No Happy Trails For Victorville Tax Increment Bond Financing

For more than thirty years, I’ve driven by, but never stopped at, the Roy Rogers and Dale Evans Museum in Victorville, California.  The museum eventually relocated to Missouri but reportedly did not survive for long.  Despite this notable defection, Victorville has grown remarkably in the last three decades.  Unfortunately, it now finds itself accused of

Law Mandates CalPERS/CalSTRS Support For Shareholder Resolutions Supporting Religious Minorities

In 1999, the legislature enacted SB 105 (Burton) which obligates CalPERS and CalSTRS to support, whenever feasible, shareholder resolutions at domestic and international corporations in which those funds have invested that are designed to encourage, among other things: Increased representation of individuals from underrepresented religious groups in the work force, including managerial, supervisory, administrative, clerical, and technical

Ninth Circuit Holds Private Company Rules Preempt California Law

California’s Statutory Prohibition on Forced Patronage California Labor Code Section 450(a) forbids employers from coercing the patronage of their employees:  It provides: “No employer, or agent or officer thereof, or other person, may compel or coerce any employee, or applicant for employment, to patronize his or her employer, or any other person, in the purchase

Federal Court Sides With Second DCA In Privity Split

In Moss v. Kroner, 197 Cal. App. 4th 860 (2011), the Second District Court of Appeal found that rescission was available to a plaintiff under Corporations Code Section 25504 even though the plaintiff was not in privity with the defendant.  Section 25504 imposes liability on specified persons who are in “control” of persons who are liable under Section

Eureka! Bill Introduced To Homologate Finders

Questions about the use of finders have bedeviled transactional lawyers for years.  The need for finders is the unintended consequence of the federal and state securities law exemptions that are conditioned on the absence of a general solicitation.  Most start-ups don’t have preexisting relationships with rich people (aka accredited investors).  Thus, they are sorely tempted

When Asking For Spousal Consent Is Unlawful

From time to time, a question will arise about the necessity of obtaining spousal consent in connection with the purchase or sale of a security.  Interestingly, California declares it unlawful for any agent or broker-dealer to require prior spousal consent or authorization as a condition to the purchase or sale of securities in the name of

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

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

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

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