Legal and/or Regulatory Issues
In an IPO or initial public offering, a privately owned company can list
its shares on the stock exchange. It means that the general public can
purchase their shares. For a company to go public, it must first
register with the Securities and Exchange Commission (SEC) and
prospectus. "A prospectus is a formal document that is required by
and filed with the Securities and Exchange Commission
(SEC) that
provides details about an investment offering to the public. A
prospectus is filed for offerings of stocks, bonds, and mutual funds
"
(Murphy, 2021).
There are three current legal or regulatory issues facing Fred's
Miracle Cough Syrup that might impact a public offering. The first
one is about Fred's daughter-in-law, Jane's history of forging checks
to pay off her gambling debt. The fraud case could potentially scare
off investors. As a result, Fred and Sally will have to show investors
the plans they set to reduce the risk of fraud, forgery, and
embezzlement in the future. Another issue that may arise is Fred's
appearance on a widely viewed talk show starring a prominent
doctor. The public may assume that the doctor is the owner of the
cough syrup, which creates an issue of intellectual property.
Tammy's current sex discrimination lawsuit against Fred's Miracle
Cough Syrup. Tammy was a local girl who was making deliveries for
the company. She applied for Jane's bookkeeping position but was
turned down because Fred and Sally hired Ted, who has experience
as an accountant. Tammy's lawsuit falls under Title VII of the Civil
Rights Act of 1964. "Title VII of the Civil Rights Act of 1964 (Title VII)
makes it unlawful to discriminate against someone on the basis of
race, color, national origin, sex (including pregnancy, sexual
orientation, and gender identity) or religion" (Justice.gov, 2021).
Therefore, Fred and Sally must give a justifiable reason as to why
Tammy was not given the position. In turn, Tammy must prove that
she has the experience and is fit to fill the position. Fred and Sally
may win the case because Tammy does not have any known prior
experience in an account or any bookkeeping position because she's
just been delivering products for the company. On the other hand,
Ted went to school to become an accountant and has the experience,
making him well fit for the bookkeeping position.
Legal Test
Fred and Sally must file the registration statement S-1 form with the
SEC to comply with government regulations. The S-1 form details
essential information about the company and its securities. This
information includes properties, financial information, and past and
ongoing legal matters.
Recommendations
I recommend that Fred and Sally wait a few more years before going
public because of their ongoing lawsuits. It will give the company
time to settle its lawsuits. It will also show how the company has
grown from its past mistakes.
References:
1. Murphy, C. (2021, September 14). Prospectus. Investopedia.
Retrieved
from https://www.investopedia.com/terms/p/prospectus.asp
2. Justice.Gov. (2021, March 10). LAWS ENFORCED BY THE
EMPLOYMENT LITIGATION SECTION. The United States
Department of Justice. Retrieved
from https://www.justice.gov/crt/laws-enforced-employment-
litigation-section#:~:text=Title%20VII%20of%20the%20Civil
%20Rights%20Act%20of%201964%20(Title,and%20gender
%20identity)%20or%20religion.
