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CALIFORNIA CORPORATE & SECURITIES LAW

“This Is Not The Way Criminal Law Is Supposed To Work.”

Last week, the Ninth Circuit Court of Appeals issued its opinion in U.S. v. Goyal, No. 08-1436 (Dec. 10, 2010).  This case involved an appeal by the former Chief Financial Officer of Network Associates, Inc. (now known as McAfee, Inc.).  This unfortunate individual was indicted, tried and convicted of one count of securities fraud, seven…

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California’s Phantom Stock Plan Exemption

Some issuers prefer not to issue actual shares to their employees but want their employees to share in any appreciation in the value of their shares.  A phantom stock plan is one way to achieve this result.  Of course, their are tax (including IRC § 409A), accounting, cash flow and other issues to be addressed before…

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Supreme Court Weighs Opening The Janus Gate of Secondary Liability

The Supreme Court heard oral arguments in Janus Capital Group, Inc. v. First Derivatives Traders on Tuesday.  You can read the transcript here.  The SCOTUSblog posts transcripts of oral arguments.  If you are not up to reading the entire transcript, Jim Hamilton’s World of Securities Regulation posted this summary.  Mark Perry, on behalf of the…

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A Brief Rumination On Metaphysics, Trusts and Accredited Investors

I know that the practice of law requires a bit of abstract thinking.  However, sometimes this abstract thinking takes a sharp turn into the metaphysical, if not the absurd.  One such example is the SEC Staff’s Compliance and Disclosure Interpretation addressing who qualifies as an accredited investor as defined by Rule 501 of Regulation D.  First,…

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CCP § 1029.8: “Let Him Make Treble Satisfaction”

Recently, I’ve been writing about Section 25501.5 of the California Corporations Code, which was added to the Corporate Securities Law of 1968 by AB 2167 (Correa).  That wasn’t the only statutory change effected by AB 2167, however.  AB 2167 also amended California Code of Civil Procedure § 1029.8 and that amendment should be of particular interest to unregistered…

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A Modern Council Of Nicaea – Supreme Court Hears Oral Arguments In Janus Today

In this September post, I compared the petitioner’s arguments in Janus Capital Group, Inc.v. First Derivative Traders to the Arian controversy debated at the Council of Nicaea.  Today, the Supreme Court will hear oral arguments on the case.  If you are interested in reading up on the arguments, you can find links to the briefs…

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What Do It [§ 25501.5] Mean?

I’ve received several responses to my post last week concerning the meaning of California Corporations Code Section 25501.5.  Alan Parness, Chairman of the ABA Business Law Section’s Committee on State Regulation of Securities, observes that the remedies of rescission or damages can be “legislative overkill”.  He notes that investors will typically pursue these remedies only…

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Department of Corporations Invites Comment on Adviser Rules

This morning, the California Department of Corporations issued this Invitation For Comments with respect to its investment adviser rules.  The Department had proposed an “omnibus” revision to its investment adviser regulations way back in 2007.  Unfortunately, events, including changes to the Securities and Exchange Commission’s investment adviser rules, have overtaken that proposal.  The Department is seeking comment on the…

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Section 25501.5 – What Do It Mean?

In 2004, the California Legislature added Section 25501.5 to the Corporate Securities Law of 1968.  Ever since then, I’ve been asked “What do it mean?” Corporations Code Section 25501.5 generally authorizes an action for rescission (or damages, if the security is no longer owned) by any person “who purchases a security from or sells a security to a broker-dealer…

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