Disclosure Bill May Put Retirees At Risk
Recently, I wrote about a bill, SB 1208 (Leno), that would require disclosure of total compensation information with respect to each of a corporation’s five most highly compensated retirees. This requirement would be imposed on publicly traded corporations that are either incorporated under the General Corporation Law or qualified to transact intrastate business here. These corporations are already required to Read more...
Bill Illustrates Ills Besetting Corporate Fraud Fund
In 2002, the Legislature enacted AB 55 creating the victims of corporate fraud fund. Since the fund was created, it has collected about $15 million and nearly 800 claims have been submitted. In a devastating article published last fall by the Sacramento Bee, Dan Morain reported that only 10 people had been paid with a total payout of $112,496. His verdict Read more...
How Many Errors Can You Make In 9,000 Words, More Or Less?
The Jumpstart Our Business Startups Act (JOBS Act) is a very modest 9,000+ words. In comparison, the Dodd-Frank Act is a hefty 360,000+ words. Thus, I find the number of technical errors in the JOBS Act to be surprising. One such error is likely to cause some consternation. Before there was a JOBS Act, a Dodd-Frank Act or even a Sarbanes-Oxley Act, Read more...
Borrowing Money? The Legislature May Require You To Tell The DOC
California defines a “security” to include an “evidence of indebtedness” in Section 25019. Thus, when someone borrows money, they may be offering and selling a security in the form of an “evidence of indebtedness”. I say “may” because “[d]espite their inclusion in the statutory definition, not every note or evidence of indebtedness constitutes a security under the Corporate Securities Law of Read more...
Crowdfunding – There Will Be Investor Losses
With preternatural sagacity, Yogi Berra once observed that “prediction is very hard, especially about the future”. Although I whole heartedly concur with Mr. Berra’s assessment of the difficulties that inhere in prognistication, I’ve nonetheless decided to make a prediction. My prediction is that after President Obama signs the Jumpstart Our Business Startups Act, there will be investor losses. I feel very safe in this prediction because there Read more...
The SEC’s Rule Making Rule Doesn’t Follow The Rules
As discussed in yesterday’s post, Congress has once again directed the Securities and Exchange Commission to engage in rule making. The SEC almost always adopts rules through the informal rule making procedures of the Administrative Procedure Act (5 U.S.C. § 553) rather than the formal, on the record provisions (5 U.S.C. §§ 556 & 557). In general, Section 553 requires: Publication of a notice Read more...
Chowing Down On The JOBS Act And Ralston Purina
Anyone who has studied securities law has undoubtedly heard of the Supreme Court’s decision in SEC v. Ralston Purina Co., 346 U.S. 119 (1953). In that case, the Supreme Court struggled with the exemption in the Securities Act of 1933 for “transactions by an issuer not involving any public offering” (now in Section 4(2) but then found in Section 4(1)). Yesterday, Read more...
Bill Proposes Expanded Definition Of “Independent Contractor”
Currently, the California Corporations Code does not define the term “independent contractor”. A bill introduced last month by Assembly Member Chris Norby would change this. AB 2373 proposes to add a new Section 22 to the Corporations Code to define an “independent contractor” as having the same meaning as in Section 30 of the Labor Code. Because there currently is no Section Read more...
Jobs Or Bucket Shops?
Last week, New York Times columnist Gail Collins wrote this Op-Ed piece criticizing the Jumpstart Our Business Startups (aka JOBS) Act (H.R. 3606). Dave Lynn provided a good summary of the bill in this posting on TheCorporateCounsel.net blog. In criticizing the JOBS Act, Ms. Collins remarked “You could also call it the Just Open Bucket Shops Act.” But what exactly is a Read more...
Why The Word “Includes” Conflates The Separation Of Powers
There are many ways to define a term. Many definitions are “intensional definitions”. An intensional definition lays down all of the properties required to meet that definition. For example, Corporations Code Section 185 provides that “Shareholder” means “one who is a holder of record of shares.” That is, the necessary and sufficient condition for belonging to the set of “shareholders” Read more...
