Website Heading

CALIFORNIA CORPORATE & SECURITIES LAW

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…

Share on:

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…

Share on:

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…

Share on:

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…

Share on:

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…

Share on:

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  The now repealed Beverly-Killea Act provided a default provision for just this contingency, former Corp.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…

Share on:

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…

Share on:

California Finders Bill Moves To Senate on 73-1 Vote

Yesterday, I wrote about a recent no-action letter issued by the SEC’s Division of Trading and Markets with respect to “M&A Brokers”.  Here in California, the legislature is considering a bill, AB 713 (Wagner) that would exclude “finders” from the definition of “broker-dealer” in Section 25004 of the Corporations Code.  Late last month, the bill passed…

Share on:

SEC No-Action Letter Addresses “M&A Brokers”

Martin A. Hewitt alerted me to this no-action letter issued on January 31, 2014 by the SEC’s Division of Trading and Markets.  The letter was issued in response to a request by six lawyers, including Mr. Hewitt.  In very broad terms the letter states that the Division would not recommend enforcement “if an M&A Broker…

Share on:

Finders Bill Finds Some Forward Transaction

Finders in securities transactions are common but their legal status is uncertain at best.  Last year, I wrote that Assembly Member Donald P. Wagner had introduced a bill, AB 713, to statutorily homologate the status of finders in California.  See Eureka! Bill Introduced To Homologate Finders.  The bill was set for hearing last April, but the author…

Share on: