INSTITUTIONALIZED DISRUPTION: THE RISE OF THE REFORMER STARTUP
Abraham J.B. Cable, 12 Hastings Bus. L. J. 1 (2015)
This essay emerges from a joint symposium of the Hastings Business Law Journal and the Hastings Science and Technology Law Journal entitled "Regulating the Disruption Economy: Tech Startups as Regulatory Reformers." The symposium featured panels on virtual currency, crowdfunding, and the sharing economy. Drawing from the symposium, this essay considers why startups are increasingly taking up the mantle of regulatory reform, how they are achieving their successes, and whether this is a positive development for our political economy. It tentatively proposes that: (1) features of the current venture-capitalist market and startup ecosystem, rather than the pace of technological advancement, might explain the timing, (2) a "bootleggers and Baptists" dynamic of popular messaging and well-resourced interest groups explain the successes, and (3) we should be cautiously optimistic about this "institutionalized disruption" of incumbents.
Reza Dibadj, 12 Hastings Bus. L. J. 15 (2015)
Beyond all the hype surrounding crowdfunding there is a curious incongruity. On the one hand, there exist apparently successful crowdfunding sites; on the other hand, more than three years after the Jumpstart Our Business Act ("JOBS Act") mandated an equity crowdfunding exception, we are still waiting for final regulations from the Securities and Exchange Commission.
This essay explores this irony, arguing that existing crowdfunding sites carefully manage around a fundamental ambiguity in the securities laws-a surprisingly fuzzy definition of what a "security" is. It then shifts to understanding the existing regulatory framework: the federal crowdfunding statute and proposed rules, as well as other existing alternatives issuers might consider. Second, this essay surveys other potential alternatives to place crowdsourced securities and even new state crowdfunding exemptions-but ultimately argues that none are attractive. As such, it is far more likely that crowdfunding sites will continue to operate as they currently do, rather than subject themselves to any new crowdfunding rules or seek alternative exemptions. Finally, it argues that, for all of its advantages, crowdfunding presents fundamental negatives that cannot be regulated away. As such, we must face a stark choice: either prophylactically ban the activity, or allow it with few restrictions. To think that we can craft a balanced regulatory framework for crowdfunding is delusional.
EMPLOYEE PERKS IN SILICON VALLEY: TECHNOLOGY COMPANIES LEAD THE "ARMS RACE" AS CORPORATE LAW TRAILS IN REPRESENTING SHAREHOLDER INTERESTS
Student Note, Thuy Nguyen, 12 Hastings Bus. L. J. 51 (2015)
Within the last decade, Silicon Valley technology companies have increasingly engaged in a practice of providing nontraditional perks to employees, in what has been characterized as an "arms race" to attract engineering talent. As this practice expands throughout Silicon Valley, so do the costs associated with providing these perks. While companies view the practice as a tool to recruit talent, boost productivity, and increase efficiency, the IRS's renewed interest in scrutinizing the tax laws casts doubt on whether these stated objectives would remain robust in the future.
This Note focuses on the practice of providing employee perks from a shareholder governance perspective. In particular, this Note identifies the challenges shareholders face in properly assessing how the costs associated with in-kind perks affect share value under the current corporate legal framework. This Note then proposes an interim solution for shareholders to address concerns about employer-provided perks. Ultimately, this Note aims to foster a conversation between shareholders and management in order to provide these key stakeholders with the appropriate knowledge to effectively confront the long-term consequences of this practice.