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CALIFORNIA CORPORATE & SECURITIES LAW

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  The now repealed Beverly-Killea Act provided a default provision for just this contingency, former Corp.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

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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…

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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…

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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…

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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…

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DBO to Licensees: “Thou Shalt Have A Dedicated Electronic Mailbox And Read Your Email Daily”

Late last month, Department of Business Oversight Commissioner Jan Owen issued an order requiring licensees to: establish within their computer electronic mail system an electronic mailbox; dedicate the email address to receiving communications from the DBO; and monitor the mailbox daily. The Commissioner’s order further requires that the mailbox have the capability of receiving attachments.  The Commissioner…

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M&A Brokers – What About George Babbitt?

Yesterday’s post mentioned a California broker-dealer exemption for mergers and acquisitions specialists – Rule 260.204.5.  One astute and observant reader pointed out that California’s Real Estate Law may also be an issue.  This is an issue that I raised three years ago: That law defines a “real estate broker” as any person who sells or offers to sell, buys or…

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NASAA Supports Regulatory Relief For M&A Brokers

Last June, Congressman Bill Huizenga introduced H.R. 2274 which would amend the Securities Exchange Act of 1934 to provide for a notice-filing registration procedure for brokers performing services in connection with the transfer of ownership of smaller privately held companies.  In most cases, registration would be effective upon filing.  Given NASAA’s generally jaundiced view of…

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Subcommitee Recommends SEC Rules Imposing Fiduciary And Disclosure Duties On Brokers

Recently, the Securities and Exchange Commission posted two recommendations by the Investor as Purchaser Subcommittee of the Investor Advisory Committee.  In general, the Subcommittee recommended: The SEC should conduct a rulemaking to impose a fiduciary duty on broker-dealers when they provide personalized investment advice to retail investors; and As part of its rulemaking, the SEC should adopt…

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Commodities And The CSL

A recent unpublished opinion by Justice William W. Bedsworth set me to cogitating on the status of commodities under the Corporate Securities Law of 1968.  In Kelly v. Monex Co., 2013 Cal. App. Unpub. LEXIS 5903 (Aug. 21, 2013), the plaintiff had lost substantial amounts in trading gold and silver through the defendant.  She sued and the…

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