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CALIFORNIA CORPORATE & SECURITIES LAW

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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Subcommitee Recommends SEC Rules Imposing Fiduciary And Disclosure Duties On Brokers

Recently, the Securities and Exchange Commission posted two recommendations by the Investor as Purchaser Subcommittee of the Investor Advisory Committee.  In general, the Subcommittee recommended: The SEC should conduct a rulemaking to impose a fiduciary duty on broker-dealers when they provide personalized investment advice to retail investors; and As part of its rulemaking, the SEC should adopt…

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Can The DBO Incorporate By Reference A Federal Form?

Almost a year ago, the Commissioner of Corporations (now the Commissioner of Business Oversight) proposed to amend the custody rule, 10 CCR Section 260.237, for investment advisers under the Corporate Securities Law of 1968.  The Department received several comments and recently proposed to amend its proposed custody rule by expressly incorporating by reference Form ADV-E and…

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Emergency Powers And Emergency Bylaws Bill Enacted

Now Corporations Can Be Like the Boy Scouts Thanks to the efforts of the Corporations Committee of the Business Law Section of the California State Bar, the legislature last week enacted and the Governor has signed legislation intended to help corporations react to emergency situations, Chapter 255, Statutes of 2013 (AB 491 (Torres)).  The bill addresses two distinct…

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Proxy Advisory Firms – What About State Registration?

Yesterday’s post discussed why proxy advisory firms are likely to meet the definition of “investment adviser” under the Investment Advisers Act of 1940.  I noted that some proxy advisory firms, such as ISS and Marco Consulting Group, Inc., have, in fact, registered with the Securities and Exchange Commission as investment advisers.  Other proxy firms are not registered…

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Proxy Advisory Firms And Investment Adviser Registration

Recently, I wrote about a shareholder proposal seeking to hold a proxy advisor popularity contest.  I commented that this could raise some interesting compliance challenges for proxy advisory firms that are registered as investment advisers.  I waited, it turns out in vain, for someone to point out that not all proxy advisors are registered as…

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Is A Popularity Contest The Best Way To Pick A Proxy Advisor?

Koheleth wrote that “there is nothing new under the sun”, but there are a many ideas that are new to me.  Such is the case with the shareholder proposal recently submitted by James McRitchie (Corpgov.net) to Cisco Systems, Inc.  In general, he proposes that Cisco’s board establish a competition for proxy advisory firms.  These firms would pay a fee (he…

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If You Pay More, Do You Actually Get More?

The typical private fund is organized as a limited partnership or limited liability company that is managed by a general partner or manager.  The fund manager is usually compensated in three ways – an annual management fee (often 2%), a carried interest (often 20%), and an investment in the fund (often 1%).  In a recently…

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Law Mandates CalPERS/CalSTRS Support For Shareholder Resolutions Supporting Religious Minorities

In 1999, the legislature enacted SB 105 (Burton) which obligates CalPERS and CalSTRS to support, whenever feasible, shareholder resolutions at domestic and international corporations in which those funds have invested that are designed to encourage, among other things: Increased representation of individuals from underrepresented religious groups in the work force, including managerial, supervisory, administrative, clerical, and technical…

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Defining “Qualified Client” – Uff Da!

Corporations Code Section 25234 generally prohibits an investment adviser registered in California to be compensated on the basis of a share of capital gains.  This prohibition is analogous to the prohibition found in Section 205(a)(1) of the Investment Advisers Act of 1940 (IAA).  Congress included this prohibition because it was believed that performance fees might induce…

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