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SEC likely doesn’t have authority to enact new regulations on ‘unicorns,’ law professor writes
LAWRENCE — Not long ago, private startup companies that hit a billion-dollar valuation before going public were rare enough to earn the nickname unicorns. Now that there are more than 1,000 such companies, the Securities and Exchange Commission is weighing new regulations designed to force them to go public and take on the obligations that come with that status. A University of Kansas researcher has just published an article identifying a fundamental legal obstacle for this regulatory agenda.
Donna Ginther awarded Regents Distinguished Professorship
LAWRENCE — The Kansas Board of Regents has named an accomplished economics scholar at KU as its next Regents Distinguished Professor. Donna Ginther, Roy A. Roberts Distinguished Professor of economics and director of the Institute for Policy & Social Research, earned the new title at February’s Kansas Board of Regents meeting.
KU students to present at Kansas Undergraduate Research Days
LAWRENCE — Ten University of Kansas students will participate in the 2022 Kansas Undergraduate Research Days, which will be March 2-3. Undergraduate students from each Kansas Board of Regents (KBOR) four-year public university are working on 30 projects that will be presented online. KU is the 2022 sponsor of this free and virtual event. KU participants from Kansas include students from Berryton, Leawood, Lenexa, Liberal, McLouth, Overland Park, Paola and Wichita.
Full stories below.
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Contact: Mike Krings, KU News Service, 785-864-8860, [email protected], @MikeKrings
SEC likely doesn’t have authority to enact new regulations on ‘unicorns,’ law professor writes
LAWRENCE — Not long ago, private startup companies that hit a billion-dollar valuation before going public were rare enough to earn the nickname unicorns. Now that there are more than 1,000 such companies, the Securities and Exchange Commission is weighing new regulations designed to force them to go public and take on the obligations that come with that status. A University of Kansas researcher has just published an article identifying a fundamental obstacle for this regulatory agenda: the law.
A private company is not required to disclose information to investors in the same manner as public companies do. In the past, when companies hit a certain magnitude, they would go public, begin making periodic disclosures to investors and come under the full jurisdiction of the federal securities laws and the SEC. But now, companies can raise enormous amounts of capital and employ thousands of people worldwide, all while remaining private. Under Chair Gary Gensler, there has been increasing talk from the SEC that it will enact new ways to force such companies into the light. Policymakers, legal researchers and others have all tended to assume the SEC has the necessary authority to do this.
Alexander Platt, associate professor of law at KU, has published an article challenging this view. He examined the governing law and said that any effort to redraw the lines between public and private companies most likely would need to come from Congress.
“The SEC wants to reassert its authority over this rapidly expanding area of the market, which has slipped away from its control over the last decade,” Platt said. “Law professors have been extremely worried about the expansion of private markets and have generally assumed the SEC has the authority to act to reassert its jurisdiction without getting new authorization from Congress.”
Platt’s article, available on SSRN and forthcoming in the Michigan Law Review Online, identifies the limits on the SEC’s authority. His analysis focuses on Exchange Act Section 12(g), which requires companies to go public when they have more than 2,000 shareholders “of record.” The 2,000 shareholder limit does not operate as a meaningful constraint because a single “record” shareholder may be composed of tens, hundreds or thousands of real human investors. The SEC’s planned proposal is to look through the record holders to the beneficial investors behind them for purposes of section 12(g). For instance, instead of counting a venture capital fund investor as one holder of record, as it would be under current rules, the SEC’s proposal may require counting up all of the fund’s investors – and perhaps all of their investors as well. In this way, the SEC would ensure that companies hit the 2,000 shareholder limit much earlier in their corporate lives and thus would be forced to go public.
But, while Section 12(g) is an important tool for the SEC, Platt said it likely doesn’t give the agency the authority to do this.
“My point in this paper is to set aside the questions about the wisdom of this policy change and ask a classic lawyerly question: ‘Can they do this?’ As I show, there is good reason to think not. If the SEC moves forward with this rule, it could be struck down by the courts,” he said.
Platt explores the legislative history of the JOBS Act of 2012, which raised the shareholder limit from 500 to 2,000. During debate in Congress, Democratic senators and congressional representatives tried four times to add an amendment to the bill that would have expressly given the SEC authority to look through to beneficial owners – and Congress four times rejected these efforts. Courts would be unlikely to override Congress’ decision not to authorize the SEC to do so, he wrote.
Additionally, changes to the line between public and private markets that happened in 1933 and 1964 were made by Congress and that authority has not been handed over to an agency such as the SEC, Platt wrote.
For the changes in public and private regulation to happen, the SEC would first need to make an official proposal, which would then go through a notice and comment period, Platt wrote. If it were then made official, it would likely face legal challenges in appeals court that the agency holds the authority to change oversight in the proposed manner.
Platt previously practiced as a litigator in Washington, D.C., in securities regulation cases, and he clerked for the U.S. Court of Appeals for the D.C. Circuit, which would likely hear any legal challenge to this regulation.
“Any fundamental redrawing of the boundary between public and private markets will likely have to come from Congress – just as it did in 1933 and 1964,” he wrote.
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Contact: Andy Hyland, Office of Public Affairs, 785-864-7100, [email protected], @UnivOfKansas
Donna Ginther awarded Regents Distinguished Professorship
LAWRENCE — The Kansas Board of Regents has named an accomplished economics scholar at KU as its next Regents Distinguished Professor.
Donna Ginther, Roy A. Roberts Distinguished Professor of economics and director of the Institute for Policy & Social Research, earned the new title at February’s Kansas Board of Regents meeting.
The purpose of the Regents Distinguished Professorship program is to attract and retain established scholars whose research projects augment the state’s economic and industrial development.
“I am honored by this distinction. Kansas has been my home for the last 20 years. Over that time, I have worked with students, colleagues at KU and leaders throughout the state on research to help us understand what policies best strengthen the Kansas economy,” Ginther said. “I am proud to serve the state in this way.”
Ginther’s research, which has led to more than $7 million in grant funding, focuses on topics including scientific labor markets, gender differences in employment outcomes, wage inequality and children’s educational attainments. Ginther currently serves as an adviser to Gov. Laura Kelly’s Council on Tax Reform, providing the council with information on the current effects of the state tax structure on Kansans and how those impacts would shift with tax policy changes. Her research addresses a broad range of topics, asking what policies and conditions contribute to healthy and vibrant communities. This work supports KU and the Board of Regents’ strategic goals to advance Kansas’ economy.
“Professor Ginther’s research findings help build a healthier and more equitable society,” Chancellor Douglas A. Girod said. “These are keys to the economic growth of our state and nation, and this professorship signals the importance of her work to the economic development of our state and recognizes her service to Kansas and our nation.”
She has also contributed recent research on the economic impact of COVID-19 and its effect on the Kansas economy. Through her research, reports and consultations with government leaders and state institutions, she has supported economic development in Kansas. Under her leadership, the Institute for Policy & Social Research has developed and maintained an online library of resources on the public health and economic implications of the pandemic.
Before joining the KU faculty in 2002, Ginther worked as a research economist and associate policy adviser at the Federal Reserve Bank of Atlanta. She has testified before Congress and consulted on equity and diversity issues in science funding with organizations like the National Academies of Sciences, the National Institutes of Health and the Sloan Foundation.
She has earned several teaching and research awards at KU, including the Byron T. Shutz Award for Excellence in Teaching and the University Scholar Award, both in 2012.
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Contact: Matt Downen, Center for Undergraduate Research, [email protected], @ugresearchKU
KU students to present at Kansas Undergraduate Research Days
LAWRENCE — Ten University of Kansas students will participate in the 2022 Kansas Undergraduate Research Days, which will be March 2-3.
Undergraduate students from each Kansas Board of Regents (KBOR) four-year public university are working on 30 projects that will be presented online. KU is the 2022 sponsor of this free and virtual event.
“This event is a great opportunity for undergraduate students at the University of Kansas to share their research projects with state lawmakers as well as other researchers and students across Kansas,” said Alison Olcott, director of the Center for Undergraduate Research. “Following the success of last year, we at KU are excited to host the virtual conference and highlight the research being conducted by undergraduate students in the state of Kansas.”
The Kansas Undergraduate Research Day website will feature posters and accompanying student videos describing the research projects. Visitors will be able to comment and post questions for the student presenters. Students, faculty, KBOR members, state lawmakers and members of the public from across the state are invited to participate.
The event is intended to raise awareness of research being conducted by undergraduate students and to highlight the transformational educational opportunities available to students at each KBOR university.
“Undergraduate Research Days showcase research in Kansas, providing a forum for undergraduates from across Kansas to present their projects to our state legislators and other guests visiting the website,” said Dawn Tallchief, assistant director of the Center for Undergraduate Research and event coordinator. “This event is exciting. Last year’s event was held online for the first time, and based on its attendance, I anticipate we’ll have many people from Kansas and beyond who will take part and engage with the presenters.”
The presenters are listed below by name, year of study, major, mentor and title of research project:
From KU Lawrence
1. Karlo Flores, senior in pharmacy from Liberal, mentored by Cambrey Nguyen, clinical assistant professor of pharmacy: “Accessibility of Ocular Drug Product Websites.”
2. Matt Gratton, senior in psychology from Kansas City, Missouri; mentored by Nancy Hamilton, associate professor of psychology: “Cross Sectional Associations between Nightmare Frequency and Mental Health within the Wisconsin Sleep Cohort.”
3. Christopher Kywe, junior in molecular, cellular & developmental biology from Leawood, mentored by Brian Ackley, associate professor, Center for Computational Biology: “Testing the role of mab-5/Hox in Innate Immune Response pathways in C. elegans.”
4. Mary Sevart, junior in chemical & petroleum engineering from Wichita, mentored by Susan Williams, Charles E. & Mary Jane Spahr Professor of Engineering: “Valorization of Residual Hemp Biomass Through Thermochemical Processing.”
5. Shay Whiting, senior in molecular, cellular & developmental biology from Paola, mentored by Andrew Fry, professor of health, sport & exercise sciences: “Effect of Stance in Squatting.”
From KU Medical Center
1. Kaitlyn Campbell, senior in nursing from Palm Beach Gardens, Florida; mentored by Kristine Williams, E. Jean Hill Professor of Nursing: “Responses of Persons Living with Dementia to Caregiver Validating Communication: A Secondary Analysis.”
2. Macie Fulton, senior in nursing from Lenexa, mentored by Barbara Polivka, professor of nursing: “Home Air Quality and Asthma Study: Developing the Methodology to Measure the Momentary Impact of Cleaners/Disinfectants on Adults with Asthma.”
3. Ceara Funk, senior in nursing from McLouth, mentored by Danielle Olds, research assistant professor of nursing: “Predictors of Nurse Intentions to Leave Emergency Departments During the 2020 COVID-19 Pandemic.”
4. Kayla Kasaei, senior in nursing from Overland Park, mentored by Kelly Bosak, associate professor of nursing: “Association of Sociodemographic Characteristics, Biometric Factors, Exercise Levels and Revised Ejection Fraction Categories of Adults with Heart Failure.”
5. Tristen Rand, senior in nursing from Berryton, mentored by Kesa Herlihy, clinical assistant professor of nursing, and Maryellen Potts, education assistant professor of nursing: “Health Professions Students’ Experiences with Identity-Based Patient Bias: A Cross Sectional Study.”
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