Potential Revisions to the Definition of “Accredited Investor”

On December 18, 2015, the staff (the “Staff”) of the U.S Securities and Exchange Commission (the “SEC”) released a report on their review of the definition of “accredited investor” under the Securities Act of 1933. This review was undertaken in accordance with Section 413(b)(2)(A) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), which requires the SEC to review the accredited investor definition (as it relates to individuals) every four years to determine whether it should be revised.  This is the first such review. Continue Reading

FAST Act Speeds-Up Raising Capital

On December 4, 2015, President Obama signed into law the Fixing America’s Surface Transportation Act, or FAST Act. Although primarily a transportation bill, the FAST Act also made changes to the federal securities laws as described below. Overall, the FAST Act’s changes to the securities laws will help facilitate raising capital. Continue Reading

Far From The Madding Crowdfunding: A look at the SEC’s proposed changes to Rule 147 and Rule 504

On October 30, 2015, the Securities and Exchange Commission adopted the final rules for “Regulation Crowdfunding” nearly two years after issuing its proposed rules and over three years after the enactment of Title III of the JOBS Act. Since the publication of those final rules, many commentators have blogged about those rules, and many have not been kind, criticizing the final rules as, among other things, unusable by the very start up issuers for which they were supposed to be “the solution.” Lost in the shuffle that day was the announcement by the SEC of proposed changes to two other exemptions from the registration requirements of the Securities Act of 1933: Rule 147 and Rule 504.  Rule 147 is a “safe harbor” provision for intrastate securities offerings exempted from registration by Section 3(a)(11) of the Securities Act, while Rule 504 is one of the four exemptions provided by Regulation D. Both of these rules have been seldom used in the modern era. Rule 147 has proven to have too many requirements and restrictions to be useful, especially in the modern age of the internet.  Rule 504 has proven not to be attractive to issuers privately placing their securities, who have instead almost universally chosen to rely on Rule 506(b).With its proposed changes to these two rules, the SEC has taken positive steps toward creating more useful exemptions and alternatives to Rule 506(b) offerings. Continue Reading

The Days of the Vultures (Silicon Valley – Season 2 Finale)

This season’s finale of Silicon Valley provided Richard with only the briefest moment of victory before he once again faces losing Pied Piper.  First, the arbitrator rules that because Richard used a Hooli computer while developing Pied Piper, under the invention assignment provision of Richard’s employment agreement with Hooli, Hooli would have the right to Pied Piper’s technology.  However, because the employment agreement also contained unlawful non-compete provisions, the arbitrator held that the entire employment agreement was unenforceable, including the invention assignment portion.  Therefore, Hooli had no right to Pied Piper’s technology, and Richard won!  In the meantime, the Pied Piper team triumphs by successfully livestreaming the condor cam video to 200,000 viewers—including Laurie, the head of Raviga Capital.  Laurie is so impressed with the technology that once Hooli loses the arbitration, Raviga buys out Russ’s stake in Pied Piper.  Raviga now controls three of Pied Piper’s five board seats:  Russ’s two seats plus the seat filled by Monica as Raviga’s designee.  However, Laurie is also underwhelmed by Richard’s performance as CEO.  After gaining control of the board, Raviga promptly votes its majority control to remove Richard as CEO of Pied Piper.

Click here to read the full article posted on our Video Game blog, Law of the Level.

Rogue Witnesses (Silicon Valley, Episode 17)

In Episode 17, Hooli’s lawsuit appears to be nearing its end – with Hooli poised as the apparent victor.  In Episodes 9 and 10 the show had positioned the case so we thought Pied Piper was sure to win.  What happened?  The impact of a rogue witness should not be underestimated.

Click here to read the full article posted on our Video Game blog, Law of the Level.

Board Games (Silicon Valley, Episode 16)

Episode 16 culminates with a disastrous end to the Intersite bake-off, and highlights an issue that’s cropped up in several episodes:  troublesome or under-performing board members.  To recap, Pied Piper is competing against nemesis Endframe in a “bake-off” to win a $15 million contract with Intersite.  In the course of the bake-off, Pied Piper’s (formerly) billionaire investor and board member, Russ Hanneman, unknowingly sets a tequila bottle on the delete key of Richard’s laptop causing the deletion of 9,000 hours of Intersite’s premium content, and Pied Piper loses the bake-off.

Click here to read the full article posted on our Video Game blog, Law of the Level.

Other Peoples’ Content (Episode 15)

There are so many legal issues in Episode 15 that it’s hard to know where to begin, so I’m going to start at the end: porn.  Pied Piper is competing against nemesis Endframe for a $15 million contract from the online porn company Intersite.  If Pied Piper wins the contract it will allow Pied Piper to stay afloat and avoid being absorbed and obliterated by Endframe.

Click here to read the full article posted on our Video Game blog, Law of the Level.

“‘Say it ain’t so!’” (Episode 14)

Previously we’ve discussed Hooli’s reverse engineering of Pied Piper’s technology and the threatened lawsuit for ownership of the technology.  In Episode 14, Pied Piper faces a new threat:  Endframe, a Pied Piper competitor, has also stolen Pied Piper’s technology, in collusion with VC firm Branscomb Ventures.  This started back in Episode 10, when the Pied Piper team pitched to Branscomb and were “brain raped.”  The team shared the intimate, technical details of Pied Piper’s middle-out technology before realizing what was happening.  Branscomb/Endframe then used the information Pied Piper revealed to create their competing product.  But was there anything Pied Piper could have done to protect itself?

Click here to read the full article posted on our Video Game blog, Law of the Level.

Hooli is suing Pied Piper (Episodes 9 and 10) continued

Last post I mused that had Richard taken certain steps in the first season of Silicon Valley, he might now have ammunition to use against Hooli’s lawsuit. What am I talking about? To very crudely recap what happened last season, Richard invented Pied Piper, a music copyright search service that hid within it amazing lossless compression technology. Richard shared his software with two “brogrammers” at Hooli, who (being slightly smarter than they appeared) realize the importance of Richard’s compression technology and informed Gavin Belson (Hooli’s CEO). After Richard refused to sell Pied Piper to Hooli, Hooli reverse-engineered Pied Piper and used Pied Piper’s technology as the basis of Hooli’s competing product called Nucleus.

Click here to read the full article posted on our Video Game blog, Law of the Level.

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