Is A Blue Sky Exemption For Farms Sustainable?

Today, California regulates the offer and sale of securities more by exemption than qualification.  In addition, California and other states have lost authority over a significant amount of securities transactions due to federal preemption.  The Sustainable Economies Law Center nonetheless is sponsoring a bill, AB 2751 (Brown), to add two new exemptions to the California Corporate

Bill Aims To Put The Kibosh On Alleged Hedge Fund Stock Price Manipulation

The California Corporate Securities Law has long declared a number of manipulative devices to be unlawful.  See Cal. Corp. Code § 25400.  Now, a California legislator wants to add to the list.  As amended last week, SB 726 (Hueso) would insert a new Section 25401.2 to the Corporations Code declaring: It is unlawful for any person, directly or indirectly,

Citizenship And The California Securities Laws

I often hear lawyers say something along the lines of “We need to find an exemption from the California Corporate Securities Law because one of the investors is a citizen of California”.  The citizenship or residency of a purchaser, however, doesn’t necessarily determine whether the CSL will apply to an offer or sale.  Qualification of an offer

Should Church Debt Be Exempt From Qualification?

The California Corporate Securities Law of 1968 currently exempts from qualification any security of an issuer (1) organized exclusively for educational, benevolent, fraternal, religious, charitable, social, or reformatory purposes and not for pecuniary profit, if no part of the net earnings of the issuer inures to the benefit of any private shareholder or individual, or (2)

Bill Aims To Negate Scienter

You can thank the Romans for science and the English for knowledge The etymon of “scienter” is sciens which is the present participle form of the Latin verb meaning to know (scire).  The English word “know” is derived from the Old English verb, cnāwan, the present participle of which is cnāwende.  The roots of cnāwan can be traced back to

Bill Threatens To Yank Qualification Upon Any Change In Management

Sometimes, I run across bills that seem to defy rational explanation.  AB 2610 (Holden) appeared to be one such bill. Under the California Corporate Securities Law of 1968, the offer and sale of securities must be qualified unless the transaction or security is exempt or not subject to qualification due to federal preemption.  Qualification, however,

California’s Blue Sky Law May Cast A Shadow On Some Foreign Issuer Equity Plans

Foreign issuers whose securities are not listed on either the NASDAQ or New York stock exchange may overlook the need to comply with California’s Corporate Securities Law of 1968 when making equity plan awards to their California employees.  Without the benefit of preemption pursuant to Section 18 of the Securities Act of 1933, these issuers

What The SEC Doesn’t Understand About Blue Sky Laws

I recently submitted this comment letter to the Securities and Exchange Commission with respect to its proposal to modernize the exemption applicable to intrastate offerings.  The SEC somewhat misleadingly describes its proposal as ” “amendments to Rule 147 under the Securities Act of 1933″.  While that may technically be accurate, the SEC is actually jettisoning

Is There A State Role For Binary Option Regulation?

The North American State Securities Administrators Association (NASAA) recently warned investors about the risks of investing in binary options.  While NASAA asserts that many binary trading platforms are “unregulated or are completely illegal”, I found it surprising that it didn’t cite any state securities or other laws that might regulate, much less outlaw, binary options

If It Doesn’t Sell Buckets, Is It Truly A Bucket Shop?

An often overlooked corner of the California Corporations Code is the Bucket Shop Law, Cal. Corp. Code § 29000 et seq.  The law quite literally criminalizes the keeping of a bucket shop: Any person who . . . is the keeper of any bucket shop, is guilty of a felony. Cal. Corp. Code § 29100.  However, this is