The DBO Wants Your Social Security Number, But Is It Legal?

Readers will recall that last year the California legislature created a statutory exemption for finders from the California’s registration requirement for broker-dealers (Chap. 743, Stats. 2015).  That exemption, codified at Corporations Code Section 25206.1, requires persons relying on the exemption to file a statement of information with the Department before engaging in activities described in the

How Much Does Your Banker Make?

In the midst of the Great Depression, The New Yorker published a poem by Ogden Nash entitled “Bankers Are Just Like Anybody Else, Except Richer”.  But are bankers really wealthier than hoi polloi?  The answer may be found in the Department of Business Oversight’s annual survey of bank officer and director at state-chartered banks, national

Suitability Of Broker-Dealer Recommendations And Litotes

The Financial Industry Regulatory Authority, better known as FINRA, imposes a suitability requirement on its members.  Rule 2111(a) requires, in part, that a broker-dealer or registered representative “have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer” based on the customer’s investment

Are California Statutes Authorizing Desist And Refrain Orders Facially Unconstitutional?

In December 2008, the Commissioner of Corporations issued a desist and refrain order based on alleged violations of the Corporate Securities Law and the Finance Lenders’ Law.  Nearly seven years later, the respondents challenged the order by filing a complaint in the U.S. District Court.  The complaint included four causes of action: (1) violation of

DBO Defeats Preliminary Injunction Files Suit Against Prorater

Last month, I wrote about Judge Lucy Koh’s decision not to preliminarily enjoin the Department of Business Oversight’s investigation of Nationwide Biweekly Administration, Inc. for unlicensed activity under California’s Check Sellers, Bill Payers and Proraters Law.  Cal. Fin. Code § 12000 et seq.   Judge Koh concluded that the law’s requirement that licensees be California corporations did not violate the Commerce

California/Delaware Corporate Law Update

If you find yourself in Los Angeles on Thursday, consider attending the Los Angeles County Bar Association’s 2015 California and Delaware Law Update Symposium & Marvin Greene Award Presentation.  Supreme Court Justice Karen Valihura “will share some of her insights from ‘the other side of the bench,’ having recently been appointed to the Delaware Supreme Court

DBO Proposes Reversal Of Long-Standing CFLL Interpretation

The California Finance Lenders Law generally requires that a person engaged in the business of making consumer loans and/or commercial loans obtain a license from the Department of Business Oversight.  Cal. Fin. Code § 22100.  There are, of course, numerous exemptions from this requirement.  Section 22050(a) provides that the CFL does not apply to “any person

DBO Filing Procedures Set To Change Big Time

When I joined the Department of Corporations, it had no website and filings were made only in hard copy.  In the ensuing years, the Department (now known as the Department of Business Oversight) created a website, established system for filing notices of exemption under Section 25102(f) online, and provided online access to securities and franchise filings.  See California’s Big

Commissioner Signals Intent To Expand Authority Over Federal Bank Subsidiaries

Last month, Commissioner of Business Oversight Jan Owen issued an invitation for comment on two proposed rules that would subject non-depository operating subsidiaries, affiliates and agents of federal banks and other financial institutions to licensing under the California Finance Lenders Law or the Residential Mortgage Lending Act.  I found this proposal to be particularly interesting

DBO Issues Guidance Regarding Virtual Currencies And Asks For Comments On Proposed Money Transmission Rules

Yesterday, the Department of Business Oversight issued this cautionary guidance for consumers regarding virtual currencies.  However, amidst the warnings, the Department disclosed that “California has been working with virtual currency industry leaders and other state and federal regulators to evaluate businesses engaging in virtual currency transactions for possible licensing.” A few weeks back, the Department also