Fairness Hearings – Shell Companies Need Not Apply
In recent weeks, a number of stories have appeared in the press regarding “reverse mergers” involving shell corporations and Chinese companies. For example, Joshua Gallu wrote this story for Bloomberg last December. After the Securities and Exchange Commission adopted rule amendments in 2005 governing the use of Forms S-8, 8-K and 20-F by shell companies, the California Commissioner of Corporations Read more...
Religious Facility Debt Securities And The CSL
Earlier this week, Shelly Banjo wrote this story for The Wall Street Journal about religious facilities that are unable to meet their debt obligations. Ms. Banjo notes that many religious groups have relied on bond financing to acquire, build or expand their facilities. As is the case with securities issued by secular enterprises, the offer and sale of securities in California by a religious institution are subject to qualification Read more...
Video: Fairness Hearings: A Faster, Cheaper Alternative To Federal Registration
Watch the video A California fairness hearing can be a faster, cheaper alternative to federal registration under the Securities Act of 1933. Although fairness hearings can be used in a variety of situations, they are most often used by publicly traded companies using their own securities to acquire another company. According to the Department of Corporations, the approximate market value of the securities Read more...
Bits and Pieces
Another California Pay-to-Play Story? Tom Petruno, a reporter with the Los Angeles Times, recently wrote that the Financial Industry Regulatory Organization has sent letters to the members of a California municipal bond trade association seeking information about payments made by those members to the association. According to the story, several major brokerage firms are members of the association. Chapman University Read more...
California Commissioner Expresses Concern About Proposed Venture Capital Fund Definition
As I wrote in this early posting, California is ground zero for the venture capital industry. Many of our most succesful and innovative companies have been funded by the venture capital industry. Thus, it is good to see that Commissioner Preston DuFauchard has submitted this letter of comment with respect to the Securities and Exchange Commission’s proposed rule defining “venture capital Read more...
What You Can Do When Securities Are Subject To A Commissioner’s Transfer Restriction
As a condition to qualification, the Commissioner of Corporations may impose a restriction on the subsequent transfer of the securities being qualified. Cal. Corp. Code § 25141. Rule 260.141.10 describes the general circumstances under which the Commissioner will impose a transfer restriction. The imposition of a transfer restriction was a far more common occurrence in the “old days” when there Read more...
Life Settlement Contracts And The CSL
In this recent post, I wrote about California’s cooling off statute with respect to viatical and life settlement contracts. Yesterday, the Securities and Exchange Commission filed this complaint alleging a massive life settlement contract bonding fraud. At the same time, the United States Attorney’s Office for the Eastern District of Virginia announced the filing of a criminal action and the Read more...
Ascertaining Shareholder Intent Using A Borda Count
In yesterday’s post, I described how an approval voting system could be used to determine shareholder preferences. The Borda count system is another system that also could provide more accurate information about the consensus opinion of shareholders. The Borda count system is named for Jean-Charles de Borda, an 18th century French mathematician with a practical turn of mind. Monsieur Borda Read more...
Approval Voting And Determining Shareholder Intent
In this post last week, I wrote about the Dodd-Frank Act’s requirement that companies subject to the SEC’s proxy rules include in their proxy statements a resolution regarding the frequency of shareholder advisory votes on executive compensation. I noted that a plurality vote rule is not be the best way to determine shareholder preferences and suggested that other voting systems Read more...
“Most” Does Not Mean All
Because the Dodd-Frank Act requires the adoption of so many new regulations, I like to say that the other shoe (or more likely a whole closet full of shoes) remains to be dropped. One large shoe that is yet to be dropped is how the Securities and Exchange Commission will define “venture capital fund” for purposes of the exemption from the Investment Advisers Read more...