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Legal Guardrails for a Unicorn Crackdown

This document consists of five parts. Part I provides a brief overview of the rise of private markets and the SEC`s increasing efforts to re-establish its authority in this area. The second part examines the text and legislative history of Article 12(g) and shows how Congress limited the agency`s power to require review for shareholder count purposes. Part III examines various possible interpretations of the SEC`s power to impose a perspective and shows that the SEC`s more limited interpretations are the most reasonable. Part IV shows that the limited interpretations presented in Part III are also consistent with the small number of views previously approved by the Agency. Part V shows how these limited interpretations could significantly limit the agency`s ability to fundamentally redraw the boundaries between public and private companies.12 To my knowledge, this is the first sustained analysis of the SEC`s transparency power under paragraph 12(g). But others expressed doubts about the SEC`s proposal. Hester M. Peirce & Elad L. Roisman, Comm`rs, U.S. Sec.

& Exch. Comm`n, Falling Further Back—Statement on Chair`s Regulatory Agenda (December 13, 2021) (suggests that the proposal “may. contradict the express will of Congress”); John C. Coffee, Jr., Climate-Risk Disclosures and “Dirty Energy” Transfers: “Progress” Through Evasion, Colum. L. Sch.: CLS Blue Sky Blog (25. January 2022), clsbluesky.law.columbia.edu/2022/01/25/climate-risk-disclosures-and-dirty-energy-transfers-progress-through-evasion [perma.cc/3LQL-XRFQ] (suggests, by the way, that the proposal amounts to “effectively repealing the Employment Act without new legislation, and this appears to be legally vulnerable”). The reality is more complicated.

The text and legislative history of paragraph 12(g) suggest that the SEC cannot redefine “registered holding” as “economically owned” and that it has limited powers to require review for the purpose of counting shareholders.10 See Part II below. If this is true, the authority under Section 12(g) to substantially alter public/private management without additional legal approval may be significantly limited.11 I focus here only on the legality of the SEC`s plans to invoke Section 12(g) to force large private corporations to go public. I have analyzed the costs and benefits elsewhere. See Alexander I Platt, Unicorniphobia, Harv. (forthcoming 2022), ssrn.com/abstract=3915793 [perma.cc/XC6P-CZR9]. I will focus only on Article 12(g) and will not address the other components of the SEC`s private markets program. And I don`t focus on the intertwined implications of this proposed change to limit the ability of public companies to “sink.” See Lee, note 1 above. Dieses explosive Wachstum der privaten Märkte und hochkarätige Skandale bei Einhörnern wie Uber und Theranos provozierten eine Flut von Kritik von der Rechtsakademie.21 Siehe Jennifer S. Fan, Regulating Unicorns: Disclosure and the New Private Economy, 57 B.C. L. Rev.

583 (2016); Renee M. Jones, The Unicorn Governance Trap, 166 U. Pa. L. Rev. Online 165 (2017); Ann M. Lipton, Not Everything is About Investors: The Case for Mandatory Stakeholder Disclosure, 37 Yale J. Reg. 499 (2020); Verity Winship, Private Company Fraud, 54 U.C. Davis L.

Rev. 663 (2020); Elizabeth Pollman, Private Company Lies, 109 Geo. L.J. 353 (2020); Matthew Wansley, Taming Unicorns, 97 Ind. L.J. 1203 (2022); Donald C. Langevoort et Hillary A. Sale, Corporate Adolescence: Why Did « We » Not Work?, 99 Tex.

L. Rev. 1347 (2021); Amy Deen Westbrook, We`(re)Working on Corporate Governance: Stakeholder Vulnerability in Unicorn Companies, 23 U. Pa. J. Bus. L. 505 (2021); George S. Georgiev, The Breakdown of the Public-Private Divide in Securities Law: Causes, Consequences, and Reforms, 18 N.Y.U.

J.L. & Bus. 221, (2021); siehe auch Elisabeth de Fontenay, The Deregulation of Private Capital and the Decline of the Public Company, 68 Hastings L.J. 445 (2017); Michael D. Guttentag, Patching a Hole in the JOBS Act: How and Why to Rewrite the Rules that Require Firms to Make Periodic Disclosures, 88 Ind. L.J. 151 (2013); Usha R. Rodrigues, The Once and Future Irrelevancy of Section 12(g), 2015 U. Ill. L. Rev. 1529 (2015).

Und unmittelbar nach Joe Bidens Wahl und seiner Ernennung von Gary Gensler zum SEC-Vorsitzenden begann die SEC klare Signale zu senden, dass sie mit dieser Kritik sympathisierte und plante, Maßnahmen zu ergreifen. Dieser Teil stellt diese gängige Auffassung durch eine genaue Analyse des Textes und der Entstehungsgeschichte des Gesetzes in Frage. Section A shows that the text of the Exchange Act reveals a system that distinguishes between different types of legal interests in securities – with a focus on “beneficiary” owners in some provisions and “registered” holders in others. Under accepted principles of law interpretation, courts will interpret Congress` decision to use “set forth in Article 12(g)” as a deliberate and deliberate decision not to use the “beneficial owner.” Section B examines the genesis of the Jumpstart Our Business Startups Act of 2012 (JOBS Act), which increased the threshold for triggering the number of shareholders from 500 to 2,000, and shows that Congress repeatedly refused to authorize the SEC to redefine the “go-to hero” as “favorably kept.” Finally, Section C reviews the legislative history of the 1964 law, which added section 12(g), and again shows that the congressional election for “Held of Record” was a deliberate rejection of “favorably obsessed.” Until now, it has been assumed that the SEC has the legal authority to do so and no new legislation is required. SEC Commissioner Allison Herren Lee recently stated that it is “clear” that the SEC has the legal authority “to require issuers to review beneficial ownership” for purposes of Article 12(g). Donald Langevoort and Robert Thompson noted that the SEC could “likely” amend the rule “to refer to beneficial ownership known or reasonably available to the issuer.” George Georgiev wrote that the SEC could implement this change “quite easily by responding to its existing authority without requiring additional action from Congress” and that its authority to do so was “indisputable.” And an influential report from the Duke Global Financial Markets Center claimed that “change can be made without legislation.” Again, this is evidence that Congress` decision to use “archive” property was also a conscious decision not to use “beneficial” property.99Lee points to petitions to establish rules on the issue in support of the legality of his proposal. Lee, op. cit.

Cit. Note 1. But one of those petitioners may not have been sure that the SEC had the authority to proceed. Compare Lawrence J. Goldstein`s letter to Elizabeth M. Murphy, Sec`y, Sec. & Exch. Comm`n (25. February 2009), www.sec.gov/rules/petitions/2009/petn4-483supp.pdf [perma.cc/K33R-V4A4] (proposes that the SEC amend Section 12(g)), with a letter from Lawrence J. Goldstein to Richard Breeden, President, Sec. & Exch.