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CALIFORNIA CORPORATE & SECURITIES LAW

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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Has The SEC Paid Millions In Whistleblower Bounties To “Friends And Family”?

Earlier this month, the Securities and Exchange Commission announced yet another large whistleblower bounty.  See SEC Awards Nearly $1 Million to Whistleblower.  This brings to $136 million the total amount awarded to date by the SEC to whistleblowers.  That is a lot of money, especially since it went to only 37 individuals! Were any of those awards made to…

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SEC Takes Action Because Issuer Did Not Effect A Public Offering

Until the addition of paragraph (c) to Rule 506 three years ago, securities lawyers spent a lot of time advising their clients on how to avoid a public offering of their securities.  Thus, I found it somewhat ironic to read that the Securities and Exchange Commission had taken enforcement action against a California lawyer for not conducting…

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Why The SEC Isn’t Vegas

Last week, I wrote that the Securities and Exchange Commission is sending letters to registrants requesting information about compliance with Regulation G and Item 10(e) of Regulation S-K.  These letters request issuers to voluntarily provide information concerning their disclosures of non-GAAP financial measures.  I cautioned that registrants should read the accompanying SEC Form 1662 carefully before…

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When CEOs Read This, They May Become Less Enamored Of Delaware

In a forthcoming paper, Professors Murali Jagannathan (Binghamton University School of Management) and A.C. Pritchard (University of Michigan Law School) evaluate whether there might be  relationship between incorporation in Delaware and Chief Executive Officer turnover.  The two professors conclude that Delaware firms terminate their CEOs significantly more frequently than the average firm in their study.  They found that decisions by Delaware boards to force out…

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NASAA Releases 2015 Enforcement Report

State securities regulators serve an important local enforcement function.  In fact, state securities regulation precedes federal regulation by more than two decades.  The North American Securities Administrators Association is an association of state, provincial and territorial securities regulators from the 50 states, the District of Columbia, the U.S. Virgin Islands, Puerto Rico, Canada, and Mexico.…

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Will Your Corporation Be Required To Designate A “Corporate Law Enforcement Contact”?

Before seeing AB 1993 (Irwin), I had not come across the concept of a “corporate law enforcement contact”.  The bill, which was introduced last month, doesn’t exactly say what a corporate law enforcement contact’s responsibilities might be, but it does require California’s Attorney General to establish minimal qualifications for the position by July 1, 2017.  Since these qualifications are…

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Court Enjoins SEC Administrative Proceeding

Last March, 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? At the time, I was disappointed by U.S. District Court Judge Rudolph…

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Facing Legal Challenges, SEC Proposes To Reform Administrative Proceedings

As has been widely reported elsewhere, the Securities and Exchange Commission has been facing a spate of challenges to its administrative court.  It should come as no surprise then that the SEC recently announced a number of proposals to the rules of practice in that forum.  I have already submitted a comment letter on the…

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Insider Trading, Newman And Der Prozess

The U.S. Supreme Court’s denial of review in U.S. v. Newman, 773 F.3d 438 (2014) yesterday inspired the following very short tale: Joseph K. knew that he had done nothing wrong, but, one morning, he was arrested.  Joseph K. asked the officer “why have I been arrested?”  The officer replied “insider trading”.  “What statute is that?” asked…

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