Punitive Bill Proposes Giant Step Backwards On Capital Formation
The California Corporate Securities Law of 1968 forbids the offer and sale in this state of any security in an issuer transaction unless the sale has been qualified or the security or transaction is exempt or not subject to qualification. Cal. Corp. Code Section 25110. This important principle is the same whether it is the initial sale of securities by Read more...
Enforcing Form D Filings – A Misguided State Policy
The American Bar Association’s Committee on State Regulation of Securities publishes The Blue Sky Bugle, a newsletter for lawyers who deal with the state regulation of securities. In a column for the December issue, Alan Parness of Cadwalader, Wickersham & Taft LLP wrote about the enforcement report issued last October by the North American Securities Administrators Association (aka NASAA). Alan Read more...
The Legacy Of The Commissioner Who Was Indicted
In an earlier post, I wrote about Edwin M. (“Mike”) Daugherty who served as California’s Commissioner of Corporations from 1922 until 1926 and then from 1931 to 1954. He was succeeded by interim Commissioner Clifford J. MacMillan. Then in March 1927, Governor Clement C. Young appointed Los Angeles City prosecutor Jack Friedlander to the post. Within two months of taking office, the Read more...
Securities Law Doppelgängers
Over the years, I’ve noted that a number of evil twins have walked the corporate securities law stage. Other People’s Money O.P.M. Leasing Services, Inc. was a large computer leasing company that crashed into bankruptcy on March 11, 1981. Eventually, O.P.M.’s two founders were each sentenced to prison for a financial fraud that reportedly involved over $200 million. One of Read more...
Felonious Filings
In October, I wrote about a warning from the Secretary of State regarding business theft. One way to steal a corporation’s identity is to make a false filing with the Secretary of State listing yourself as an officer. While this can be an initial step in an even bigger crime, such as grand theft, the filing itself is a crime (even Read more...
Commissioner Orders Crowdfunding Facilitator To Stop
In November, the U.S. House of Represantatives passed the Entrepreneur Access to Capital Act, HR 2930, to create a new exemption under the Securities Act of 1933 for “crowdfunding” meeting specified conditions. About the same time, the U.S. Senate weighed in with the Democratizing Access to Capital Act of 2011, S 1791. According to the bill’s author, Massachusetts Senator Scott Brown, S 1791 Read more...
When Employees Steal, The SEC May Punish The Company And The CEO
In this week’s issue of Compliance Week, Tammy Whitehouse writes about the SEC’s recent enforcement action against Koss Corporation and Michael J. Koss, its Chief Executive Officer and former Chief Financial Officer. According to the SEC’s complaint, Koss Corporation’s former Principal Accounting Officer and its former Senior Accountant, engaged in a wide-ranging accounting fraud to cover up the PAO’s embezzlement of over $30 Read more...
Confession Is Good For Soul And Equilibrium But Maybe Not Justice
Recently, I read this article about how the Department of Labor, the Internal Revenue Service and states are targeting pay practices of home builders. This got me thinking about how industry enforcement sweeps can be a very effective enforcement tool. Suppose, for example, an enforcement sweep involves only two firms that do not communicate with each other. If both firms Read more...
Grizzly Bears And Internal Investigations
The Los Angeles Times recently published this story about an Idaho man who shot and killed a grizzly bear on his property where his children were playing. Since the grizzly bear is a threatened species, the U.S. Attorney filed an information charging the man with a violation of the Endangered Species Act of 1975. The shooter faced a sentence of up to one year in prison Read more...
This Time, Record Destruction Claims Are Aimed At The SEC
Most have heard the saying “do as I say, not as I do” but I expect that fewer know the full quotation. Its author was the remarkable English polyhistor, John Selden (1584-1654). Here’s the full quotation from The Table Talk of John Selden: Preachers say, Do as I say, not as I do. But if the physician had the same disease upon him Read more...
