Just How Many Errors Can Be Found In The Securities Act?

I’ve recently completed my editing of the annual update to Marsh & Volk’s treatise, Practice Under the California Securities Laws.  One source of frustration has been to account for and explain the numerous technical errors in the securities laws.  When I refer to “errors”, I don’t mean policy decisions with which I disagree.  I mean the

How California Made Mergers Potentially More Difficult

The last two sentences of Section 1101 of the Corporations Code can be an unwonted surprise to some practitioners.  They are intended to ensure fair treatment of shareholders in a merger by imposing two requirements: Each share of the same class or series of any constituent corporation must be treated equally with respect to the distribution of

Bill Aims To Put The Kibosh On Alleged Hedge Fund Stock Price Manipulation

The California Corporate Securities Law has long declared a number of manipulative devices to be unlawful.  See Cal. Corp. Code § 25400.  Now, a California legislator wants to add to the list.  As amended last week, SB 726 (Hueso) would insert a new Section 25401.2 to the Corporations Code declaring: It is unlawful for any person, directly or indirectly,

Does Anyone Remember Y2K – California Does!

In the closing years of the last millennium, many were concerned about the “Year 2000 Problem” (aka Y2K).  According to this Securities and Exchange Commission interpretive release: The “Year 2000 problem” arose because many existing computer programs use only the last two digits to refer to a year. Therefore, these computer programs do not properly

Legislature Tries Again To Put Citizens United On California Ballot

Nearly two years ago, I wrote that the California Supreme Court had blocked an effort to include an advisory vote in the statewide ballot.  Proposition 49 asked whether the United States Congress and California Legislature should approve an amendment to the U.S. Constitution overturning the United States Supreme Court decision in Citizens United v. Federal Election Commission, 130 S.

Is The SEC On Schedule To Violate Another Law?

Last December, President Obama signed into law the Fixing America’s Surface Transportation Act (aka the “FAST Act“).  Buried in the FAST Act were several provisions intended to lighten the load of Securities and Exchange Commission compliance.  Section 72001 requires the SEC to issue regulations to permit issuers to submit a summary page on Form 10–K (17

Should Church Debt Be Exempt From Qualification?

The California Corporate Securities Law of 1968 currently exempts from qualification any security of an issuer (1) organized exclusively for educational, benevolent, fraternal, religious, charitable, social, or reformatory purposes and not for pecuniary profit, if no part of the net earnings of the issuer inures to the benefit of any private shareholder or individual, or (2)

Bill Aims To Negate Scienter

You can thank the Romans for science and the English for knowledge The etymon of “scienter” is sciens which is the present participle form of the Latin verb meaning to know (scire).  The English word “know” is derived from the Old English verb, cnāwan, the present participle of which is cnāwende.  The roots of cnāwan can be traced back to

Will Your Corporation Be Required To Designate A “Corporate Law Enforcement Contact”?

Before seeing AB 1993 (Irwin), I had not come across the concept of a “corporate law enforcement contact”.  The bill, which was introduced last month, doesn’t exactly say what a corporate law enforcement contact’s responsibilities might be, but it does require California’s Attorney General to establish minimal qualifications for the position by July 1, 2017.  Since these qualifications are

Bill Threatens To Yank Qualification Upon Any Change In Management

Sometimes, I run across bills that seem to defy rational explanation.  AB 2610 (Holden) appeared to be one such bill. Under the California Corporate Securities Law of 1968, the offer and sale of securities must be qualified unless the transaction or security is exempt or not subject to qualification due to federal preemption.  Qualification, however,