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CALIFORNIA CORPORATE & SECURITIES LAW

Dropping a Dime in California

In this recent post, I wrote about California’s employee whistleblower legislation.  California Labor Code § 1102.7 requires the California Attorney General to maintain a whistleblower hotline to receive calls from persons who have information regarding possible violations of state or federal statutes, rules, or regulations, or violations of fiduciary responsibility by a corporation or limited…

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California’s Whistleblower Hotline

Yesterday, the Securities and Exchange Commission proposed rules for implementing the whistleblower provisions of the Dodd-Frank Act.  That act established a whistleblower program that requires the SEC to pay a bounty to eligible whistleblowers who voluntarily provide the SEC with original information about a violation of the federal securities laws that leads to the successful…

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A Proxy Is Not A Vote And Why It Matters

As discussed in this prior post, the Securities and Exchange Commission recently proposed rule amendments to implement the Dodd-Frank Act’s executive compensation advisory votes mandates.  Regrettably, the SEC’s proposal perpetuates the common misconception that executing a proxy is the same as voting.  For example, the SEC’s proposed Rule 14a-4(b)(3) refers to “[a] form of proxy which provides for a shareholder vote…

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The SEC’s Proposed Advisory Vote Rule Favors Large Minority Shareholders

The Securities and Exchange Commission continues to pump out rule proposals at “warp speed” in order to meet the mandates of the Dodd-Frank Act.  Last week, the Commission issued this proposal with respect to shareholder advisory votes concerning executive compensation and golden parachute compensation.  Because the Dodd-Frank Act requires a shareholder advisory vote on the…

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Ninth Circuit Declares No General Alter Ego Claim Exists In CA Law

When alter ego is alleged, the question may arise as to whether the theory is to be applied generally (i.e., for all of the creditors) or specifically (i.e., in the particular case presented by the creditor). This question was answered recently by the Ninth Circuit Court of Appeals in Ahcom, Ltd. v. Smeding, 2010 DJDAR…

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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…

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Massey Energy Loses Bid To Eliminate Cumulative Voting

I’ve recently commented CalPERS’ announcement that it would abstain on a proposal by Massey Energy Company to eliminate cumulative voting.  Yesterday, Massey Energy reported in this Form 8-K that its stockholders did not approve the proposal.  The company reported that there were 75,341,383 votes cast for the proposal, 3,967,341 votes cast against the proposal, 564,215…

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“It’s Dark as a Dungeon Way Down in the Mines” – CalPERS Declines to Vote Against Massey Energy Co. Proposal

Last week, I expressed surprise in this post about the California Public Employees Retirement System’s recent announcement that it plans to abstain on a proposal by Massey Energy Company to jettison cumulative voting.  My surprise was based on the fact that Government Code Section 6900 specifically and unequivocally requires CalPERS and other state agencies to vote in favor of cumulative voting. …

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CalPERS and Cumulative Voting

California has a strong historical bias in favor of cumulative voting in the election of directors.  In fact, California’s 1879 Constitution enshrined cumulative voting as a constitutional right.  Cal. Const. of 1879, Art. XII, § 12 (repealed).  The 1931 California General Corporation Law continued mandatory cumulative voting.  When the current California General Corporation Law was introduced,…

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Don’t Be a Dummy – Measuring Shareholder Voting Power

John F. Banzhaf III is a law professor who in the 1960s became interested in voting and voting power.  See Weighted Voting Doesn’t Work: A Mathematical Analysis, 19 Rutgers Law Review 317 (1965).  In ensuing years, Professor Banzhaf has attracted controversy for his anti-smoking and anti-obesity activism. Determining voting power is key to knowing where…

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