Do State Courts Lack Subject Matter Jurisdiction Over Covered Class Actions That Allege Only ’33 Act Claims?

In Luther v. Countrywide Financial Corp., 195 Cal. App. 4th 789 (2011), the trial court ruled that state courts do not enjoy concurrent jurisdiction when a class action meeting the definition of a “covered class action” under the Securities Litigation Uniform Standards Act of 1998 (aka “SLUSA”) did not involve a “covered security” as also defined by SLUSA

Unilateral Disarmament, The Prisoners’ Dilemma And SEC Staff Comment Letters

In an arms race, each suffers the worst result if it disarms and the other side remains armed.  However, if both sides are armed, they are not as well off as when both sides are disarmed.  This is, of course, the classic “Prisoners’ Dilemma” game (see table below). Much the same logic applies to the SEC’s insistence

Is Forced Speech In Responding To Staff Comment Letters Inaccurate Speech?

In 2014, the Securities and Exchange Commission announced that all comment letters would request that the issuer include the so-called “Tandy Letter”.  Thus, all staff comment letters include a request for a written statement in haec verba: The company is responsible for the adequacy and accuracy of the disclosure in the filing; Staff comments or

Plaintiffs Find California Courts Congenial To Section 11 Actions

Muttering About Mottoes The official motto of the State of California is “Eureka”.  Cal. Gov’t Code § 420.5.  The word is a transliteration of the Greek word εὕρηκα which is first person, singular, indicative active form of verb “find”.  Thus, it translates into “I have found it”.  The motto, which appears on the state’s seal,

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

Section 11 Class Actions And The Magna Carta

If you had a dispute in Medieval England, it would likely be heard in the court of the local baron.  Some disputes, however, caught the interest of the monarch and would be heard in a royal court.  In the twelfth century, King Henry II instituted royal justice throughout England.  As might be expected, controversies arose

California’s Secured Promissory Note Exemption

The line between real property transactions and securities transactions is not always clear.  California Corporations Code Section 25100(p) provides an exemption for a promissory note secured by a lien on real property provided it is neither: (a) one of a series of notes of equal priority secured by interests in the same real property; or

A Criminal Waste Of Space Foments Securities Law Problem

California Court of Appeal Justice William W. Bedsworth writes the popular syndicated column “A Criminal Waste of Space”.  In this month’s column, Justice Bedsworth expounds on the highly improbable case of a man who purchased a Pick-9 ticket at the track and somehow managed to pick all nine winners.  Szadolci v. Hollywood Park Operating Company,

California, Nevada and 38 Other States Have These, But Delaware Doesn’t

According to the National Center for State Courts, forty states, including California and Nevada, have established intermediate courts of appeal.  California’s Court of Appeal was established by a constitutional amendment adopted by the voters in November 1904.  Originally, the Court of Appeal was comprised of three districts, with the First District sitting in San Francisco,

California Reverts To Former Securities Anti-Fraud Statute

Readers of this blog will recall my chariness of a 2013 amendment to California’s basic securities anti-fraud statute.  See California Creates Complete Chaos By Rewriting Anti-Fraud Statute, But “We Are Against Fraud Aren’t We?”  Although I identified a host of issues, my fundamental concern was that by rewriting California Corporations Code Section 25401, the legislature