On this day in history, August 25, 1921, the U.S.–German Peace Treaty was signed in Berlin, marking a significant moment in the aftermath of World War I. The treaty was necessitated by the U.S. Senate's refusal to ratify the multilateral peace treaty signed in Versailles, leading to a separate peace agreement with Germany. The U.S. had declared war on Germany on April 6, 1917, and was part of the Allied Powers that defeated the German Empire. The end of the war saw the overthrow of the German monarchy and the establishment of a republic. Spoiler alert for those that haven’t read the next chapter in the metaphorical history book yet, that would not go well.
The U.S. Senate's objections to the Versailles Treaty were largely due to its provisions regarding the League of Nations. As a result, the U.S. and Germany began negotiations for a bilateral peace treaty, culminating in the signing of the treaty on August 25, 1921. The treaty became effective on November 11, 1921, after ratifications were exchanged in Berlin. It laid the foundations for American-German cooperation outside the strict supervision of the League of Nations, partially assisting the Weimar Republic in easing the burden of war reparations. Diplomatic relations were reestablished, and a supplementary treaty was signed in 1922 to decide the amount of reparations to be paid by Germany to the U.S. The signing of the treaty also led to the retirement of the Morgan silver dollar in favor of the new Peace dollar design, symbolizing a new era of peace and cooperation–in aspirations if not in reality.
The Biden administration is collaborating with Texas to restore Medicaid coverage to approximately 90,000 individuals who had lost it erroneously, according to senior officials from the Centers for Medicare & Medicaid Services (CMS). The officials are working with the state's Medicaid agency to reinstate coverage back to the date when it was terminated. The restoration is expected to be completed by the end of the month. This move follows a letter from Democratic House members from Texas, urging the CMS to investigate reported problems at the Texas Medicaid agency. A whistleblower letter had alleged system failures leading to incorrect coverage terminations, affecting thousands of pregnant women and seniors. The Texas Democrats accused the state of not complying with federal Medicaid requirements and called for CMS intervention. Nearly 600,000 Texans have already lost Medicaid coverage in recent months, mostly due to procedural reasons. Legislators have warned of further "catastrophic coverage losses" as Texas sends renewal notices to more enrollees. Rep. Lloyd Doggett emphasized the need for swift federal action to prevent interruptions in care for disadvantaged families.
JPMorgan Chase & Co. has won a federal appeals court ruling that a $1.8 billion leveraged loan was not a security, marking a significant victory for the banking and private equity sectors. The ruling came in a securities fraud lawsuit related to a 2014 syndicated loan deal led by JPMorgan for drug-testing company Millennium Health, which later filed for bankruptcy. Currently, loan notes are not considered securities, so a ruling against JPMorgan could have had broad implications for the regulation of the leveraged loan market. If classified as securities, loans would require additional disclosures, more financial data, and quicker settlement of trades. The decision is seen as favorable for banks and private equity firms, which frequently use leveraged loans in buyout deals. Advocates for reclassifying leveraged loans have argued that it would bring transparency to an opaque part of the financial markets. The appeals court agreed with a lower court's dismissal of the plaintiff's fraud claims, finding that the notes were not securities. The Securities and Exchange Commission declined to offer its opinion on the matter, despite heavy lobbying from the Loan Syndications and Trading Association. The trustee had claimed that JPMorgan and other banks withheld crucial information about Millennium's troubles. The appeals court found that the notes did not meet three of the four factors required to be considered a security under U.S. law.
The test to determine whether a financial instrument is considered a security under U.S. law comes from the Supreme Court case of SEC v. W. J. Howey Co., 328 U.S. 293 (1946). This test is commonly referred to as the Howey Test, and it has four factors that must be considered:
Investment of Money: There must be an investment of money or other tangible or definable consideration.
Common Enterprise: The investment must be in a common enterprise, meaning that the fortunes of the investor are interwoven with those of either the promoter or a third party.
Expectation of Profits: There must be an expectation of profits from the investment. This could include capital appreciation resulting from the development of the initial investment or a participation in earnings.
Efforts of Others: The profits must come solely from the efforts of others, typically the promoter or third party, not the investor. This element emphasizes that the investor must be a passive participant in the business.
Subsequent cases, such as United Housing Foundation, Inc. v. Forman, 421 U.S. 837 (1975), have further clarified the Howey Test, specifically focusing on the economic realities of the scheme and noting that the form should be disregarded for the substance. Moreover, other cases such as Reves v. Ernst & Young, 494 U.S. 56 (1990), introduced a "family resemblance test" which helps in differentiating notes that are securities from those that are not.
The Howey Test remains a fundamental standard in securities law, providing a broad and flexible framework to accommodate the evolving nature of investment schemes.
Robert F. Kennedy Jr. has lost a bid to force Google and YouTube to restore videos in which he questioned the safety of Covid-19 vaccines. Kennedy, who is seeking to be the Democratic Party's 2024 presidential nominee, alleged that YouTube violated his First Amendment right to political speech when it removed the videos due to its medical and vaccine misinformation policies. The U.S. District Court for the Northern District of California stated that the suit is likely to fail because Google and YouTube are not state actors subject to the free speech clause of the First Amendment. Judge Trina L. Thompson denied Kennedy's motion for a temporary restraining order that would prevent the tech companies from keeping the videos off their platform. The judge ruled that emails between government officials and Google personnel about vaccine misinformation were not enough to show that YouTube's decisions were state decisions or evidence of a conspiracy to censor speech. There was no evidence that government officials demanded that Google adopt a Covid-19 misinformation policy, nor that they communicated with Google regarding Kennedy specifically. The evidence showed that communications between government officials and Google were merely "consultation and information sharing." The case is scheduled for a hearing on November 7 regarding Kennedy's motion for a preliminary injunction and the companies' motion to dismiss.
Starbucks Corp. is on the verge of defeating a National Labor Relations Board (NLRB) attempt to obtain a temporary injunction from a New York federal court. US District Judge John Sinatra ruled that the NLRB's move to block the court's discovery order in the case is "repugnant" and necessitates the dismissal of the agency's injunction petition. The NLRB has until September 1 to avoid dismissal by ceasing efforts to obstruct the discovery order. This ruling is a significant victory for Starbucks' aggressive discovery strategy in response to the NLRB's attempts to quickly obtain court orders. The NLRB has authorized its General Counsel, Jennifer Abruzzo, to sue Starbucks 10 separate times for 10(j) injunctions. The NLRB has won two cases and obtained an interim settlement in a third, while Sinatra's decision could mark the second loss for the agency. Three cases are ongoing, and one authorized petition hasn't been filed yet. Abruzzo plans to challenge Sinatra's ruling at the US Court of Appeals for the Second Circuit. Starbucks Workers United criticized the decision, while a Starbucks spokesperson said the ruling made clear that the NLRB "crossed the line." The injunction case has lasted over 400 days, mainly due to discovery disputes, with Sinatra permitting Starbucks to issue nearly 22 subpoenas for various information related to union activities.
Former U.S. President Donald Trump was booked at an Atlanta jail on more than a dozen felony charges related to his attempts to overturn his 2020 election defeat in Georgia. Though his mugshot was released, the focus of the case is on the wide-ranging criminal charges he faces. Trump spent only about 20 minutes at the jail before returning to his New Jersey golf club, maintaining that the prosecution is politically motivated. Judge Scott McAfee set a trial date of October 23 for one of Trump's 18 co-defendants, but the schedule does not yet apply to Trump or the other defendants. Trump faces 13 felony counts in the Georgia case, including racketeering, for pressuring state officials to reverse his election loss. Trump's legal team is expected to push for a later trial start date. In total, Trump faces 91 criminal counts across four cases. He has pleaded not guilty in the three other cases and denied wrongdoing. In the Georgia case, arraignments are requested to begin the week of September 5. Trump agreed to post a $200,000 bond and accepted bail conditions that would bar him from threatening witnesses or his co-defendants in the Georgia case. Republicans who control the U.S. House of Representatives announced they would investigate whether the prosecutor improperly coordinated with federal prosecutors.