Is Rule 10b-5 The “Mother Of All Litotes”?

Yesterday’s post addressed the use of litotes in California’s broker-dealer suitability rule.  Litotes can be an effective rhetorical device, but as Judge Frank H. Easterbrook observed, it is also ambiguous.  Associated Randall Bank v. Griffin, Kubik, Stephens & Thompson, Inc. 3 F.3d 208 (7th Cir. 1993) (“‘Not unlike’ can mean almost anything; although the listener may cancel

Is Certiorari A Possibility For SLUSA Question Not Addressed By Any Federal Circuit Court?

In Luther v. Countrywide Financial Corp., 195 Cal. App. 4th 789 (2011), the trial court ruled that state courts do not enjoy concurrent jurisdiction when a class action meeting the definition of a “covered class action” under the Securities Litigation Uniform Standards Act of 1998 (aka “SLUSA”) did not involve a “covered security”, as also

Does “Valid When Made” Apply To Evidences Of Indebtedness Qualified Under The CSL?

Many have expressed disappointment that the U.S. Supreme Court denied certiorari in Midland Funding, LLC v. Madden.  The question presented by the petitioners in the case was as follows: Whether the National Bank Act, which preempts state usury laws regulating the interest a national bank may charge on a loan, continues to have preemptive effect after the national bank has sold

Is Counterfeit Currency A Bank Note?

Counterfeiting was once considered to be tantamount to treason.  It is still a serious, but not capital, crime.  In fact, it is one of only four crimes specifically mentioned in the Constitution.  Notably, however, the Constitution doesn’t mention paper currency, it refers rather to the “securities and current coin of the United States”.   Perhaps

Did Ethiopian Electric Power Violate California’s Corporate Securities Law?

Last week, the Securities and Exchange Commission announced a $6.5 million settlement with Ethiopian Electric Power, which was described in the SEC’s order as “a government-owned power utility headquartered in Addis Ababa, Ethiopia”.  According to the order, Ethiopian Electric Power offered and sold bonds to U.S. residents of Ethiopian origin in Washington D.C. and other

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