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Unicorns: The Tale Continues

Potential disputes involving unicorns have been a hot topic for the last several years.  We predicted that would continue this year in in our webinar and related blog post: The Top Ten Regulatory and Litigation Risks for Private Funds in 2018.  In April, the Regional Director of the SEC’s San Francisco office, Jina Choi, confirmed this in her comments during a San Francisco Federal Bar Association panel.  Specifically, Ms. Choi discussed the SEC’s actions against Zenefits, Credit Karma, and Theranos, and reiterated the SEC’s continued commitment to monitoring suspected investor fraud in privately-held companies.  Ms. Choi also highlighted the settlement remedies in Zenefits and Theranos, including specifically that both settlement agreements required the company and individual officers at the company to pay penalties.

We expect to see the SEC continue to focus on unicorns in future investigations and proceedings. Private companies should prepare for increased scrutiny of their investor disclosures, particularly those related to and affecting the company’s valuation.  In addition, they should ensure their disclosures comply with Rule 701(e) of the Securities Act when granting stock options to employees, as the SEC noted in the Credit Karma settlement.  Finally, SEC actions may spark parallel private actions by investors against the company.

© 2019 Proskauer Rose LLP.

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About this Author

Joshua Newville, Proskauer Rose, regulatory enforcement attorney, industry compliance legal counsel, securities exchange commission lawyer
Partner

Joshua M. Newville is a partner in the Litigation Department in New York. His practice focuses on commercial litigation and regulatory investigations. Mr. Newville advises companies and individuals in securities litigation and compliance matters. He also focuses on internal investigations and enforcement matters. Prior to joining Proskauer, Josh was senior counsel in the U.S. Securities and Exchange Commission’s Division of Enforcement, where he investigated and prosecuted violations of the federal securities laws. Josh served in the Enforcement Division’s Asset...

212-969-3336
William D Dalsen, Proskauer, Private Equity Lawyer, Hedge Fund Litigation Attorney
Associate

Will Dalsen is an associate in the Litigation Department, practicing in the Patent Law, Intellectual Property, and Private Equity & Hedge Fund Litigation groups.

Will practices in the area of complex intellectual property disputes, with a primary focus on patent infringement matters. He has litigated several high-profile patent infringement cases for some of the world's leading technology companies, including Panasonic, Philips, Sony, Mitsubishi and Zenith Electronics.

His practice also includes complex commercial and securities litigation matters, in particular those involving private equity, venture capital and hedge funds. He has represented public and private corporations in contractual disputes, business tort cases, and government investigations. In addition, he advises funds, fund sponsors, investment advisers, and institutional and individual investors.

Will leads all phases of the litigation process, including pre-suit investigations, negotiating discovery disputes and arguing discovery motions, managing expert discovery, preparing and arguing dispositive motions, and preparing witnesses for trial. He has elicited deposition testimony from numerous witnesses on topics ranging from corporate finances to document preservation.

617.526.9429
Alexandra Bargoot, Proskauer Law Firm, Boston, Litigation and Finance Law Attorney
Associate

Alexandra Bargoot is an associate in the Litigation Department and a member of the Private Equity & Hedge Fund Litigation Group. Her practice includes a variety of complex commercial litigation matters, with a focus on private investments funds, involving both private disputes and regulatory issues.

Alexandra assists clients on matters involving SEC investigations, pay to play violations, private actions, sales of investments, investigations of aiding and abetting, arbitration award enforcement, among other areas of expertise.

617-526-9461