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CALIFORNIA CORPORATE & SECURITIES LAW

Post No Bills

Planning for a congregational picnic this Sunday past, a local Lutheran church sought permission to use the neighboring Catholic church’s parking lot.  The Catholic church graciously agreed to allow the use of its lot provided that the Lutherans refrain from posting anything on their church door.  The Catholic’s proviso, of course, was a reference to an event…

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NASAA Issues Report On State Enforcement Actions

“Nothing but blue skies From now on” The North American Securities Administrators Association recently released its annual enforcement report.  The report is based on a survey of the 50 state members of NASAA.  The states report data based on either the calendar year or their own fiscal year.  Some highlights of the report are: Nearly 80%…

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Did The Co-Founder Of Alcoholics Anonymous Violate Rule 10b-5?

Recently, I enjoyed watching My Name is Bill W., a 1989 movie that starred James Woods, JoBeth Williams and James Garner.  The film tells the story of Alcoholics Anonymous co-founder William Griffith Wilson (aka Bill W.).  In telling his story, the film details Wilson’s  work on Wall Street during the 1920s.  According to the film, Wilson decides…

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Insider Trading Is Like A Dog Named “Stay”

Insider trading cases remind me of the following joke attributed to stand-up comic Steven Wright: I bought a dog the other day. I named him Stay. It’s fun to call him. “Come here, Stay! Come here, Stay!” He went insane. Regulation of insider trading is a lot like Wright’s unfortunate pet.  Securities regulators encourage investors…

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Did This Corporation’s Law Firm Unwittingly Join The Criminal Prosecution Team?

In Brady v. Maryland, 373 U.S. 83 (1963), the Supreme Court held that the prosecution has a duty under the Fourteenth Amendment’s due process clause to disclose evidence to a criminal defendant.   The former Chief Executive Officer of IAR Systems Software, Inc. invoked this right after the San Mateo District Attorney charged him with felony…

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Criminal Conviction Of De Facto Officer Does Not Preclude D&O Coverage

After a two week trial in 2013, a jury convicted Mitchell J. Stein, a lawyer, of mail, wire, and securities fraud based on evidence that he fabricated press releases and purchase orders to inflate the stock price of his client Signalife, Inc., a publicly-traded manufacturer of medical devices.  Mr. Stein received a sentence of 204 months’ imprisonment, over…

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Why Bassam Salman Should Not Have Been Convicted

A lot of ink has been spilt on the United States Supreme Court’s decision in Salman v. United States, 137 S. Ct. 420 (2016).  In that case, the Supreme Court upheld the criminal conviction of Mr. Bassam Salman who received lucrative trading tips from an in-law, who had received the information from his brother.  The legal issue in…

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Ninth Circuit Accords Chevron Deference To The SEC, What Would Judge Gorsuch Say?

Last week, I noted that Judge Gorsuch has expressed a certain skepticism of Chevron deference.  The next day, the Ninth Circuit Court of Appeals held that the Securities and Exchange Commission’s interpretation of Section 19(d)(2) of the Securities Exchange Act is entitled to Chevron deference. Sharemaster v. United States SEC, 2017 U.S. App. LEXIS 1827 (9th…

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SEC Continues To Pay Out Millions In Secrecy

Earlier this week, the Securities and Exchange Commission announced awards to three whistleblowers totaling more than $7 million.  That is about all anyone can say about the awards.  The SEC’s order is only 448 words long, including numerous occurrences of the word “redacted”.  It doesn’t name the company or describe the nature of the investment scheme. Even…

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10th Circuit Holds SEC ALJs Are Holding Office Unconstitutionally

In March 2015, I posed the following question: But if you were hailed before an unconstitutional tribunal with the ostensible authority to fine you and bar you from working, would you want a “real” court to step in and consider the constitutionality of the proceedings? Since raising that question, several respondents in administrative proceedings brought by…

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