Q4 2018 Prime Unicorn Index Reconstitution Report

The Prime Unicorn Index added 15 constituents and dropped 5 in its quarterly reconstitution, for a total of 112 index components as of Q4 2018.

As more high-performing companies defer or eliminate plans to go public, the demand for information and investment exposure to this growing portion of the American economy has soared. The Q4 Prime Unicorn Index Reconstitution Report provides more information on the new 15 constituents and how they compare against the Index.

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The Prime Unicorn Index Announces Quarterly Reconstitution

Year to Date Return on the Index is 25.16% A record 15 private companies joined the Index, while five left.

The Prime Unicorn Index, the first index to track the share price performance of privately-funded U.S. companies, announced today its quarterly reconstitution. The index, which gives equal-weighting to its constituents, has added a record 15 companies that qualify as Unicorns or Approaching Unicorns. Five companies have left the index – two have had successful IPOs and three were acquired.

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Broker-Dealer and Investment Adviser Agrees to Settle SEC Enforcement Action Arising From a Data Security Incident

Guest post by William R. Daugherty and John Busch, Baker & Hostetler LLP

The U.S. Securities and Exchange Commission (SEC) recently announced a consent order settling an enforcement action brought by the SEC against Voya Financial Advisors Inc. (VFA) in connection with a data security incident that occurred in 2016. VFA is a registered broker-dealer and investment adviser with the SEC. The order memorializes the SEC’s agreement to accept $1 million in settlement of the charges alleging that VFA violated both the SEC’s “Safeguards Rule” and “Identify Theft Red Flags Rule.” This was the SEC’s first enforcement action under the Identity Theft Red Flags Rule.

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Responsibilities When Outsourcing to Third-Party Service Providers

Guest Post from REVERSE Inquires by Mayer Brown, VOLUME 01, ISSUE 05 | August 14, 2018

Discussions on regulatory requirements generally focus on substance. Less often highlighted is how the nuts and bolts of compliance and daily operations are actually carried out—often by third-party service providers. FINRA recognizes the role third-party service providers play and even hosts the Compliance Vendor Directory. We discuss FINRA’s guidelines for the use of third-party service providers below using examples relating to technology governance, cybersecurity and anti-money laundering (“AML”) programs. These topics were included in the FINRA 2018 Regulatory and Examination Priorities Letter and were chosen to highlight the role of outsourcing across various focus areas.

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Delaware Court of Chancery Finds a Material Adverse Effect and Permits Termination of Merger Agreement

Post from Insight & Analysis: Wilson Sonsini Goodrich & Rosati

In a 246-page post-trial decision issued this week, the Delaware Court of Chancery ruled that a buyer could terminate a $4.75 billion public company acquisition because of material adverse effects that had occurred at the seller following signing.1 The decision is the first Delaware case to reach such an outcome and provides critical guidance for such situations going forward.

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Takeaways from SEC’s First Ever Enforcement Actions Against Cryptocurrency Firms for Failing to Register as a Broker-Dealer and Investment Company

Guest post by Michael S. Dicke and Alexis I. Caloza of Fenwick & West LLP

Over the past year, the U.S. Securities and Exchange Commission has ramped up its scrutiny of cryptocurrencies and other digital token offerings. On Sept. 11, 2018, the SEC escalated its crackdown when it announced a pair of settled enforcement actions against non-issuers participating in the offer and sale of cryptocurrencies it deemed unregistered securities. As with prior cryptocurrency cases, the SEC charged the defendants with offering or selling securities without filing a registration statement or having a valid exemption from registration. However, these cases mark the SEC’s first cryptocurrency enforcement actions against non-issuers for failing to register as broker-dealers and investment companies. As such, they highlight the SEC’s continuing efforts to bring the purchase and sale of cryptocurrencies within a regulated framework, including by targeting third parties who facilitate the purchase and sale of such assets.

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