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💊 Walmart's opioid nightmare

Good Monday afternoon. It’s our last issue of 2020 and we wanted to say a big thank you for making Legit a part of your weekly routine. See you in 2021!
In today’s issue:
  • Brexit, bullet-pointed.
  • The new kid IPO on the block.
  • Walmart’s opioid nightmare.
  • 2020’s biggest flop.

Brexit in Bullet Points
The UK and EU reached a historic trade deal on Christmas Eve, ending months of bumpy negotiations that teetered on the brink of a no-deal Brexit. 
Refresher. Under a no-deal Brexit, the UK-EU trading relationship would’ve reverted to WTO rules, kickstarting Jan. 1 with a chaotic mélange of tariffs, border checks, job losses and higher food prices. 
The deets on this deal. Unless you have crippling insomnia, you’re not going to flick through all 1,246 pages of the Brexit deal. Here are the key provisions BoJo spent the last year hammering out:
  • Goods will be tariff-free. But British exporters will face a slew of regulatory hurdles that’ll make doing business in Europe more difficult.
  • Fishing: EU boats will lose 25% of their current catch in British waters (worth £146mn).
  • Level playing field: both sides will uphold their environmental, social, labor and tax transparency standards. If one side undercuts these standards, the other can retaliate with tariffs.
  • Travel: UK nationals will need a visa to stay in the EU for more than 90 days in a 180-day period.
But. Not everyone is jazzed about the deal:
  • It barely mentions security, data and the services sector (which makes up 80% of Britain’s economy).
  • British fisherman, who wanted 100% control over UK fishing waters, say BoJo “caved” to clinch a last-minute deal.
  • UK students can no longer take part in the Erasmus program.
  • Nicola Sturgeon says Brexit is happening “against Scotland’s will”.
See EU later. After four years of lethargy, BoJo’s “oven-ready” Brexit cooked just in time for Christmas.
But this is just the beginning. 2021 will be “a high stakes and unpredictable experiment in how to unstitch a tight web of commercial relations across Europe,” says the NYT.
Image: Giphy
Image: Giphy
The Securities and Exchange Commission has approved a new way for companies to go public on the NYSE.
The new way ­– called the Primary Direct Floor Listing – is like if an IPO and a direct listing had a cute little do-it-all baby:
  • It’s like an IPO because it lets companies sell new stock to raise capital.
  • It’s like a direct listing because companies can sell stock to the public without hiring investment banks, and can let markets (not banks) decide the stock price.
Before this… direct listings only let companies sell existing shares, meaning founders and investors could cash out but the company couldn’t raise new capital. As a result, only cash-rich companies went public via direct listing e.g. Palantir, the data-mining company founded by billionaire Peter Thiel.
What’s wrong with IPOs? Investment banks keep messing up on pricing. They thought DoorDash and Airbnb’s stocks were worth $102 and $68 when they IPO’d last month, but they were off by 86% and 113%.
Stock-timism. Being able to raise capital AND get the right stock price is a game-changer for capital markets, with venture capitalist and lovable Silicon Valley vet Bill Gurley saying this will “unquestionably” end the IPO. Primary direct listings are especially good for:
  • Startups, who’ll be able to duck Wall Street fees.
  • The average (millenial) Joe, who’ll be able to buy new stock in companies via apps like Robinhood in the future. 
It’s not so great for investment banks, who’ve traditionally been the IPO gatekeepers.
Looking ahead… the SEC might now approve a similar direct listing proposal made by Nasdaq.
Big Pharma’s Big Nightmare
The Justice Department sued Walmart on Tuesday, accusing the company of fueling the opioid crisis by dispensing “hundreds of thousands” of invalid opioid prescriptions at its pharmacies.
The allegation. Federal law requires Walmart to spot and report suspicious prescriptions to the Drug Enforcement Administration, but prosecutors are saying Walmart didn’t do that. It kinda did the opposite of that.
The 160-page suit alleges:
  • Walmart put “enormous pressure” on pharmacists to fill as many prescriptions as possible.
  • A Walmart exec suggested the company should focus on “driving sales” instead of looking for red flags e.g. patients travelling long distances and ‘pill mill’ doctors prescribing large opioid dosages.
The flip side. Walmart’s saying the lawsuit is “riddled with factual inaccuracies” and claims it:
  • Empowered pharmacists to turn away problematic prescriptions.
  • Sent the Drug Enforcement Administration thousands of investigative leads.
Last month, Walmart also filed a pre-emptive countersuit claiming the government’s suit is a thinly veiled attempt at deflecting its own failure to stem the opioid crisis. 
Could be worse. The DoJ briefly mulled pressing criminal charges but decided to go the civil route instead.
Commentators say the suit is unlikely to dent Walmart’s stock; the retail giant cashed out big time from the pandemic and any potential settlement won’t go far in breaking the bank.
Zoom out. The government’s been gunning for Big Pharma, settling an $8bn lawsuit with Purdue for supplying drugs without a legitimate purpose in October.
The Perils of Hype
On Friday investors filed a lawsuit against CD Projekt Red, the Warsaw company behind Cyberpunk 2077, for misleading them about the game’s performance.
The backstory. The hype around Cyberpunk 2077 snowballed for nearly a decade. When CD Projekt announced the game in 2012, it was billed as a story-driven saga where players could navigate their way through a cutting-edge sci-fi universe of corporate espionage.
And – with Keanu Reeves featuring as a main character – 8 million people pre-ordered the game sight unseen.
Cyberpunk was released on Dec. 10. The mountain of hype quickly collapsed into a buggy mess, with thousands of users posting viral videos of the game’s (hilarious) glitches: cars exploding for no reason, characters with “stupid AI” being tossed out of buildings or assuming ‘T-Pose’ – standing with their arms stretched out to either side.
Amongst an uprising of livid fans, retailers began offering unprecedented refunds.
Turns out investors in CD Projekt are pretty angry, too. One investor, Andrew Trampe, is suing the company for marketing the game as a success when it was “virtually unplayable.” Trampe is asking the court to recognize the suit as a class action on behalf of all similar investors.
Glitchy. Although CD Projekt will defend itself “vigorously” against the claims, shares in the company are down 38 per cent from early December.
Heads up… you probably shouldn’t pre-order video games.
  • Ripple, one of the most important companies in the cryptocurrency industry, is sued over the sale of $1.3bn unlicensed securities.
  • Uganda charges Nicholas Opiyo, a prominent human rights lawyer, with money laundering.
  • Turkish parliament passes a new law that critics say will stifle NGOs.
  • Rihanna is sued for copyright infringement by father-daughter duo King Khan and Saba Lou.
  • Business guru Tony Robbins is sued by an employee who says he tried to fire her as she recovered from COVID.
  • Facebook reportedly offers to help build a rival social network to avoid an antitrust lawsuit.
  • Jack Ma’s Ant Group is ordered to revamp its business to comply with Chinese regulations.
  • Double whammy: Beijing launches an antitrust investigation into Jack Ma’s Alibaba.
The top 15 legal tech podcasts you should listen to over the holidays.
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