Website Heading

CALIFORNIA CORPORATE & SECURITIES LAW

Section 25401 – Does No One Know Its History?

A few years back, I criticized the amendment of California Corporations Code Section 25401 to conform to Rule 10b-5 under the Securities Exchange Act of 1934.  See California Creates Complete Chaos By Rewriting Anti-Fraud Statute, But “We Are Against Fraud Aren’t We?  At the time, I observed:  Apparently, the legislature didn’t recognize that Section 25501…

Share on:

Does The SEC Have Exposure For Tipping Inside Information?

Yesterday, I discussed the recent hack of the Securities and Exchange Systems’ electronic filing and retrieval system commonly referred to as EDGAR.  In a written statement disclosing the hack, Chairman Jay Clayton speculated that the incident may have provided a basis for “illicit gain through trading”.  Professor Peter Henning and others have observed that the…

Share on:

Hacking EDGAR And Insider Trading

SEC Chairman Jay Clayton launched a sea of news stories last week when he included the following five sentence in a statement on cybersecurity: Notwithstanding our efforts to protect our systems and manage cybersecurity risk, in certain cases cyber threat actors have managed to access or misuse our systems.  In August 2017, the Commission learned…

Share on:

There’s No Dressing This Up – Item 303(a)(1) Of Regulation S-K Is Unreasonable

In less than a month, the United States Supreme Court will hear oral argument in Leidos, Inc. v. Indiana Public Retirement System (Docket No. 16-581).  The question presented in Leidos is: Whether the Second Circuit erred in holding – in direct conflict with the decisions of the Third and Ninth Circuits – that Item 303…

Share on:

Scienter In The News Again

In May, I wrote about Judge Gonzolo P. Curiel’s  decision to grant the defendants’ motion to dismiss federal and state securities law claims in Mueller v. San Diego Entm’t Partners, LLC, 2017 U.S. Dist. LEXIS 77643 (S.D. Cal. May 22, 2017).  I pointed out that Judge Curiel had ruled that scienter is required under Corporations Code Section 25401 but…

Share on:

How To Confer A $6.9 Million Benefit For Less Than A Half Dollar

In March 2011, the three-member compensation committee of EchoStar Corporation awarded options to purchase 1.5 million shares of company stock to its Chairman, Charles W. Ergen.  According to EchoStar’s proxy statement for its 2012 annual meeting, the aggregate grant date fair value of the award was $21.6 million.  There was just one problem, the plan…

Share on:

Did The Co-Founder Of Alcoholics Anonymous Violate Rule 10b-5?

Recently, I enjoyed watching My Name is Bill W., a 1989 movie that starred James Woods, JoBeth Williams and James Garner.  The film tells the story of Alcoholics Anonymous co-founder William Griffith Wilson (aka Bill W.).  In telling his story, the film details Wilson’s  work on Wall Street during the 1920s.  According to the film, Wilson decides…

Share on:

Scienter Requirement May Be A Question Of Timing

On several occasions, I have written about whether scienter is required under Corporations Code Section 25401.  That question surfaced again last week in Judge Gonzolo P. Curiel’s ruling on the defendants’ motion to dismiss federal and state securities law claims in Mueller v. San Diego Entm’t Partners, LLC, 2017 U.S. Dist. LEXIS 77643 (S.D. Cal.…

Share on:

District Court Rules Plaintiff Failed To Plead Real Estate Investment Was A “Security”

Both the Securities Act of 1933 and the California Corporate Securities Law of 1968 provide similar, but not the same, definitions of a “security”.  See Making A List Of Securities And Checking It Twice.  Although these lists are expansive, courts continue to explain why some items on the lists are not securities and why some…

Share on:

Court Rules Indirect Purchaser Claims Against Theranos May Proceed

Theranos’ anni horrorum began in October 2015 with the publication of a story by investigative reporter John Carreyrou at The Wall Street Journal.  Lawsuits and government investigations ensued.  Although the Theranos recently announced agreements with the Arizona Attorney General and the Centers for Medicare & Medicaid Services, U.S. District Court Magistrate Judge Nathanael M. Cousins last week dealt a setback to the…

Share on: