Court Of Appeal Holds “May” Does Not Mean “May Only”

California requires persons who are engaged in the business of making consumer loans or commercial loans to be licensed under the Finance Lenders Law, unless exempt.  Cal. Fin. Code § 22100.  The CFLL includes the following: A licensee may sell promissory notes evidencing the obligation to repay loans made by the licensee pursuant to this

Bill Would Authorize Payments For Commercial Loan Referrals

California State Senator Marty Block has introduced a bill, SB 197, that would authorize a licensed finance lender to compensate an unlicensed person or company in connection with the referral of one or more prospective borrowers to the licensee for a commercial loan.  Compensation would be authorized only if several conditions are met.  For example, the referral must lead

DBO Proposes Reversal Of Long-Standing CFLL Interpretation

The California Finance Lenders Law generally requires that a person engaged in the business of making consumer loans and/or commercial loans obtain a license from the Department of Business Oversight.  Cal. Fin. Code § 22100.  There are, of course, numerous exemptions from this requirement.  Section 22050(a) provides that the CFL does not apply to “any person

DBO Filing Procedures Set To Change Big Time

When I joined the Department of Corporations, it had no website and filings were made only in hard copy.  In the ensuing years, the Department (now known as the Department of Business Oversight) created a website, established system for filing notices of exemption under Section 25102(f) online, and provided online access to securities and franchise filings.  See California’s Big

Commissioner Signals Intent To Expand Authority Over Federal Bank Subsidiaries

Last month, Commissioner of Business Oversight Jan Owen issued an invitation for comment on two proposed rules that would subject non-depository operating subsidiaries, affiliates and agents of federal banks and other financial institutions to licensing under the California Finance Lenders Law or the Residential Mortgage Lending Act.  I found this proposal to be particularly interesting

Bill Aims To Exempt Venture Capital Company Equity Security Investments From Lenders Law

California requires persons who are engaged in the business of making loans to be licensed under the Finance Lenders Law.  Cal. Fin. Code § 22000 et seq.  This had been an issue for venture capital funds that extended bridge loans to see portfolio companies through to the next round of financing.  In 2003, the legislature provided some

Courts Tackle Meaning of “May” Under the Finance Lenders Law

Section 22340(a) of the California Financial Code provides that a licensee “may sell promissory notes . . . to institutional investors.”  Does this mean that a licensee may only sell promissory notes to institutional investors or that selling promissory notes to institutional investors is something that licensees are permitted to do?  U.S. Magistrate Judge Nathanael M. Cousins

DBO to Licensees: “Thou Shalt Have A Dedicated Electronic Mailbox And Read Your Email Daily”


Late last month, Department of Business Oversight Commissioner Jan Owen issued an order requiring licensees to: establish within their computer electronic mail system an electronic mailbox; dedicate the email address to receiving communications from the DBO; and monitor the mailbox daily. The Commissioner’s order further requires that the mailbox have the capability of receiving attachments.  The Commissioner

Bill Proposes Significant Changes To Finance Lenders Law

If you are in the business of making loans in California, there’s a good chance that you need a license.  Some lenders are licensed under the Real Estate Law while others are licensed under laws governing banks, credit unions or residential mortgage lending.  If a lender doesn’t fall within any of these categories, that lender

Move Over Hester Prynne: If Your Company Is Delinquent, You May Also Be Wearing A Scarlet Letter

In 2006, then Assembly Member Jerome Horton authored AB 1418 to require the Board of Equalization and the Franchise Tax Board to make publicly available lists of the 250 largest tax delinquencies in excess of $100,000.  In California, the BOE collects sales and use taxes and the FTB collects personal and corporate taxes. Last year, the