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

What’s So Special About An 80% Doing Business Threshold?

In yesterday’s post, I dipped into the SEC’s proposed amendments to Rule 147, a safe harbor for intrastate offerings exempt from registration pursuant to Section 3(a)(11) of the Securities Act of 1933.  Among other things, the SEC is proposing to jettison the current requirement of Rule 147 that limits the availability of the rule to issuers organized

Rule 147 Changes May Cause Uptick In California Securities Qualifications

As has been widely noted, the Securities and Exchange Commission has proposed amending Rule 147 under the Securities Act of 1933.  That Rule provides a safe harbor for compliance with the Section 3(a)(11) exemption from registration for intrastate securities offerings.  Among other things, the SEC is proposing to eliminate the current requirement in Rule 147 that issuers to

California’s Secured Promissory Note Exemption

The line between real property transactions and securities transactions is not always clear.  California Corporations Code Section 25100(p) provides an exemption for a promissory note secured by a lien on real property provided it is neither: (a) one of a series of notes of equal priority secured by interests in the same real property; or

Governor Signs Finders Exemption Bill

Yesterday was the last day for Governor Brown to sign or veto bills passed by the Legislature on or before September 11 and in the his possession after that date.  Cal. Const. Art. IV, § 10(b)(1).  On Saturday, he signed into law a bill that will create a statutory exemption for “finders” from the securities broker-dealer registration

Filing Notices of Exemption Online In California

Occasionally, I’m asked whether it is possible to file a specific notice electronically using the California Department of Business Oversight’s online portal.  To use this service, you must register online.  There are two registration options: Option A is for quick notice filings and Option B is for applying for a license, registering a franchise or applying for

Overcoming A Securities Overissue

I like to remind my colleagues that California has two securities laws. Neither of these laws applies exclusively to corporations or other entities organized under California law.  The Corporate Securities Law of 1968, Cal. Corp. Code § 25000 et seq., is generally concerned with the offer and sale of securities in California.  The Uniform Commercial Code –

In California, A Snail Is Sometimes A Fish And A Goldfish Isn’t

With statutes, it can be dangerous to rely on plain meaning.  Most people, for example, would not consider an amphibian, such as a frog, or a mollusk, such as a snail, to be fish.  However, the California Fish & Game Code considers these and crustaceans (including crabs, lobsters, and barnacles) to be fish.  Oddly, however, the

Why The SEC’s Pre-Existing Relationship Test Is The Mirror Image of California’s

One significant condition to California’s limited offering exemption is that all purchasers have a “pre-existing relationship”: All purchasers either have a preexisting personal or business relationship with the offeror or any of its partners, officers, directors or controlling persons, or managers (as appointed or elected by the members) if the offeror is a limited liability