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CALIFORNIA CORPORATE & SECURITIES LAW

Binary Options And Securities Regulation

Recently, the North American Securities Administrators Association (NASAA) updated and expanded its 2015 advisory warning investors about online binary option schemes.  NASAA offers the following explanation of “binary options”: A binary option is a type of all-or-nothing investment contract, similar to placing a bet. Like the flip of a coin, there are only two possible outcomes: heads…

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Did The SEC’s Pay Ratio Guidance Miss Conjunction Junction?

Last week, the Securities and Exchange Commission issued interpretive guidance to assist issuers in complying with the pay ratio rule.  At the same time, the Division of Corporation Finance staff issued guidance concerning how companies might use statistical sampling technologies and “other reasonable methods” in implementing the pay ratio rule.  I am sure that both…

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California Bill May Spur Rewriting Gender Boilerplate

On the penultimate day of the current session, the California legislature passed SB 179 (Atkins & Wiener).  If signed into law by Governor Brown, this bill would enact the California Gender Recognition Act.  In general, SB 179 would create a third, nonbinary gender option on a California driver’s license, identification card, and birth certificate.  It also would…

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Does California Side With Delaware Or New York On Special Litigation Committee Reviews?

As discussed in the two preceding posts, Nevada’s Supreme Court last week decided to adopt New York’s standard of review of special litigation committee recommendations to dismiss stockholder derivative suits.  In re Dish Network Derivative Litigation, 133 Nev. Adv. Op. 61 (2017).  The New York Court of Appeals described this standard as follows: While the substantive aspects of a…

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Review Of Special Litigation Committee Recommendations

Yesterday’s post limned the Nevada Supreme Court’s adoption of New York’s Auerbach standard of review for special litigation committee recommendations.  In re Dish Network Derivative Litigation, 133 Nev. Adv. Op. 61 (2017).  The Supreme Court unequivocally required that the trial court apply Auerbach at an evidentiary hearing : Pursuant to Auerbach, 393 N.E.2d at 996, and consistent with…

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Nevada Favors New York Over Delaware Precedent For SLC Review

Nevada law endows a board of directors “full control over the affairs of the corporation”.  NRS 78.120(1).  This control is subject only to such limitations as may be provided by NRS chapter 7, or the articles of incorporation of the corporation.  Id.  This means the board controls decisions about whether the corporation should bring suit.  The ability…

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California Bill Deadline Is Today

Former New York Surrogate Gideon J. Tucker would be happy today.  Pursuant to Joint Rule 61(a)(15), today is the last day for California’s legislature to pass bills.  Today, also marks the beginning of the legislature’s interim study recess (Joint Rule 51(a)(4)).  Governor Brown will have until October 15 to sign or veto bills passed by the legislature…

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There’s No Dressing This Up – Item 303(a)(1) Of Regulation S-K Is Unreasonable

In less than a month, the United States Supreme Court will hear oral argument in Leidos, Inc. v. Indiana Public Retirement System (Docket No. 16-581).  The question presented in Leidos is: Whether the Second Circuit erred in holding – in direct conflict with the decisions of the Third and Ninth Circuits – that Item 303…

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Nevada Precedes Delaware In Blockchain Legislation

On July 21, 2017, Delaware’s 74th Governor, John Carney, signed SB 69 into law.  This legislation amended various provisions of Delaware’s General Corporation Law (Title 8, Delaware Code) ostensibly to establish express statutory authority for Delaware corporations to use networks of electronic databases for the creation and maintenance of corporate records, including the stock ledger.  These databases are…

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This California Court Held That A Limited Partnership Is No Person

In preceding posts, I commented on the multifarious definitions of “person” in the Securities Act of 1933, the Exchange Act of 1934 and various laws within the California Corporations Code.  As noted, the Corporations Code’s definition of “person” is short but open-ended: “Person” includes a corporation as well as a natural person. Cal. Corp. Code § 18. …

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