Bus 307 Case Study

December 10, 2021

B. Pellizzo

SNHU

Analysis
 If Fred and Sally decide to an initial public offering there are three current

legal/regulatory issues that will impact their IPO: 1. The sexual discrimination claim brought on

by Tammy. She applied for the bookkeeping position yet lacked the experience being that Fred

and Sally hired an experienced male accountant Tammy felt she was being discriminated against.

2. The embezzlement committed by Jane, a family member, due to a bad gambling habit. Jane

was able to manipulate the books to hide the money she had been stealing from the business.

3. Securities Regulations – the SEC was created to enforce securities laws, interpret provisions of

securities acts, and regulate the trade of securities. The securities act requires companies to

submit a registration statement which contains a description of the securities being offered for

sale and an explanation of how the proceeds will be used. It also includes information about

management, any pending lawsuits, and certified financial statements. A prospectus will follow

which is a more honest and transparent view of the company’s history, management, and

product.

With the fact that Fred’s Cough Syrup has an adverse reaction when taken with aspirin this could

be a potential risk . He would have to note this in the registration statement as well as the

prospectus. Investors could see this as a red flag and deny the application for the IPO. Even with

a warning label on the product it is not a guarantee that someone will not try suing. I would

recommend further research into what specific ingredient causes the reaction to make the cough

syrup safer and more likely for investors to give their approval.

My recommendations would be to hold off on going public allowing the current litigation suit

with Tammy to end. Hire outside of the family for some of the management positions investors

may be weary of another embezzlement scandal by a family member. This wait time gives the

family time to see if the business will continue in its current upward state. Again, further
research into what ingredient in the cough syrup causes the reaction with aspirin. By postponing

the IPO process will allow your business to further grow and allow the current legal fiasco to die

down and by hiring outside of the family will give the new employees time to grow into their

positions.

References
Kubasek, N. K., Browne, M. N., Herron, D. J., Dhooge, L. J., & Barkacs, L. L. (2020).

Dynamic Business Law, Fifth Edition. McGraw-Hill Education.