IPOs and the Slow Death of Section 5

Since its enactment, Section 5 of the Securities Act of 1933 has restricted sales-based communications with investors, but that effort is nearly dead even with respect to the most sensitive of offerings, the IPO. Our paper traces that devolution, which began almost as soon as the ’33 Act came into existence, though the SEC’s 2005 deregulatory reforms and Congress’ intervention in the JOBS Act of 2012. We show how much of this related to an embrace of “book-building” as the industry’s preferred method of price discovery, which requires private two-way communications between underwriters and potential sophisticated investors. But book-building (and the predictable IPO underpricing that results) has a retail dimension as well, and we point to ways in which the otherwise sensible deregulation may enable an over-stimulation of retail investor demand. We then explore two main justifications that have been given for the aggressive deregulation. The first is that any loss in prophylactic protection can be made up for by the threat of liability, particularly with an enhanced Section 12(a)(2). We find this unpersuasive for a variety of reasons. The other—amply visible in the long history of Section 5—is a faith in the “filtration” process, that retail investors gain protection because of the availability of the preliminary prospectus during the waiting period, to those involved in the selling process if not the investors themselves. Putting aside the biased incentives that affect filtration, much of what is most important—and conveyed privately to the institutions in the course of book-building—is forward-looking information that probably need not appear in the formal disclosure, whether preliminary or final. None of this is an argument for returning to the old prophylactics of Section 5. But it is cause for the SEC and FINRA to pay close attention to the retail investor effects of the IPO selling practices, especially in the post-JOBS Act era

“Publicness” in Contemporary Securities Regulation after the JOBS Act

The JOBS Act of 2012 reflects the largest deregulatory change to the Securities Exchange Act of 1934 over its more than 75 year history. It contracts the coverage of those companies subject to the obligations of ‘publicness” and it introduces an “on ramp” that will permit most newly-public companies to meet a lesser set of disclosure, internal control and governance obligations for up to five years. We set these changes against a larger discussion of when a private enterprise should be forced to take on public status in securities regulation, a topic that has been entirely under theorized. We conclude that the change from 500 to 2000 shareholders of record made by the JOBS Act, while entirely clear in its deregulatory thrust, misses a key point: “record” ownership is an antiquated metric for any measuring of publicness and Congress needs to find a better one, such as public trading. More broadly, we observe that Congress increasingly has defined public obligations in securities regulation less by the traditional touchstone of investor protection and more by ways that our largest companies affect constituencies beyond their investor base. Our boundary-setting thus should include two tiers of public companies with the smaller tier limited to core disclosure and governance obligations. Finally, our review of these boundary questions reveals a larger pattern that ought to inform how we understand securities regulation. Entrepreneurs and their advisors regularly occupy new unregulated space created in the wake of technological change or by gaps in regulation revealed as markets evolve. Government response, seemingly inevitably, is piecemeal and reactive. The result is a regulatory process that is more informal than administrative law theory usually suggests and more opaque than we might want in contemplating regulatory change

Student understanding of the Boltzmann factor

We present results of our investigation into student understanding of the physical significance and utility of the Boltzmann factor in several simple models. We identify various justifications, both correct and incorrect, that students use when answering written questions that require application of the Boltzmann factor. Results from written data as well as teaching interviews suggest that many students can neither recognize situations in which the Boltzmann factor is applicable, nor articulate the physical significance of the Boltzmann factor as an expression for multiplicity, a fundamental quantity of statistical mechanics. The specific student difficulties seen in the written data led us to develop a guided-inquiry tutorial activity, centered around the derivation of the Boltzmann factor, for use in undergraduate statistical mechanics courses. We report on the development process of our tutorial, including data from teaching interviews and classroom observations on student discussions about the Boltzmann factor and its derivation during the tutorial development process. This additional information informed modifications that improved students' abilities to complete the tutorial during the allowed class time without sacrificing the effectiveness as we have measured it. These data also show an increase in students' appreciation of the origin and significance of the Boltzmann factor during the student discussions. Our findings provide evidence that working in groups to better understand the physical origins of the canonical probability distribution helps students gain a better understanding of when the Boltzmann factor is applicable and how to use it appropriately in answering relevant questions

Nonlinear acoustics and honeycomb materials

The scope of research activity that Bruce Thompson embraced was very large. In this talk three different research topics that the author shared with Bruce are reviewed. They represent Bruce\u27s introduction to NDE and include nonlinear acoustics, nondestructive measurements of adhesive bond strengths in honeycomb panels, and studies of flexural wave dispersion in honeycomb materials. In the first of these, four harmonics of a 30 Mhz finite amplitude wave were measured for both fused silica and aluminum single crystals with varying lengths and amounts of cold work using a capacity microphone with heterodyne receiver with a flat frequency response from 30 to 250 Mhz. The results for fused silica with no dislocation structure could be described by a model due to Fubini, originally developed for gases, that depends upon only the second and third order elastic constants and not the fourth and higher order constants. The same was not true for the aluminum with dislocation structures. These results raised some questions about models for harmonic generation in materials with dislocations. In the second topic, experiments were made to determine the adhesive bond strengths of honeycomb panels using the vibrational response of the panels (Chladni figures). The results showed that both the damping characteristics of panel vibrations as a whole and velocity of propagation of elastic waves that travel along the surface and sample the bondline can be correlated with destructively determined bond strengths. Finally, the phase velocity of flexural waves traveling along a 1-inch honeycomb sandwich panel was determined from 170 Hz to 50 Khz, ranging from 2.2×104 cm/sec at the low end to 1.18×105 cm/sec at 40 Khz. The dispersion arises from the finite thickness of the panel and agreed with the results of continuum models for the honeycomb. Above 40 Khz, this was not the case. The paper concludes with a tribute to Bruce for his many wonderful contributions and lessons beyond his technical legacy for all of us

BRINGING TIL THERAPY BEYOND MELANOMA: ADVANCING THE TREATMENT OF ADVANCED PANCREATIC AND OVARIAN CANCERS

The success of checkpoint blockade immunotherapy (CBI) has reinvigorated the cancer therapy field, particularly for advanced melanoma which has doubled the survival rates compared to 20 years ago. However, there are many solid tumor types that are yet to receive substantial benefit from this groundbreaking therapy, two of which are pancreatic cancer (PDAC) and ovarian cancer (OvCa). As such, the 5-year survival rate for PDAC and OvCa stand at 9% and 28% respectively. Despite the lack of efficacy of CBI so far, there is still evidence for the role of immune control in these cancers as evidenced by presence of tumor-infiltrating lymphocytes (TIL) correlating with increased survival. Since in vivo manipulation of TIL through CBI does not seem to be sufficient to generate a strong clinical response, approaches involving ex vivo manipulation of immune cells, such as adoptive cell therapy (ACT) using autologous TIL, might be able to provide therapeutic benefit. The effectiveness of TIL ACT has been demonstrated in metastatic melanoma with overall response rates around 50%. Given this success and the anti-tumor potential of the immune infiltrate in PDAC and OvCa, I sought to assess the feasibility of TIL ACT in these solid tumors. My work here has demonstrated the feasibility of TIL ACT for PDAC and OvCa by showing that they harbor an activated, anti-tumor CD8+ T-cell infiltrate that can be robustly and reliably expanded using an improved 3-signal culture method consisting of a CD3 stimulation, an agonistic 4-1BB mAb, and high-dose IL-2. Additionally, these results show that TIL ACT for PDAC and OvCa is viable regardless of primary or metastatic site and regardless of prior chemotherapy. Furthermore, given the difficulty of treating PDAC, single-cell RNA sequencing was used to interrogate the immune landscape to further our understanding of the TIL heterogeneity in PDAC. Paired transcriptomic and T-cell receptor sequencing revealed novel TIL populations with potential prognostic and therapeutic implications. A Phase II clinical trial based on this work has been initiated at MDACC to evaluate the feasibility of the adoptive transfer of autologous TIL in recurrent or refractory PDAC and OvCa (NCT03610490)

Stepped Tip Gap Effects on a Transonic Axial-Flow Compressor Rotor

The effects of stepped tip gaps and clearance levels on the performance, flowfield, and stall characteristics of a transonic axial-flow compressor rotor were experimentally and numerically determined. A theory and mechanism for relocation of blockage in the rotor tip region was developed. A two-stage compressor with no inlet guide vanes was tested in the Wright Laboratories Compressor Research Facility located at Wright-Patterson Air Force Base, Ohio. The first-stage rotor was unswept and was tested for an optimum tip clearance with variations in stepped gaps machined into the casing near the aft tip region of the rotor. Nine casing geometries were investigated consisting of three step profiles at each of three clearance levels. For small and intermediate clearances, stepped tip gaps were found to improve pressure ratio, efficiency, and flow range for most operating conditions. At 100% design rotor speed, stepped tip gaps produced a doubling of mass flow range with as much as a 2.0% increase in mass flow and a 1.5% improvement in efficiency The flowfield characteristics associated with performance improvements were experimentally and numerically analyzed. Stepped tip gaps were found to have no significant effect on the stall characteristics of the rotor; the stability characteristics attributable to tip geometry were determined by the clearance over the forward portion of the rotor blade. This study provides guidelines for engineers to improve compressor performance for an existing design by applying an optimum casing profile