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,

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

Video: Fairness Hearings: A Faster, Cheaper Alternative To Federal Registration

Video - Fairness Hearings

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

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

“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

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

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

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

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

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