inhumane."

Title VI of the Civil Rights Act, which prohibits discrimination on the basis of race, color, or national origin by recipients of federal funds, has been an important tool for fighting discrimination in health care. In theory, tying anti-discrimination protections to federal funding would give the government greater leverage to enforce Title VI against health care providers who wanted those funds. In reality, Title VI's power as an anti-discrimination tool depended on the federal government's willingness to devote significant resources to health care to ensure that this leverage existed.

Loyola Hosts the Southern California Criminal Justice Roundtable

On July 29, Loyola hosted the inaugural SoCal Criminal Justice Roundtable, an intensive day-long paper workshop for criminal justice scholars from UCLA, USC, UC Irvine and Loyola. The next Roundtable will be hosted by UCLA. The drafts were fascinating: everyone agreed that the workshop was extremely engaging and helpful, and is looking forward to the next one.

The group discussed five works-in-progress:

Jennifer Chacon is writing about the intersection of immigration and the school-to-prison pipeline, delving into the little-understood impact of school discipline and criminalization on the protective legacy of Plyler v. Doe.

Sharon Dolovich’s draft analyses the doctrinal mechanisms that generate the descriptive and analytic gap between fundamental constitutional norms and the functional reality of the criminal system on the ground.

Ingrid Eagly is writing about the surge in video-conferenced immigration hearings for detainees and their impact on litigants, outcomes, and the entire immigration adjudication apparatus.

Sasha Natapoff is writing about the decriminalization of misdemeanors and how decriminalization policies can quietly exacerbate inegalitarian and punitive aspects of the criminal process.

Dan Simon’s draft addresses how law enforcement actors and practices influence and generate witness testimony in ways that fundamentally undermine the integrity of the evidentiary process.