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

District Court Refuses To Halt SEC Administrative Proceedings

While serving as General Counsel to California’s Business, Transportation & Housing Agency, I was from time to time asked to respond to ersatz summons and other documents issued by “Our One Supreme Court”.  Given that these “courts” existed only in the minds of their creators, these summons were ignored.  But if you were hailed before an

DBO Warns Victims Not To Be Victimized Twice

Recently, the Department of Business Oversight issued the following warning: The DBO has become aware that past investors in Leland Energy are being solicited by a purported New York State-licensed attorney claiming to have been hired by the State of California to contact them regarding $6.5 million in funds he claims to hold from the

Does Former Officer Have An Obligation To Turn Over Whistleblower Award?

Yesterday, the Securities and Exchange Commission announced “a whistleblower award payout between $475,000 and $575,000 to a former company officer who reported original, high-quality information about a securities fraud that resulted in an SEC enforcement action with sanctions exceeding $1 million.”  This was the SEC’s first award to a former officer because officers, directors, trustees, or

Is Anything Fishy With The SEC’s Whistleblower Inquiries?

Yesterday, Rachel Louise Ensign of The Wall Street Journal wrote that the SEC recently sent letters “to a number of companies asking for years of nondisclosure agreements, employment contracts and other documents”.  According to Ms. Ensign, the SEC is seeking information since the enactment of the Dodd-Frank Act (i.e., 2010). Because the SEC sent letters and

Some LLC Names Slip Past California’s Statutory Ban

The California Revised Uniform Limited Liability Company Act explicitly bans a number of different words from being included in LLC names: The name shall not include the words “bank,” “trust,” “trustee,” “incorporated,” “inc.,” “corporation,” or “corp.” and shall not include the words “insurer” or “insurance company” or any other words suggesting that it is in

SEC Charges Attorney For Allegedly False Legal Opinion

Last week, the Securities and Exchange Commission announced charges against an attorney who was allegedly involved in the filing of false registration statements.  The SEC’s order instituting proceedings alleges that the attorney provided opinion letters in support of registration statements filed by multiple shell companies: In late 2011 and 2012, Dalmy, an attorney, provided opinion