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CALIFORNIA CORPORATE & SECURITIES LAW

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…

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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…

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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…

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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…

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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…

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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…

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DOC Warns Financial Services Licensees And Can A Theory Be A Tautology?

Last April, the Consumer Financial Protection Bureau issued this Bulletin cautioning supervised banks and certain non-depository financial services companies that they must have “an effective process for managing the risks of service provider relationships”.  Like many regulatory requirements, the Bulletin has given birth to both a new industry and unintended consequences.  The new industry is third-party risk management.  This is a…

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Justice Scalia, Liberal Construction & The Finance Lenders Law

A few weeks ago, I purchased a copy of Reading Law: The Interpretation of Legal Texts by Justice Antonin Scalia and Bryan Garner.  According to the cover, the authors “carefully and engagingly explain 57 valid canons of construction and dispel 13 false notions about legal interpretation . . . .”  While it is true that the book…

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Sale-Leaseback Transactions And The Finance Lenders Law

The California Finance Lenders Law generally requires that persons “engaged in the business of making consumer loans or making commercial loans” be licensed, unless exempt.  Cal. Fin. Code §§ 22100(a) and 22009.  The business of making consumer loans or commercial loans may include lending money and taking, in the name of the lender, or in any other name, in whole…

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CFL Annual Report Form Presents A Subterranean Problem For DOC

Every person who was licensed under the California Finance Lenders Law as of December 31, 2011 must file an annual report with the Department of Corporations.  The report is due on or before March 15, 2012.  Cal. Fin. Code § 22159(a).  The Department uses the report to determine each licensee’s annual assessment.   The Department also…

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