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.

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

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

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

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

SEC Proposes “A Clearly Unwarranted Invasion of Personal Privacy”

Last week, the Securities and Exchange Commission proposed that persons involved in administrative proceedings be required to submit all documents and other items electronically.  The SEC is proposing these rules as part of its effort to create a comprehensive Internet-based electronic system that would, among other things, allow for the electronic filing and service of documents in

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

DBO Establishes Protocol To Block Unlicensed Payday Lenders’ Ads

When I served as California’s Commissioner of Corporations, Internet commerce was just finding its legs and we were concerned about how to apply the Corporate Securities Law to this new technology.  For state regulators, the challenge has been how to prevent unlicensed activity from entering the state through the Internet.  This week, the Department of

Could The SEC Ask Airlines To Produce Data On Delayed And Canceled Flights?

The following story is fiction.  It was imagined following the SEC’s recently settled action against KBR, Inc. Airlines were caught completely off guard yesterday by SEC letters asking that they produce five years of data on delayed and canceled flights to the nation’s capital. The SEC’s action was a continuation of the agency’s inquiry into

Collateral Damage – Should Investors Pay The Price Of Government Sting Operations?

Nearly two years ago, I wrote about a Securities and Exchange Commission enforcement action against a penny stock promoter in San Diego.    There’s nothing particularly unusual about the SEC targeting penny stock fraud.  What made this case interesting was the fact that the investigation appeared to involve the government in criminal stock manipulation.  See Did The FBI Violate The CSL? I