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CALIFORNIA CORPORATE & SECURITIES LAW

Can California Handle Dodd-Frank?

In 1996, Congress apportioned regulation of investment advisers between the Securities and Exchange Commission and the states based on the amount of assets that an adviser had under management.  At that time, Congress drew the line at $25 million in Section 203A of the Investment Advisers Act of 1940 (subsequent rulemaking by the SEC generally did not require SEC registration…

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Placement Agent Bill Advances

Assemblymember Hernandez introduced AB 1743  to require placement agents for funds and fund managers seeking business with California’s public retirement system to register as lobbyists.  The bill continues to progress through the legislature.  On Monday, it passed out of theCalifornia Senate Appropriations Commitee on a 8-0 vote according to the unofficial ballot.  This is good news for the bill’s…

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Compensation Committees – Whom Do You Represent?

Amongst the many, many, changes wrought by the Dodd-Frank Wall Street Reform & Consumer Protection Act, is this requirement in Section 952(d)(1):   “The compensation committee of an issuer, in its capacity as a committee of the board of directors, may, in its sole discretion, retain and obtain the advice of independent legal counsel and other advisers”. …

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More on CalPERS’ Director Database Proposal

On Bastille Day, I posted this item about Gina Chon’s article in The Wall Street Journal about the plans of the California Public Employees’ Retirement System (aka CalPERS) to create a director database.   Today, Broc Romanek has posted an excerpt of an interview on this topic with Anne Sheehan, Director of Corporate Governance at the…

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Section 2115: Beware of Double Counting

Many practitioners both in and outside of California struggle with Section 2115 of the California Corporations Code.  That statute purports to apply a laundry list of California statutes to out-of-state corporations to the exclusion of the law of their state of incorporation.  An out-of-state corporation is subject to Section 2115 if: (i) more than 1/2 of its outstanding voting…

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What is a Venture Capital Fund? (Part II)

The Securities and Exchange Commission has established a procedure for commenting on rule proposals even before the proposals have been made.    I’ve already taken advantage of this procedure to submit this comment on with respect to the definition of “venture capital fund”.  This process didn’t go well for me as the SEC somehow lost my comment.  However,…

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Placement Agent Bill to be Heard Today

Earlier this year, Assemblymember Edward Hernandez introduced AB 1743 to require placement agents who assist in obtaining business from California public retirement systems, such as CalPERS and CalSTRS, to register as lobbyists.  Although there are a number of consequences to being classified as a lobbyist, the one that has attracted the most attention is the…

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The Alter Ego Doctrine Yields Conflict of Interest

American journalist Ambrose Bierce defined a corporation in his The Devil’s Dictionary as “an ingenious device for obtaining individual profit without individual responsibility”.  The alter ego doctrine is one tool that the courts use to address a perceived want of individual responsibility on the part of a corporate owner. In most cases, creditors try to use…

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Furlough Fridays Once More

The State of California still has no budget and Governor Schwarzenegger has been stymied for the time being in reducing state workers to the federal minimum wage.  As reported by Shane Goldmacher in this Los Angeles Times story, Governor Schwarzenegger has issued another executive order requiring most California state workers to take the second, third…

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What is a Venture Capital Fund?

Section 407 of the Dodd-Frank Wall Street Reform and Consumer Protection Act creates a new exemption from federal registration for investment advisers if all their investment advice is limited to one or more “venture capital funds”.  Congress, however, did not say what a “venture capital fund” was.  Rather, Congress told the Securities and Exchange Commission…

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