Blake L. Osborn

Managing Associate

Los Angeles


Read full biography at www.orrick.com
Blake Osborn is a managing associate in the Los Angeles office and a member of the White Collar, Investigations, Securities Litigation and Compliance Group.  He represents clients in complex civil litigation in state and federal courts, including class actions, business disputes, founder disputes, trade secrets, securities fraud claims, investment disputes, and SEC enforcement actions.

Blake's practice in complex litigation matters focuses on defending companies, officers and directors in class actions, business disputes and regulatory proceedings and investigations in state, federal, and appellate courts throughout the country.  He has represented these companies, directors and officers in various arenas, including matters involving emerging tech companies, software, trade secrets, securities fraud, public entities, accounting fraud, insider trading, and alter ego. 

Blake has also dedicated significant time to pro bono representations in civil rights, unlawful detainer and domestic violence cases.  His pro bono work has included first chairing a Section 1983 trial and oral argument before the California Court of Appeals.

Before joining Orrick, Blake worked as a Deputy Public Defender in Orange County.  In that capacity, Blake individually tried 12 misdemeanor cases, argued more than 20 motions, and managed an extensive case load by representing clients at pretrial conferences.

Notable representations include:

  • Representation of leading self-driving tech startup in business dispute and related merger and acquisition.
  • Representation of leading media and digital video recording company in business dispute.
  • Representation of owner and chairman of a leading entertainment and media company in corporate governance litigation.
  • Representation of major software and hardware company in issues related to a patent-infringement trial.
  • Representation of emerging electronic commerce company in business dispute.
  • Representation of educational startup company in business dispute.
  • Representation of foreign company in trade secrets litigation.
  • Representation of major software company in shareholder derivative action in Delaware.
  • Conducted internal investigation on behalf of public entity concerning potential violations of whistleblower protection act and allegations of misconduct.
  • Representation of international trust entities and Singapore-based public company in action alleging alter ego and RICO liability.
  • Representation of former President and COO of Countrywide Financial Corp. in connection with various federal and state securities lawsuits.
  • Representation of founder and CEO of United Kingdom-based automobile service and repair business in shareholder litigation.
  • Representation of Big Four accounting firm in state court litigation stemming from the Madoff fraud.
  • Representation of city employee in connection with SEC action over alleged misstatements in connection with the issuance of municipal bonds.
  • Representation of mobile device company in connection with securities shareholder class action and derivative action.
  • Representation of medical device company in connection with shareholder class action alleging violations of securities fraud.
  • Representation of global venture investor in various business litigation disputes.

Posts by: Blake Osborn

SEC Updates Revenue Recognition Guidance for Bill-and-Hold Arrangements

Last Friday, the SEC issued two releases regarding guidance on revenue recognition, along with a related Staff Accounting Bulletin. These releases are notable for all SEC registrants, as they update prior revenue recognition guidance.

First, the SEC updated its guidance for criteria to be met in order to recognize revenue when delivery has not occurred, i.e., bill-and-hold arrangements. The SEC’s guidance now follows that of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenues from Contracts with Customers. Per ASC Topic 606, revenue may be recognized when or as the entity satisfies a performance obligation by transferring a promised good or service to a customer, and a good or service is transferred when the customer obtains control of that good or service. In the context of bill-and-hold arrangements, ASC Topic 606 provides specific guidance that certain indicators must be met to show that control has been transferred, including: (i) a substantive reason for such an arrangement where the customer has declined to exercise its right to take physical possession of that product; (ii) the product must be identified separately as belonging to the customer; (iii) the product currently must be ready for physical transfer to the customer; and (iv) the entity cannot have the ability to use the product or direct it to another customer. Until a registrant adopts ASC Topic 606, however, it should continue to follow the older guidance for revenue recognition. In conjunction with the SEC’s release, the SEC’s Office of the Chief Accountant and Division of Corporate Finance also released a bulletin that brings existing SEC staff guidance into conformity with ASC Topic 606.

The SEC also published new guidance with respect to accounting for sales of vaccines and bioterror countermeasures to the Federal Government for placement into the pediatric vaccine stockpile or the strategic national stockpile. In light of the updated ASC Topic 606 referenced above, the SEC states that vaccine manufacturers should now recognize revenue and provide disclosures when vaccines are placed into Federal Government stockpile programs because control of the enumerated vaccines (i.e., childhood disease, influenza and others) will have been transferred to the customer.

Supreme Court Unanimously Limits the SEC’s Ability to Seek Disgorgement

This week, the United State Supreme Court finally resolved a circuit split and unanimously held that SEC actions seeking to disgorge ill-gotten gains are subject to a five-year statute of limitations on civil fines, penalties or forfeitures under 28 U.S.C. § 2462.  This decision is expected to dramatically reduce the SEC’s ability to collect disgorgement in enforcement actions.

The decision arose out of an SEC enforcement action brought in 2009 that alleged between 1995 and 2006, Charles Kokesh, a New Mexico-based investment adviser, misappropriated $35 million from two investment advisory companies he owned and controlled, thereby squandering the money of tens of thousands of small investors. Kokesh was ultimately found liable at trial and the trial court ordered him to disgorge the entire $35 million he was found to have misappropriated plus interest, and pay a civil monetary penalty.  Kokesh subsequently challenged the disgorgement order before the U.S. Court of Appeals for the Tenth Circuit, arguing that the SEC’s claim for disgorgement was subject to the five year statute of limitations period codified in Section 2462, and therefore the $35 million disgorgement amount should be significantly reduced by eliminating any ill-gotten gains received prior to 2004—five years prior to the initiation of the SEC enforcement action.  A three judge circuit court panel of the Tenth Circuit unanimously disagreed, and upheld the disgorgement order on the basis that disgorgement is not a “penalty” or “forfeiture” as defined in Section 2462, but rather was “remedial” and “does not inflict punishment” because it leaves the wrongdoer “in the position he would have occupied had there been no misconduct.”  On this basis, the Tenth Circuit held that Section 2462’s limitations period was inapplicable to disgorgement. READ MORE

Hold the Phone: SEC Takes One Last Stand Before the Tenth Circuit regarding the Constitutionality of the SEC’s Administrative Law Judges

Last week, the United States Securities and Exchange Commission filed a petition for rehearing en banc with the Tenth Circuit Court of Appeals, imploring the court to reconsider a divided panel’s ruling on the unconstitutionality of its administrative law judges in Bandimere v. SEC.  In that ruling (detailed here), the Tenth Circuit overturned the Commission’s sanctions against Mr. Bandimere because the SEC administrative law judge (“ALJ”) presiding over Mr. Bandimere’s case was an inferior officer who should have been constitutionally appointed (rather than hired) to the position, in violation of the Appointments Clause of the United States Constitution.

Primarily relying on its prior submissions and Judge Monroe G. McKay’s dissent in the panel’s original ruling, the SEC argues that the original decision reflects a fundamental misunderstanding of the role of ALJs and Supreme Court precedent, and risks throwing essential features of the agency into disarray. In particular, the SEC questioned the majority’s opinion that Freytag v. Commissioner, 501 U.S. 868 (1991), was dispositive in equating special trial judges of tax court to the ALJs to find that the ALJs are inferior officers who must be constitutionally appointed.  The SEC distinguishes the roles of its ALJs from those of the special tax court trial judges by noting differences in their power and function.  First, the special trial judges are vested with authority, including the power to enforce compliance with their orders, that is different in degree and kind from the powers given to ALJs.  For example, both the special trial judges and ALJs have the power to issue subpoenas, but unlike the special trial judges, ALJs have no authority to enforce subpoenas.  ALJs can only request the Commission to seek enforcement of the subpoenas in district court.  In addition, unlike the special trial judges, ALJs cannot use contempt power—a hallmark of a court—to enforce any order it may issue.  Second, the function between the special trial judges and ALJs differ because the Tax Court in Freytag was required to defer to the special trial judge’s factual finding unless “clearly erroneous, whereas the SEC decides all questions of fact and law de novo.

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Not So Fast: The Tenth Circuit Creates a Split by Denying the Constitutionality of the SEC’s Administrative Law Judges

court decision

Just before the clock struck 2017, the United States Court of Appeals for the Tenth Circuit weighed in on the constitutionality of the United States Securities and Exchange Commission’s (“SEC” or “Commission”) administrative law judges. In Bandimere v. SEC, the Tenth Circuit overturned Commission sanctions against Mr. Bandimere because the SEC administrative law judge (“ALJ”) presiding over Mr. Bandimere’s case was an inferior officer who should have been constitutionally appointed to the position in violation of the Appointments Clause of the United States Constitution.

The SEC originally brought an administrative action against Mr. Bandimere in 2012, alleging he violated various securities laws. An SEC ALJ presided over the fast paced, “trial-like” hearing, and the ALJ ultimately found Mr. Bandimere liable, barred him from the securities industry, imposed civil penalties and ordered disgorgement.  The SEC reviewed that decision and reached the same result.  Mr. Bandimere, therefore, appealed the SEC’s decision to the Tenth Circuit. READ MORE

Ninth Circuit Smells a Rat and Reinstates Claim That Pharmaceutical Company Failed to Disclose Cancers in Animal Testing

The Ninth Circuit recently revived a securities class action against Arena Pharmaceuticals, issuing a decision with important guidance to pharmaceutical companies speaking publicly about future prospects for FDA approval of their advanced drug candidates. The court’s opinion reemphasizes the dangers of volunteering incomplete information, holding that a company that touts the results of trials or tests as supportive of a pending application for FDA approval must also disclose negative test results or concerns expressed by the FDA about those studies—even if the company reasonably believes the concerns are unfounded and are the product of a good faith disagreement.

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No Longer a Mirage: FCPA Compliance and Cooperation Has Its Benefits

On September 12, 2016, the SEC announced that it had reached a settlement with Jun Ping Zhang (“Ping”), a former executive of a Chinese subsidiary of Harris Corporation (“Harris”), regarding alleged violations of the Foreign Corrupt Practices Act (“FCPA”). The settlement was unusual, in that the SEC declined to also bring charges against Harris, an international communications and information technology company.

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The SEC Audit Trail – Several Industry Groups See Problems as Currently Proposed

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.

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The SEC Critiques Itself – Could Changes to SEC Enforcement Investigations Be On The Way?

Last week, the SEC’s Office of Inspector General (“OIG”) released its semiannual report to Congress, which details the OIG’s independent and objective audits, evaluations, investigations and other reviews of the SEC’s programs and operations in order to prevent and detect fraud, waste and abuse in SEC programs and operations, and other vulnerabilities the SEC faces.  In the most recent report, the OIG was critical of various programs, but most notably: (1) recommended a new framework to increase the Office of Compliance Inspections and Examinations coverage of registered investment advisors, and (2) informed Congress it was conducting a further evaluation on the SEC’s enforcement investigations to ensure that investigations are coordinated internally and across SEC divisions and offices.

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SEC Chair Warns Silicon Valley That Unicorns Need To Be Watched and Monitored

Speaking last week at the SEC’s and Rock Center’s Silicon Valley Initiative at Stanford Law School, SEC Chair Mary Jo White cautioned Silicon Valley’s start-up companies regarding their potential lack of internal controls.  In particular, she warned that unicorns—nonpublic start-up companies valued north of one billion dollars—may warrant special scrutiny into whether their corporate governance and investor disclosures are keeping pace with their growing valuations.  Ms. White repeatedly warned that the prestige of obtaining “unicorn” status may drive companies to inflate their valuations.

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Mark Cuban Challenges the Referee: the Constitutionality of SEC In-House Courts

in-house courts

After the repeated challenges to the SEC’s in-house courts as previously reported, Mark Cuban joined the debate by filing an amicus curiae brief in support of petitioners Raymond J. Lucia Companies, Inc. and Raymond J. Lucia (collectively “Lucia”) in Lucia v. SEC.  Cuban, describing himself as a “first-hand witness to and victim of SEC overreach” in a 2013 insider trading case brought against him in an SEC court, argued that the D.C. Circuit should grant the petitioners’ appeal because SEC in-house judges are unconstitutionally appointed.

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