If You Did This, It Would Be Fraud!
All fees, reimbursements, assessments, and other money or amounts charged and collected by the Department are required to be deposited into the the State Corporations Fund. Cal. Gov’t Code § 13978.6(b). The legislature created the fund to “effectively support the Department of Corporations” in its administration of the laws subject to its jurisdiction. Id. In this recent post, I lamented Read more...
Does The Authorization Or Issuance Of A New Class Of Stock Require Qualification?
Corporations often amend their articles of incorporation to create one or more new classes of securities. These newly created classes often have priority over the previously issued and outstanding shares. Does the amendment or issuance of these shares require qualification under the Corporate Securities Law? The answer is “yes” – and “no”. Of course, any offer or sale of the Read more...
Where Have All The CAFA Notices Gone?
On February 18 2005, Congress enacted the Class Action Fairness Act (CAFA), P.L. No. 109-2 (28 U.S.C. §§ 1332(d), 1453, and 1711 – 1715). In enacting the CAFA, Congress sought to protect consumers and investors from settlements in which plaintiffs’ attorneys received significant fees but class members received little or even less. In one (in)famous case, for example, an unfortunate class member incurred $91.33 Read more...
Facebook Fairness Hearing Back In The News
Last August, the Department of Corporations approved the acquisition of Instagram, Inc. by Facebook, Inc. following a fairness hearing. See DOC Calls It Fair. According to this Los Angeles Times story by Salvador Rodriguez, Facebook officially closed the acquisition a few days later. Although I would have expected that to have been the end of the matter, the Facebook fairness hearing leaped into Read more...
DOC Warns Financial Services Licensees And Can A Theory Be A Tautology?
Last April, the Consumer Financial Protection Bureau issued this Bulletin cautioning supervised banks and certain non-depository financial services companies that they must have “an effective process for managing the risks of service provider relationships”. Like many regulatory requirements, the Bulletin has given birth to both a new industry and unintended consequences. The new industry is third-party risk management. This is a screening service provided to financial service Read more...
DOC Gives Notice of New Filing Requirements For Real Estate Issuers
New Filing Requirements Yesterday, the Commissioner of Corporation issued Release 121-C announcing new filings required by Corporations Code Section 25102.2 which takes effect on January 1, 2013. As discussed in Bill Targets Real Estate Industry And Borrowers, these requirements were intended to address abuses in securities offerings by hard money lenders. Unfortunately, the new requirements will be about as effective as Revalenta Arabica Read more...
A Look At Recent DOC Enforcement Activity
The California Department of Corporations administers and enforces numerous state laws, including the Commodity Law, Corporate Securities Law of 1968, Deferred Deposit Law, Escrow Law, Franchise Law, Finance Lenders Law, and Residential Mortgage Lending Act. Recently, I took a look at the Department’s enforcement activity for the first seven months of this year. By my count, the Department brought actions Read more...
Aren’t All Administrative Decisions Precedential?
As lawyers, we are used to citing earlier decisions as precedent. Thus, we might expect that the Department of Corporations is free to rely on its earlier administrative decisions as precedent. Surprisingly, this is not the case. In fact, the Administrative Procedure Act prohibits a state agency from expressly relying on a decision as precedent unless the agency has designated Read more...
California Disclosure Bill Clears First Legislative Hurdle And DOC Spells “Relief”
This being an even numbered year, last Friday (June 1) was the deadline for each house to pass bills that were introduced in that house. Joint Rule 61(b)(11). Although it was initially close, I was disappointed to see that the Senate passed SB 1208 (Leno) by a 21-15 vote after initially failing to pass on a 20-18 vote. As I Read more...
