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Taxes on Marijuana: A Percentage of Gross Profits or Net Profits?

Many pro-legalization advocates and legislators claimed legalizing marijuana would result in massive tax revenues. And while this has proven true, state officials want more.

From June 2014 to June 2015, cannabis sales soared to over $260 million in the state of Washington. State officials claim to have collected over $65 million in first-year taxes from recreational marijuana sales. In Colorado, state officials estimated that it will collect close to $100 million in taxes from the first year of recreational marijuana legalization. However, the state came short, only collecting $44 million in taxes from recreational marijuana sales, largely due to a quirk in the state’s constitution. In addition, despite legalization, some observers are suggesting not all sales are going through legal channels. Read the rest of this entry »

Insider Trading: Is the Benefit to the Tipper Tangible?

In December of 2014, a federal appeals court in Manhattan reversed the convictions of two hedge fund managers for insider trading in United States v. Newman. The court held the evidence was insufficient to sustain a guilty verdict for two reasons. First, the Government provided insufficient evidence of any personal benefit received by the alleged insiders, meaning there was not enough evidence to “establish the tipper liability from which defendants’ purported tippee liability would derive.” Second, the Government did not provide any evidence that “the defendants knew that they were trading on information obtained from insiders in violation of those insiders’ fiduciary duties.” Read the rest of this entry »

Second Circuit Affirms Apple’s E-Book Antitrust Violations

The United States Court of Appeals for the Second Circuit affirmed a 2013 United States District Court decision that held that Apple “orchestrated” an illegal conspiracy with book publishers to raise prices on e-books. The Second Circuit held that the conspiracy “unreasonably restrained trade.” The three-judge panel reached a 2-1 split decision.

The Justice Department and state attorneys general initially brought the action against Apple in 2012. Apple’s decision to force a trial in the case has been framed in the media as a “bold decision.” In contrast, the book publishers named in the case settled with the Justice Department, states, and private plaintiffs shortly after the suit was brought. Read the rest of this entry »

RBS May Have to Pay $ 13 Billion in Latest FHFA Lawsuit

Royal Bank of Scotland Group, PLC (“RBS”) may have to pay $ 13 billion in restitution to settle allegations in that it misled investors in mortgage-backed securities. The U.S. Federal Housing Finance Agency (“FHFA”) alleged, in a lawsuit filed on Monday in the U.S. District Court for the District of Connecticut, that RBS overstated the ability of borrowers to repay their mortgage loans by using false and misleading information. Philippe Selendy, a lawyer with Quinn Emanuel, estimated a $ 13 billion potential judgment against RBS based on a previous judgment against RBS in a similar lawsuit filed by the FHFA in the U.S. District Court for the Southern District of New York. Read the rest of this entry »

Dodd-Frank Act Making Progress in Fight against Conflict Minerals

When Leonardo DiCaprio exposed the horror of African blood diamond wars as Danny Archer in the movie Blood Diamond, audiences began to think twice about from where that rock on their finger came. However, the next time you look at that text from your friend or call your dad wishing him a happy Father’s Day on your phone, remember that “conflict minerals” come in more shapes and sizes than just diamond. In fact, rebel groups in countries like the Democratic Republic of the Congo run mines that produce minerals used in the manufacture of consumer electronics. The proceeds fund continuing strife that’s killed up to 5 million people since 1998, more than any conflict since World War II.

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Court Rules that Fed Exceeded Power in Bailout of AIG, But Did Not Harm Shareholders

The United States Court of Federal Claims has held that the Federal Reserve’s 2008 bailout of AIG was illegal. The class-action lawsuit against the federal government was initially filed in 2011 by Maurice Greenberg, the former Chairman and CEO of AIG. Greenberg remains a major shareholder of the global insurance company. Few legal experts gave Greenberg any chance of success when the lawsuit was initially filed.

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NHL and Television Subscribers Reach Settlement in Antitrust Case

The National Hockey League (NHL) and a group of fans reached a settlement last week in an antitrust class-action lawsuit that was originally filed in 2012. The lawsuit was filed in New York federal court by a group of television subscribers who claimed that the NHL, many of the league’s teams, and the league’s television partners violated antitrust laws by imposing territorial restrictions on the broadcast of games.  The NHL uses television blackouts to limit the availability of local, in-market game broadcasts to fans over the internet.

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SEC Sends Strong Enforcement Message by Levying Significant Penalty on Computer Sciences Corp.

The Securities and Exchange Commission (SEC) fined Computer Sciences Corporation $190 million for “manipulating financial results” and concealing significant problems with one of its largest contracts. Civil charges were also brought against eight former executives of the company. The SEC’s inquiry into Computer Sciences lasted more than four years and largely focused on accounting fraud. Computer Sciences Corp. agreed to this penalty, which was primarily a response to financial statement fraud that took place from 2009 to 2012.

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Uber, “I’ve a Feeling we’re Not in Kansas Anymore”

You’ll be out of luck next time you want to hail an Uber down the yellow brick road in Kansas.

Tuesday, May 5, 2015 was the last day Uber operated in the state thanks to a legislative override of Governor Sam Brownback’s veto of the Kansas Transportation Network Company Services Act. The Kansas House of Representatives overruled the veto by a 96-25 vote and a 34-5 vote in the Kansas Senate. The legislation requires drivers pass a local and national criminal background check conducted by the Kansas Bureau of Investigation (FBI) before they are allowed to operate as a driver of a transport network company (TNC). The new law further requires “the vehicle must be covered under primary automobile insurance that provides at least $1 million for death, bodily injury, and property damage, besides meeting other conditions.”

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Late-Stage Protection for Investors Can Inflate Start-Up Valuations

Acquisitions of unicorns, i.e. young tech companies valued at over $1 billion, were a hallmark of 2014. These acquisitions continue to be surprising both in their enormity and frequency. For example, Facebook Inc. acquired the messaging group WhatsApp Inc. for a whopping $19 billion, and then also acquired virtual reality company Oculus VR Inc. for $2 billion. Google Inc. acquired smart-thermometer marker Nest Labs Inc., and other investments, for $3.2 billion. Microsoft Corp. acquired Minecraft game maker Mojang AB for $2.5 billion.

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