Alexander Talarides, a senior associate in the San Francisco office, is a member of the Securities Litigation, Investigations and Enforcement Group.
Alex's practice focuses on disputes involving mergers and acquisitions, proxy contests, directors and officers liability, indemnification and advancement, and stockholder access to books and records; counseling directors, officers, special committees and stockholders on issues of corporation and alternative entity law; and disputes involving complex agreements such as merger agreements, asset purchase agreements, limited liability company and partnership agreements.
Alex has handled a broad array of securities, financial, accounting and other business disputes in federal and state courts throughout the country. He has also assisted boards of directors in connection with stockholder derivative actions and has assisted boards, officers and others in SEC investigations.
Alex has represented Chesapeake Energy, Nordstrom, PayPal, 23andMe, Deckers Outdoor, Oracle, Microsoft, LinkedIn, ASUS, NVIDIA, SemiLEDs, Electronic Arts, Emerson Electric, Barclays, Charles Schwab, UBS, Citigroup, Credit Suisse, Viasystems Group, ZipRealty, Synopsys, SureWest Communications, Recurrent Energy, Pre-Paid Legal Services, Merix, Par Pharmaceutical Companies, among others.
Alex's experience includes the following.
- Tompkins v. 23andMe, Inc., 840 F.3d 1016 (9th Cir. 2016). Successfully compelled class action claims alleging violations of various consumer protection statutes into arbitration, which led to dismissal of the claims. The trial court's decision was affirmed in a precedent-setting decision by the U.S. Court of Appeals for the Ninth Circuit.
- In re Xoom Corp. Stockholder Litigation, 2016 WL 4146425 (Del. Ch. 2016). Defeated stockholders' attempt to enjoin PayPal's acquisition of Xoom, as well as the stockholders' subsequent effort to recover attorneys' fees under the corporate benefit doctrine based on supplemental disclosures that mooted certain disclosure claims.
- In re Rocket Fuel, Inc. Securities Litigation, 2015 WL 9311921 (N.D. Cal. 2015). Obtained dismissal on behalf of underwriters of class action claims asserted against them under the Securities Act based on Rocket Fuel's IPO and secondary offering.
- Burbrink v. Campbell, 2015 U.S. Dist. LEXIS 128699 (W.D. Wash. 2015). Obtained dismissal of stockholder derivative action asserting claims for breach of fiduciary duty against Nordstrom's board of directors.
- Kelly v. Electronic Arts, Inc., 2015 WL 1967233 (N.D. Cal. 2015). Obtained dismissal of securities class action asserting claims under the Securities Exchange Act against the company and its top officers.
- Jones v. Martinez, 230 Cal. App. 4th 1248 (2014). Obtained dismissal of stockholder derivative action asserting claims for breach of fiduciary duty against Deckers Outdoors' top officers and board of directors. The dismissal was affirmed in a precedent-setting opinion by the California Court of Appeal.
- In re NVIDIA Corp. Securities Litigation, 768 F.3d 1046 (9th Cir. 2014). Obtained dismissal of securities class action asserting claims under the Securities Exchange Act against the company and its top officers. The dismissal was affirmed in a precedent-setting opinion by the U.S. Court of Appeals for the Ninth Circuit.
- United Food and Commercial Workers Union v. Chesapeake Energy Corp., 774 F.3d 1229 (10th Cir. 2014). Obtained dismissal of securities class action asserting claims under the Securities Act against the company, its top officers, and board of directors. The dismissal was affirmed in a precedent-setting opinion by the U.S. Court of Appeals for the Tenth Circuit.
- Weinstein v. McClendon, 757 F.3d 1110 (10th Cir. 2014). Obtained dismissal of securities class action asserting claims under the Securities Exchange Act against Chesapeake Energy and its top officers. The dismissal was affirmed in a precedent-setting opinion by the U.S. Court of Appeals for the Tenth Circuit.
- The Raymond L Permenter Revocable Trust v. Dunham, No. CJ-2014-2064 (Okla. Cnty. Dist. Ct. 2014). Obtained dismissal of stockholder dervivative action asserting claims for breach of fiduciary duty against Chesapeake Energy's board of directors.
- In re SemiLEDs Corp. Securities Litigation, No. 13-4776 (S.D.N.Y. 2014). Obtained dismissal of securities class action asserting claims under the Securities Exchange Act against the company and its top officers.
- Egleston v. McClendon, 318 P.3d 210 (Okla. Civ. App. 2013). Obtained dismissal of stockholder derivative action asserting claims for breach of fiduciary duty against Chesapeake Energy's board of directors. The dismissal was affirmed in a precedent-setting opinion by the Oklahoma Court of Civil Appeals.
- Norris v. McClendon, No. 111,137 (Okla. Civ. App. 2014). Obtained dismissal of stockholder derivative action asserting claims for breach of fiduciary duty against Chesapeake Energy's board of directors. The dismissal was affirmed on appeal.
- In re Chesapeake Energy Corp. 2012 ERISA Class Litigation, 2013 WL 5596908 (W.D. Okla. 2013). Obtained dismissal of class action asserting claims under the Employee Retirement Income Security Act against the company, its top officers and board of directors.
- Percoco v. Deckers Outdoor Corp., 2013 WL 3584370 (D. Del. 2013). Obtained dismissal of securities class action asserting claims under the Securities Exchange Act against the company and its top officers.
- Cheseldine v. McClendon, No. 111,890 (Okla. Civ. App. 2013). Obtained dismissal of stockholder derivative action asserting claims for breach of fiduciary duty against Chesapeake Energy's board of directors. The dismissal was affirmed on appeal.
- Bracht v. Deckers Outdoor Corp., No. 12-4768 (C.D. Cal. 2012). Obtained dismissal of securities class action asserting claims under the Securities Exchange Act against the company and its top officers.
- Town of Davie Police Officers Retirement System v. RightNow Technologies, Inc., No. 11-1032 (Gallatin Cnty. Dist. Ct. 2012). Obtained dismissal of stockholder class action challenging Oracle's acquisition of RightNow Technologies.
- Deborah G. Mallow IRA SEP Investment Plan v. McClendon, 2012 WL 2036748 (W.D. Okla. 2012). Defeated stockholders' attempt to enjoin Chesapeake Energy's annual stockholder meeting.
- Granfield v. NVIDIA Corp., 2012 WL 2847575 (N.D. Cal. 2012). Obtained dismissal of class action asserting claims against the company for breach of implied warranties and violations of California's consumer protection laws.
- Asbestos Workers Philadelphia Pension Fund v. McCormick, No. 0910-14399 (Multnomah Cnty. Cir. Ct. 2010). Defeated stockholders' attempt to enjoin Viasystem Group's acquisition of Merix.
Startups need funding, and most startups want to raise money with as little legal red tape as possible. But when a startup takes investment money, it is issuing securities, and federal securities laws generally require a company – or “issuer” – to register the offering and sale of any securities with the Securities Exchange Commission (“SEC”). The bad news is that most early-stage companies don’t have the legal resources to comply with the SEC’s registration and reporting requirements. The good news is that Congress and the SEC recognize this and so have created certain exemptions from the registration requirement.
The most commonly used exemptions derive from Sections 4(a)(2) and 3(b)(1) of the Securities Act of 1933. Section 4(a)(2) exempts issuer transactions “not involving any public offering,” while Section 3(b)(1) authorizes the SEC to create additional exemptions. The SEC adopted Regulation D (“Reg D”) in 1982 to clarify and expand the exemptions available under these two sections. The SEC further expanded Reg D in 2013 following passage of the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”).
Until this year, Reg D included three rules – Rules 504, 505, and 506 – that provided specific exemptions from registration. Rules 504 and 505 exempted certain offerings up to $1 million and $5 million, respectively. Rule 506 spelled out two “safe harbors” – 506(b) and 506(c). If an offering met the conditions of either of Rule 506’s “safe harbors,” it would be deemed a transaction “not involving any public offering” and would be exempt under Section 4(a)(2). READ MORE
On February 9, 2017, the Supreme Court of Delaware summarily affirmed the Court of Chancery’s decision in In re Volcano Corp. Stockholder Litigation which had dismissed plaintiffs’ complaint on defendants’ 12(b)(6) motion to dismiss.
Plaintiffs, former stockholders of Volcano Corporation, had brought an action against defendants for breaches of fiduciary duty arising from the all-cash merger between Volcano and Philips Holding USA Inc. The parties had disputed what standard of review the Court of Chancery should apply: the Revlon test, as plaintiffs claimed, because Volcano’s stockholders received cash for their shares, or the irrebuttable business judgment rule, as defendants argued, because Volcano’s stockholders were “fully informed, uncoerced, and disinterested” when they approved the merger by tendering a majority of Volacano’s shares into a tender offer. As the Court of Chancery explained, if a business judgment rule is irrebuttable, plaintiffs could only challenge the transaction on the basis of waste. Thus, plaintiffs also argued in the alternative that if the business judgment rule did apply, it should only be a rebuttable presumption.
In June 2014, the Office of Investor Education and Advocacy at the Securities and Exchange Commission issued an alert cautioning that investment newsletters are often “used to carry out schemes designed to deceive investors.” In particular, the SEC advised investors to be “highly suspicious” of newsletter “promises” of “high investment returns” and to contact the SEC to report potential securities fraud in newsletters and other promotional materials.
Last week, several securities industry groups filed critical responses to the SEC’s plan for an audit trail. While most groups that commented on the SEC’s proposed regulation supported implementing the proposal, several had concerns regarding the cost for investors and firms, and the protection of private data.
On May 31, 2016, the Delaware Chancery Court rejected shareholders’ allegations of corporate wrongdoing in a derivative suit against a national healthcare company, Bioscrip, holding that Plaintiff failed to adequately allege demand futility with respect to Bioscrip’s board of directors. For the first time, the Delaware Court found that Plaintiff was required to demonstrate demand futility with respect to the board of directors that was in place after shareholders filed their derivative complaint. Park Emps.’ & Ret. Bd. Emps.’ Annuity & Ben. Fund v. Smith, No. 11000-VCG (Ch. May 31, 2016).
The ripple effects of the Second Circuit’s landmark insider trading decision, United States v. Newman, 773 F.3d 438 (2d Cir. 2014), were felt again last week. On Tuesday, February 23, 2016, the U.S. Securities and Exchange Commission (“SEC” or the “Commission”) ruled that Former Neuberger Berman Analyst Sandeep “Sandy” Goyal, whom the SEC previously barred from the securities industry after he pled guilty to insider trading, could participate in the industry again. The SEC’s rare decision to lift an administrative bar order resulted from Newman, (previously discussed at length here), which led to Goyal’s criminal conviction being vacated and the civil claims against him being dropped by the SEC. Newman raised the bar for what prosecutors in tipper/tippee insider trading cases have to show by holding that tipper/tippee liability requires the tipper to receive a “personal benefit” amounting to a quid pro quo or pecuniary benefit in exchange for the tip and the tippee to know of that benefit. Despite the SEC’s decision to drop the administrative bar against Goyal in light of Newman, as recently as SEC Speaks on February 19-20, 2016, SEC Deputy of Enforcement Stephanie Avakian affirmed that insider trading cases “continue to be a priority” for the Commission. Nonetheless, the ripple effects of Newman continue to call the government’s ability to successfully bring both criminal and civil cases into question.
Ruling from the bench on dueling motions for summary judgment just days before a special meeting of shareholders was to be held, on December 21, 2015, Delaware Vice Chancellor J. Travis Laster invalidated certain provisions in VAALCO Energy, Inc.’s (“VAALCO”) certificate of incorporation and bylaws (the “Charter and Bylaws Provisions”). The litigation and ruling stem from investor attempts to remove a majority of VAALCO’s Board. VAALCO argued that the Charter and Bylaws Provisions prevented investors from removing board members without cause. Vice Chancellor Laster disagreed, holding that these provisions, in purporting to restrict stockholders’ ability to remove directors without cause in the absence of a classified board or cumulative voting provision, violated Delaware corporate law. The ruling is a cautionary note for a small percentage of Delaware corporations that apparently still have similar provisions on their books.
On August 5, 2015, the Securities and Exchange Commission approved its final rule subjecting most public companies to the so-called “Pay Ratio Disclosure” mandated by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. The SEC voted 3-2 to approve the measure, with the panel’s two Republican members opposing it. In the split vote, the SEC finally put into place one of the most controversial rules mandated by Dodd-Frank. In the years since the SEC began working on the rule, it has attracted an intense measure of both public scrutiny and advocacy, drawing more than 286,000 public comments.
It is well-established that a shareholder-plaintiff may not assert derivative claims against a corporation’s officers or directors unless he or she makes a pre-suit demand on the corporation’s board of directors and alleges particularized facts showing that the demand was wrongfully refused, or alleges particularized facts showing that a demand on the board would have been futile. One question that frequently arises is whether the shareholder-plaintiff may obtain discovery from the corporation and its officers and directors in order to assist his or her compliance with this threshold pleading obligation.
Back in May we discussed ATP Tour, Inc. v. Deutscher Tennis Bund a seminal Delaware Supreme Court case that upheld a non-stock corporation’s “loser pays” fee-shifting bylaw. ATP Tour held that where a Delaware corporation adopts a fee-shifting bylaw, it can recover its fees and costs from any shareholder that brings a derivative lawsuit and loses. Many commentators have suggested the case would effectively kill derivative actions in Delaware and indeed, since the time of that decision, the Delaware Corporation Law Council has proposed amendments to the Delaware General Corporation Law that would limit its applicability to only non-stock corporations.
Last week the Oklahoma State Legislature went a step further than ATP Tour and amended the Oklahoma General Corporation Act to specifically require fee-shifting for all derivative lawsuits brought in the state, whether against an Oklahoma corporation or not. Unlike the fee provision in ATP Tour, however, the law also affords derivative plaintiffs the right to recover their fees and costs should they win final judgment.
The difference is likely substantial. For while the law will potentially chill unmeritorious derivative actions, also known as “strike suits,” it could also provide an incentive for derivative plaintiffs with strong claims. Where shareholders use the “tools at hand”—including books and records inspection requests—to carefully vet their claims before filing, the promise of a fee recovery could encourage shareholder plaintiffs to bring claims they otherwise might not.
Consider: in the typical derivative lawsuit, the shareholder plaintiff stands to gain nothing tangible if he or she wins. Because he or she is suing on behalf of the corporation, any recovery will inure to the corporation itself. Thus, under the old regime, even if a derivative lawsuit was successful, the plaintiff would receive, at most, any resulting increase in the value of his or her company stock. Under the new statute, that same plaintiff could stand to receive the not-insubstantial costs of his or her efforts.