SEC Marks The Ides By Bringing Actions Involving Secondary Market For Private Company Shares
Nearly two years ago, I began writing about some of the issues related to secondary trading in private company shares. Yesterday (Prid. Id. Mart.), the Securities and Exchange Commission announced that it had taken action against several firms and individuals related to activities involving secondary trading of private company shares. In this Litigation Release, the SEC announced its filing of a civil Read more...
FINRA’s Suitability Rule Is No Match For California’s Rule
FINRA’s New Rule Beginning on July 9, 2012, broker-dealers will be subject to FINRA’s new suitability rule. Rule 2111(a) requires FINRA members and their associated person to have “a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of Read more...
Mirabile Dictu! “Common Stock Does not Constitute an Investment in ‘Stock’”
Anyone who has picked up a prospectus or a private placement memorandum has undoubtedly seen, if not read, various legends and other warnings. Recently, I came across the following legend in an offering document: COMMON STOCK DOES NOT CONSTITUTE AN INVESTMENT IN “STOCK” IN THE COMMON SENSE OF THE TERM. PURCHASERS SHOULD NOT PURCHASE COMMON STOCK WITH THE PURPOSE OF Read more...
Commissioner Revises Broker-Dealer Release
In 2007, a California Court of Appeal upheld the convictions of two officers/directors for engaging in unlicensed broker-dealer activity in violation of Corporations Code Section 25210. People v. Cole, 156 Cal. App. 4th 452 (2007). Neither defendant contested that he fell within the definition of “broker-dealer” in Corporations Code Section 25004 (i.e., any person engaged in the business of effecting transactions Read more...
Placement Agent Law Clean-Up Amendments Introduced
As I mentioned in this March 11 posting, Senator Ed Hernandez has introduced a bill, SB 398, that is intended to clean-up some of the many questions arising under legislation, AB 1743, that was enacted last session. In general, AB 1743 requires placement agents for investment funds and advisers seeking access to CalPERS or other California public retirement systems to register as lobbyists. Numerous Read more...
Broker-Dealer Safe Harbor Rule Nears Adoption
In 2007, the California Court of Appeal fired what I called at the time “a shot not heard” when it issued its opinion in People v. Cole, 156 Cal. App. 4th 452 (2007). Seemingly, a key holding of that case was that corporate officers and directors of issuers are required to be licensed as broker-dealers unless they receive a commission Read more...
Bill To Amend Placement Agent Law Introduced
As discussed in this posting from last October, the legislature enacted AB 1743 to require placement agents for funds and advisers seeking access to CalPERS or other California public retirement systems to register as lobbyists. Although I had commented on the bill, I was less than pleased with the final product. Senator Ed Hernandez, who authored AB 1743, recently introduced Read more...
“Shut, Shut The Door, Good John!” Bill Introduced To Close Revolving Pension Fund Door
Last week in this post, I wrote about the California Controller John Chiang’s announced intention to sponsor legislation to shut the revolving door between California’s two largest public retirement systems, CalPERS and CalSTRS, and the private sector. Last week, Assemblyman Warren Furutani introduced AB 873. Below is the Legislative Counsel’s description of the bill: This bill would prohibit an individual, who was a Read more...
