Secondary Trading In Private Company Shares
In this blog posting from last June, I mentioned briefly the phenomenom of secondary trading in the shares of companies not subject to the periodic reporting requirements of the Securities and Exchange Commission. In this article for the Daily Journal, I mentioned some legal issues and risks associated with the practice. California, for example, requires qualification of nonissuer transactions unless the Read more...
CCP § 1029.8: “Let Him Make Treble Satisfaction”
Recently, I’ve been writing about Section 25501.5 of the California Corporations Code, which was added to the Corporate Securities Law of 1968 by AB 2167 (Correa). That wasn’t the only statutory change effected by AB 2167, however. AB 2167 also amended California Code of Civil Procedure § 1029.8 and that amendment should be of particular interest to unregistered broker-dealers and investment advisers in Read more...
What Do It [§ 25501.5] Mean?
I’ve received several responses to my post last week concerning the meaning of California Corporations Code Section 25501.5. Alan Parness, Chairman of the ABA Business Law Section’s Committee on State Regulation of Securities, observes that the remedies of rescission or damages can be “legislative overkill”. He notes that investors will typically pursue these remedies only if the value of the Read more...
FPPC Proposes Rule Amendment To Implement Placement Agent Legislation
The California Fair Political Practices Commission (FPPC) is charged with regulation of, among other things, lobbyist registration and reporting. As discussed in several earlier posts, AB 1743 (Hernandez) amends the definition of “lobbyist” in Government Code § 82039 to include placement agents. AB 1743 defines “placement agent” in a newly added Government Code § 82047.3. These and the other provisions of AB 1743 take Read more...
DOC Broker-Dealer Rule Is On Its Way
The Department of Corporations has completed its rulemaking package for a proposed rule that would establish a non-exclusive safe harbor from California’s broker-dealer registration requirement for associated persons of an issuer. The new rule would be designated 10 CCR § 260.004.1. The Commissioner undertook this rulemaking project following the Court of Appeal’s decision in People v. Cole, 156 Cal. App. 4th 452 (2007). Read more...
Did The SEC Really Have Good Cause To Grant Accelerated Approval Of Amendments To NYSE Rule 452?
On September 9, 2010, the Securities and Exchange Commission granted accelerated approval of the New York Stock Exchange’s proposed amendments to Rule 452. Echoing the Queen of Hearts (“Sentence first – verdict afterwards”), the SEC at the same time announced that it was soliciting comments on the “proposed” rule change. The NYSE proposed the rule to meet the requirements of Section 957 Read more...
Usury Exemption Bites Back
Last week, I wrote about the oft overlooked California Finance Lenders (CFL) law. In general, that law provides that anyone engaged in the business of making consumer or commercial loans must obtain a license from the Department of Corporations (unless an exemption is available). CFL licensees do enjoy one benefit. They constitute a class of “exempt persons” for purposes of California’s constitutional Read more...
Commissioner Proposes Clarifications To Proposed Broker-Dealer Safe Harbor Rule
Yesterday, Commissioner Preston DuFauchard proposed further clarifications to the text of a proposed rule intended to respond to the California Court of Appeal’s decision in People v. Cole, 156 Cal.App.4th 452 (2007). That decision engendered confusion regarding whether officers and directors of an issuer can rely on the agent exclusion set forth in Corporations Code § 25003(d). For background on this case, Read more...
Governor Signs Flawed Placement Agent Bill
Yesterday, Governor Arnold Schwarzenegger signed AB 1743 (Hernandez). As discussed in previous posts, this bill will required placement agents for funds and advisers seeking access to CalPERS to register as lobbyists. As such, they will not be able to obtain success fees. Marc Lifsher provides more background on AB 1743 in this Los Angeles Times article. The California Public Employees Retirement System (CalPERS) Read more...
Senior-Specific Specifications Can Spell Trouble Under the CSL
Recently, the Securities and Exchange Commission announced that it had charged an investment adviser in Colorado with fraudulently recommending hedge funds to older investors. In California, we have a statute, Corporations Code Section 25234.5, that specifically prohibits broker-dealers and investment advisers, or their respective agents or representatives, from using a senior specific professional designation in the offer or sale of Read more...
