Senate Appropriations Committee Is Next Stop For California Finders Bill

AB 667 (Wagner) continues to wend its way through the California legislature.  The bill, which was sponsored by the Corporations Committee of the Business Law Section of the California State Bar, defines a finder as a natural person who, for direct or indirect compensation, introduces or refers one or more accredited investors, as that term

Failure To Disclose Finder’s Fee Found Not To Be Actionable

This interesting, but atypical case, involves one of the many possible issues that can arise from the use of unlicensed finders to raise securities. Five years ago, Daniel Azouri met Marvin Lipschultz at the Cannes Film Festival.  Mr. Azouri suggested that Mr. Lipschultz invest in a movie venture.  Mr. Lipschultz invested a total of $220,000

Finders Bill Finds Success In Assembly Committee

In February, I wrote about the resurrection of a bill that would clarify the status of finders under the California Corporate Securities Law of 1968.  Earlier this week, the bill, AB 667 (Wagner) cleared its first policy committee – the Assembly Committee on Banking and Finance.  The bill passed out of committee on an 11

Section 25501.5 – I Ask Again 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 that is required to be licensed and has not”.  A right of rescission makes sense when the unlicensed broker-dealer is acting

Finders Bill Was Lost, But Now Is Found

In the last legislative biennium, the Corporations Committee of the Business Law Section of the California State Bar sponsored a bill, AB 713 (Wagner), to clarify the status of finders under the California Corporate Securities Law of 1968.  Despite a lot of hard work on the part of the committee and the fact that the

Commissioner Ponders Whether To Exempt Real Estate Brokers From Investment Adviser Registration

Last week, the Commissioner of Business Oversight issued an invitation for comment on whether to exempt real estate brokers from the investment adviser certification requirement under the Corporate Securities Law of 1968.  The exemption would require a real estate broker to be operating under the scope of a license issued by the Bureau of Real

M&A Broker Exemption Bill Resurrects Financial Statement Replaced in 1988

Last week, the North American Securities Administrators Association withdrew its support for S. 1923 which, if enacted, would exempt “M&A brokers” from the broker registration requirements of the Securities Exchange Act of 1934.  In this letter to Senators Joe Manchin and David Vitter, Arkansas Securities Commissioner A. Heath Abshure blamed NASAA’s change in position on the

California Finders Bill Trapped In The Weeds As Legislative Deadline Looms

The question of whether finders’ fees can be paid in securities transactions has bedeviled issuers for decades.  The Corporations Committee of the Business Law Section of the California has tried to address this recurring problem by sponsoring AB 713 (Wagner).  In a nutshell, the bill would attempt to bring some certainty to the status of

This Legislative Lacuna Looms Large In RULLCA

I expect that most limited liability company operating agreements specify how profits and losses are to be allocated among members.  Sometimes, they may not.  The now repealed Beverly-Killea Act provided a default provision for just this contingency, former Corp. Code § 17202.  A similar default rule can be found in the California Revised Uniform Limited Partnership

9th Circuit Holds Issuer Is Investment Bank’s “Customer” And “Actions and Proceedings” Include Arbitrations

In 2005 and 2006, the biggest little city in the world (aka Reno, Nevada) issued approximately $211 million in securities employing Goldman, Sachs & Co. as its sole underwriter and broker-dealer.  The financing didn’t work out and Reno initiated arbitration proceedings against Goldman, Sachs before the Financial Industry Regulatory Authority (FINRA).  Goldman, Sachs filed an action