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Message: <blockquote data-quote="Abstruser" data-source="post: 5006" data-attributes="member: 260">Hey everyone! Welcome to this week's commercial awareness update. We hope you find it useful, and do let us have any feedback you may have! Happy reading <img src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" class="smilie smilie--sprite smilie--sprite1" alt=":)" title="Smile    :)" loading="lazy" data-shortname=":)" />Commercial Awareness Update: 21/11/181.     Snapchat Regulatory Investigations (written by [USER=157]@kitk[/USER]) The story:Snap Inc., the parent company of the social media platform Snapchat, is facing investigations from the US Securities and Exchange Commission and Department of Justice about the disclosures which Snap made to investors ahead of its initial public offering (IPO) in March 2017.Snap believes that these regulatory investigations are concerned with the issues raised in a class action lawsuit which investors have filed against Snap in May 2017. The investors in this case claimed that Snap had misled prospective investors about the state of its business. In particular, Snap had allegedly failed to disclose the extent to which competition from Instagram had affected its growth in the second half of 2016.Impact on businesses and law firms: Businesses should be aware of the fast-paced rate of technological change and the associated level of market competition that they need to face, as well as take steps to respond accordingly. Aside from it being a matter of strategic concern to keep up with or outdo one’s competitors, this is also a financial issue about ensuring investors’ confidence and hence, the amount of funding which businesses can receive from them.To ascertain the type and extent of information deemed adequate for the purposes of IPO disclosure, law firms would have to closely monitor the development of this case. This is especially so as, in its pre-IPO S-1 filing, Snap had already stated that it was facing “significant competition” in its business and cited the example of Instagram introducing a feature which “may be directly competitive” with its own Stories feature.Law firms can then advise their clients who plan to file IPOs and help them to avoid the kind of lawsuits and regulatory investigations which Snap is facing, as well as the proceedings which might arise from the investigations. Even if a law firm’s clients do not plan to file IPOs in the US, given the US’s importance in the global securities market, the standard of IPO disclosure established in this matter might be adopted in other countries.2.     Oil Prices (written by [USER=201]@bugsy malone[/USER])The story:Oil prices have seen significant change in the last month. In October prices reached a four-year high following US sanctions on oil-rich Iran, affecting their exports. This led investors to believe large amounts of oil would disappear from the market causing shortages. However, Russian, Saudi, and US oil companies supply overcompensated for this and Iran’s biggest customers <a href="https://finimize.us10.list-manage.com/track/click?u=fd92d4d6912bf051aceebbc27&id=ef278c39ac&e=ef5c7ea5cd" target="_blank">were spared</a> the US sanctions. The oil cartel OPEC also reduced its forecast for global oil demand for next year. This sudden increase and fear of excess supply led prices to fall by over 20%, putting oil into bear market territory. The decrease in price is thought to stabilise as OPEC and Saudi Arabia have spoken about lowering their production for next month.Impact on businesses:The price of oil has a far-reaching impact, it affects oil suppliers like BP and Shell, and companies using plastics made from oil, such as Adidas. When oil prices go up too much (around $100 per barrel) it weighs on the consumer, especially in countries like the US where the price feeds into petrol prices quickly and directly. It impacts the cost at the pumps and consumers tend to spend less especially when we know inflation is relatively high and economies like the US and UK rely on buoyant consumer spending. Therefore, such a large drop in price has global economic significance.A fast decrease in oil price usually worries investors as it signals turbulent times in the world economy and a decline in economic optimism. However, it seems over supply is the cause here. This is good news for consumers and the economy because industries should face less pressure to raise prices, as one of their costs is much lower, leading more money to be spent on other things.Such a dramatic fall could lift pressures on central banks to curb inflation. America’s central bank will have to rethink its forecast for inflation and reconsider some of its planned interest rate rises. If fuel costs aren’t rising and the Federal Reserve isn’t pushing for higher rates, the pressure will be off of the Bank of England, the European Central Bank and the Bank of Japan to follow suit. Fewer interest rate rises over the next 2-3 years will bring down projected borrowing costs, triggering collective relief from a growing number of indebted companies and consumers across the globe.It will be interesting see how our consumption patterns change over the next few decades. Oil use for cars is said to peak within the next 7 years as we move towards electric cars. The International Energy Agency’s forecast future growth in oil, even in a decarbonised economy (where our energy is not through oil and gas) because oil is a feedstock to make plastics. This seems quite optimistic considering consumer backlash against single use plastics and countries around the world are likely to take legal steps to reduce plastic.3.     M&A deals in the software sector (written by [USER=525]@Sara Moon[/USER]) The story: On the 11th of November, the $124 billion German software company SAP announced that it is acquiring a US survey software Qualtrics for $8 billion cash. The acquisition is thought to develop SAP’s cloud customer relations business through more sophisticated data collecting that will provide better analysis of customer behavior and response. Five days later, on the 16th, BlackBerry said that it will acquire a cybersecurity firm Cylance for $1.4 billion in cash. BlackBerry, a firm that many people associates with phones, shifted its business to producing cybersecurity software after deciding to stop manufacturing phones in-house in 2016.These recent deals follow the current trend in the tech sector, where technology giants are snapping up juicy targets to stay ahead in the race. The most popular sector for M&A deals is, according to PWC’s report in October, software; 250 deals were announced last quarter, valuing at up to $41.9 billion. IBM’s acquisition of Red Hat and Microsoft’s acquisition of GitHub were also part of the trend. Big software companies are keen to proceed acquisitions to outrun the looming shadows of fast-growing startups, especially in the cloud-computing business.Impact on law firms: Big M&A deals are one of the cash cows of law firms. Lawyers are involved in the entire process: negotiating the deal, carrying out due diligence, and drafting the terms and conditions of the deal. Therefore, the current explosion of tech M&A transactions mean that there are growing number of deals that lawyers can get involved in.4.     Criminal charges against Goldman Sachs (written by [USER=980]@Angel[/USER])The story:On November 1st, charges of money laundering and bribery were filed against Wall Street bank, Goldman Sachs, for their work for a state-investment fund based in Malaysia, 1Malaysia Development Berhad (1MDB). Goldman’s role in this money-tracing maze since 2015 was to underwrite three bond offerings for 1MDB, amounting to a value of $6.5billion, from which it legitimately earned about $600million. However, the US Justice Department claims that the conspirators misappropriated $4.5 billion from the 1MDB fund. This raises the question of whether those involved in the deal (including Goldman) were aware of the integrity of the deals and if so, when. Tim Leissner, Goldman’s former chairman for South-East Asia, had since pleaded guilty to the charges and is due to be sentenced next month.  Impact on businesses:These unprecedented legal allegations pull Goldman into a regulatory entanglement. The bank could face large fines or be compelled to forfeit the money it made from the bond deals. Taken to the greatest extent, they could be indicted and have its banking charter revoked, although, specialists in money laundering (including Stefan Casella, a former US prosecutor) says that the government is unlikely to go that far. Nevertheless, investors’ confidence is definitely affected. Since the news broke out, the bank’s shares dipped to their lowest point this week since 2011. Finally, as a bank that prides itself as a high global-standard setter, these allegations risk tarnishing its reputation in the market. Impact on law firms:Instead of focusing what law firms can do as a business to fend off money laundering ([USER=260]@Abstruser[/USER] wrote a great summary on that in the previous commercial law update for the Danske Bank money laundering case), I thought I’ll focus on what law firms can do to help clients fend off this increasingly popular crime. One precautionary step that lawyers may consider advising their clients to take is review the adequacy of the business’s internal legal and compliance controls. Lawyers may also help their clients evaluate if there is a need to change or enhance the transparency of their clients’ business culture or management through publications.</blockquote>

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