In Davis v. Skullcandy, Inc., No. 2:16-cv-00121-RJS-PMW, 2018 BL 96655 (D. Utah Mar. 21, 2018), the United States District Court for the District of Utah Central Division granted Skullcandy, Inc. (“Skullcandy”), CEO Seth Darling ("Darling"), CFO Jason Hodell ("Hodell"), and board member Richard Allen’s ("Allen") (collectively the “Defendants”) motion to dismiss shareholder Melanie Davis’s (“Plaintiff”) securities fraud claim alleging Defendants mislead shareholders about Skullcandy's performance. The court held Plaintiff did not allege with particularity a violation of Section 10(b) or Section 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”).

On July 16, 2010, the CEO and co-founder of Instagram, Kevin Systrom, posted the very first photo to the social media platform, which depicted a golden retriever next to a taco stand. (Olivia Waxman, The New York Times). Within 18 months, Facebook, Inc. purchased Instagram, and nearly 8 years after Instagram’s inception, the co-founders of Instagram, Kevin Systrom and Mike Krieger, announced their resignation from Facebook, Inc. in a New York Times article. (Mike Isaac, The New York Times).

When a private company decides to “go public”, it does so through an Initial Public Offering (IPO). An IPO is the private company’s first sale of stock on the public market. Benefits of going public can include a permanent and liquid source of capital for the company, and the company can increase their brand and name recognition through broadcasting their corporate narratives, which suggests legitimacy and stability. (Joe Bou-Saba, Forbes). Although the number of domestic companies listed on U.S. stock exchanges increased in the mid-1990’s, that number has since dropped by nearly half. (Editorial Board, Bloomberg; Michael Wursthorn and Gregory Zuckerman, Wall Street Journal). A study by the Center for Research in Security Prices at University of Chicago’s Booth School of Business reported in the Wall Street Journal showed that in 1996 there were over 7,400 companies listed on U.S. stock exchanges, and today that number is less than half. (Michael Wursthorn and Gregory Zuckerman, Wall Street Journal).

Initial coin offerings (ICOs) function in two capacities: they are used as a way for companies to raise capital and as investment opportunities for individuals. ICOs are relatively new, with the first ICO occurring in 2013. Initially, ICOs were not regulated by the Securities and Exchange Commission (SEC) and there were no restrictions on who could invest. In July 2017, however, the SEC released an investigative report determining that a particular coin was a security and, therefore, subject to federal securities laws. Despite new regulations and increased SEC scrutiny, ICOs continue to grow.