Article prepared by and republished courtesy of our colleagues Stephen Taeusch, Daniel Turinsky, and Carsten Reichel; originally published here: https://www.dlapiper.com/en/insights/publications/2024/01/what-to-know-about-noncompete-agreements-in-2024

As we head into 2024, employers can expect more risk related to the use of restrictive covenants at both the federal and state level. From the Federal Trade Commission’s (FTC) anticipated final rule and National Labor Relations Board (NLRB) unfair labor practice charges to new state laws and court decisions, employers are monitoring the landscape, preparing to meet compliance deadlines, and reassessing their approach to noncompete agreements.

Continue Reading What to know about noncompete agreements in 2024

Written by: David Stier, Eric Forni, Katrina Hausfeld, David Solander and Lauren O’Neil

On May 13, 2024, the Securities and Exchange Commission (SEC) and the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) jointly proposed a new rule that would impose requirements on SEC-registered investment advisers (RIAs) and exempt reporting advisers (ERAs) to establish, record, and maintain customer identification programs (CIPs) under the US Bank Secrecy Act (BSA) and related regulations. 

The SEC and FinCEN designed the proposal to target illicit actors, illicit funds, and

Continue Reading Treasury’s FinCEN and SEC Propose Rule Requiring Investment Advisers to Develop Customer Identification Programs

Written by: David Solander, Meghan Carey and Jessica McKinney

A three-judge panel of the US Court of Appeals for the Fifth Circuit unanimously vacated the US Securities and Exchange Commission (SEC)’s private fund adviser rules and amendments (Private Fund Rules),[1] stating that “no part of it can stand.”[2]

In August 2023, the SEC adopted the Private Fund Rules, which included five new rules: the Private Fund Audit Rule, the Quarterly Statements Rule, the Restricted Activities Rule, the Adviser-Led Secondaries Rule, and the Preferential Treatment Rule. These rules

Continue Reading Private Fund Adviser Rules Vacated: Key Takeaways

Provided that they meet certain criteria, venture capital funds are not required to be registered as an “investment company” by the U.S. Securities and Exchange Commission (the “SEC”) under the Investment Company Act of 1940 (the “Investment Company Act”). The Investment Company Act defines “investment company” to include any issuer which is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, or trading in securities. Venture capital funds would typically fall under this definition; however, most venture capital funds are

Continue Reading Venture Capital Funds: 3(c)(1) Funds vs. 3(c)(7) Funds

What are they?

A letter agreement between a portfolio company and an investing venture capital fund which provides the venture capital fund with certain “management rights” that allow it to substantially participate in, or substantially influence the conduct of, the management of the portfolio company.

Why are they important?

A management rights letter is critical for any venture capital fund that is seeking to rely upon the venture capital operating company (“VCOC”) exemption in order to avoid its assets from being subject to the Employee Retirement Income Security Act of

Continue Reading Management Rights Letters: What they are, why they are important and potential traps to be mindful of

Article prepared by and republished courtesy of our colleagues Jeffrey Hare, John Clarke, John Sullivan, and Adam Dubin; originally published here: https://www.dlapiper.com/en/insights/publications/2023/03/buying-assets-from-the-fdic

In the wake of the appointment of the Federal Deposit Insurance Corporation (FDIC) as receiver for Silicon Valley Bank (SVB) and Signature Bank (SB) on March 10 and March 12, respectively, investors may be considering whether there will be opportunities to acquire failed bank assets. This alert provides a high-level overview of the process for acquiring assets from the FDIC as receiver.

Overview

An FDIC insured bank fails when the chartering regulator closes the bank and appoints the FDIC as receiver. Upon its appointment, the FDIC as receiver succeeds by operation of law to all of the assets and liabilities of the bank, ensuring that depositors have access to their insured deposits. To address potential systemic risk arising from the failures of SVB and SB, federal authorities determined that the SVB and SB receiverships would each be handled “in a manner that fully protects all depositors.” The Deposit Insurance Fund (DIF) overseen by the FDIC absorbs the costs of covered deposits. The DIF is funded mainly through quarterly assessments on all insured banks.Continue Reading Buying assets from the FDIC

Article prepared by and republished courtesy of our colleagues Richard Marks, Kevin Criddle, Curtis Mo, and Jeffrey Lehrer; originally published here: https://www.dlapiper.com/en/insights/publications/2023/03/applying-the-lessons-of-the-svb-and-signature-bank-failures

The failures of Silicon Valley Bank and Signature Bank sent many companies into credit and liquidity crises. With the most pressing short-term impacts now stabilized, corporate boards and management should consider steps to be better prepared in the future.

What happened

On March 10, 2023, Silicon Valley Bank (SVB) was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. Two days later, New York regulators stepped in to close Signature Bank under the same structure. On March 12, 2023, the Federal Reserve, FDIC and Treasury Department jointly announced an emergency program to backstop all deposits at both SVB and Signature Bank.Continue Reading Applying the lessons of the SVB and Signature Bank failures: Steps for boards and management

Article prepared by and republished courtesy of our colleagues Jeffrey Hare, Margo Tank, Christopher Steelman, David Whitaker, and Adam Dubin; originally published here: https://www.dlapiper.com/en-us/insights/publications/2023/03/takeaways-from-the-silicon-valley-bank-and-signature-bank-receiverships

On Friday, March 10, 2023, Silicon Valley Bank (SVB) was closed by its chartering regulator, the California Department of Financial Protection and Innovation, and the Federal Deposit Insurance Corporation (FDIC) was appointed as receiver which is typical for a bank receivership. The FDIC formed Deposit Insurance National Bank of Santa Clara (DINB) (chartered by the Office of the Comptroller of the Currency) and immediately transferred to DINB all insured deposits of SVB. No loans or other products were transferred to DINB nor were uninsured deposits.Continue Reading Takeaways from the Silicon Valley Bank and Signature Bank receiverships

Article prepared by and republished courtesy of our colleague Brooke Goodlett; originally published here: https://www.dlapiperaccelerate.com/knowledge/2020/texas-cracks-down-on-cryptocurrency-fraud.html 

Texas continues to be a leader in the United States when it comes to cracking down on fraudulent cryptocurrency offerings, and the novel COVID-19 virus has not curtailed these efforts. In 2017, the Texas State Securities Board (the TSSB) became the first state securities regulator to issue a cease-and-desist order against a promoter of a cryptocurrency investment scheme. The TSSB has since issued 26 administrative orders involving 79 individuals and entities for illegally, fraudulently or deceptively offering cryptocurrency investments to Texas investors. The circumstances underlying these enforcement actions have numerous commonalities – promises of high returns, irreplaceable losses, commissions for recruiting new investors and the omission of pertinent information.
Continue Reading Texas cracks down on cryptocurrency fraud: 2020 developments

Choosing the right lawyer for your startup can be overwhelming, given the important role that relationship will play in the evolution of your company. However, finding the right fit at the earliest stages can save you lots of pain (and cost) down the road. Accordingly, I thought it would be helpful to share my observations on how to optimize the selection process and ensure a strong long-term relationship with your lawyer.

While all of the below considerations are obviously important, in my experience, individual founders put different weight on each
Continue Reading How to Choose Your Startup Lawyer

Article prepared by and republished courtesy of our colleagues Christine Daya, Thomas M DeButts, Danish Hamid, Sarah E. Kahn, Richard Newcomb, Ignacio E. Sanchez, Lawrence E. Levinson and Dana Zelman; originally published here: https://www.dlapiper.com/en/us/insights/publications/2020/01/new-regulations-reinforce-cfius-expanded-role/.

On January 13, 2020, the US Department of the Treasury released two sets of new regulations that comprehensively implement the Foreign Investment Risk Review Modernization Act (FIRRMA) – a law that strengthens the authority of the Committee on Foreign Investment in the United States (CFIUS). CFIUS is an interagency committee chaired by the Secretary of the Treasury and is responsible for screening foreign investments into the United States to determine if they could impair US national security. The new CFIUS regulations will become effective on February 13, 2020 and are titled (i) Provisions Pertaining to Certain Investments in the United States by Foreign Persons (31 CFR Parts 800 and 801) and (ii) Provisions Pertaining to Certain Transactions by Foreign Persons Involving Real Estate in the United States (31 CFR Part 802).  These CFIUS regulations reflect the Treasury Department’s response to comments provided after its issuance of certain proposed rules in September 2019, as described in our previous alert. Among various developments, the new regulations:
Continue Reading New regulations reinforce CFIUS’s expanded role with respect to foreign investments in the US