Deal Diary

Corporate Innovation and Emerging Technologies

Successful boards of directors play a critical role in overseeing a company’s technology and innovation strategy. Emerging technologies impact almost all industries. To effectively guide corporate innovation, directors should devote attention to understanding these disruptors and related operational and legal trends.

Election and Impeachment

The presidential race will garner much of the attention during the 2020 election cycle, but there is fierce competition elsewhere, too. Republicans and Democrats are fighting for both U.S. House of Representatives and U.S. Senate seats in the 116th U.S. Congress, with the Republican Party trying to regain House majority. Meanwhile, impeachment proceedings against President Donald Trump are shaping up to be a potential game changer for certain members of the Senate who are running for president. They’ll lose valuable time on the campaign trail while serving as jurors for the duration of the impeachment trial.

With threats of nation-states infiltrating supply chains and landmark laws being passed, cybersecurity and privacy are critical aspects of director oversight. Recent court decisions and speeches from the SEC have made it clear that directors are not able to delegate cybersecurity oversight: directors each have the responsibility to personally understand cybersecurity risk and ask appropriate questions. Directors must focus on internal controls to guard against cyber-threats (including accounting, cybersecurity and insider trading) and expand diligence of thirdparty suppliers. Integrating both privacy and security by design will be critical to minimizing ongoing risk of cybersecurity breaches and state and federal enforcement.

Corporate Culture

The corporate culture of a company starts at the top, with the board of directors, and directors should be attuned not only to the company’s business, but also to its people and values across the company. Ongoing and thoughtful efforts to understand the company’s culture and address any issues will help the board prepare for possible crises, reduce potential liability and facilitate appropriate responses internally and externally.

Akin Gump has issued an alert highlighting court rulings, SEC statements and other regulations and requirements involving cryptocurrency that have been issued and developed in 2018.

Click here to read the full alert.

As the U.S. Securities and Exchange Commission (SEC) stated previously, it is continuing to scrutinize and commence enforcement actions against companies, advisors and investors involved in the offering of cryptocurrencies and related activities.

According to a recent report published by Lex Machina, securities litigation in general and those that are related to blockchain, cryptocurrency or bitcoin specifically, showed a marked increase during the first two quarters of 2018 as compared to 2017.  The total number of securities cases that referenced “blockchain,” “cryptocurrency” or “bitcoin” in the pleadings tripled in the first half of 2018 alone compared to 2017.

Akin Gump corporate partner Courtney York authored “The Current Trends in Corporate Venturing” for Texas Lawyer. The article explores reasons for increased corporate venture capital (CVC) activity and its impact on other investment varieties. Courtney concludes by noting that an interesting issue to watch for is how this trend will affect private equity investments.

This week we highlight an opinion piece published by Wharton professor Kevin Werbach, which explains the differences between cryptocurrency, blockchain and cryptoassets. Beyond providing a plain-English background on the design principles and technological foundations of each category, Professor Werbach compares their goals and long-term prospects for how they will shape our financial world.