California’s New “Thermal Coal” Divestment Law Forces Fiduciary Duty Question


Public pension funds exist to provide retirement benefits to public employees.  Cal. Const. Art. XVI, § 17(a).  In 1992, the voters of California tried to eliminate political interference with the state’s retirement funds by enacting Proposition 162, the California Pension Protection Act of 1992.  One of the express purposes of the Pension Protection Act was to

Governor Signs Bill Aimed At Fixing CARULLCA

Readers of this blog will know that I’ve been censorious of California’s Revised Uniform Limited Liability Company Act (CARULLCA), Corporations Code §§ 17701.01 – 17713.13.  The Partnership and Limited Liability Companies Committee of the Business Law Section of the California State Bar recognized the flaws in CARULLCA and worked on a bill, AB 506 (Maienschein), to fix its multifarious problems.

Governor Signs Finders Exemption Bill

Yesterday was the last day for Governor Brown to sign or veto bills passed by the Legislature on or before September 11 and in the his possession after that date.  Cal. Const. Art. IV, § 10(b)(1).  On Saturday, he signed into law a bill that will create a statutory exemption for “finders” from the securities broker-dealer registration

Why Not Let The Market Decide The Frequency Of Earnings Reports?

In an Op-Ed published yesterday by The Wall Street Journal, MIT Senior Lecturer Robert Pozen and Harvard Law School Professor Mark J. Roe  argue for the retention of quarterly earnings reports with some modifications.  They would replace the first and third quarter Form 10-Qs with “news releases explaining material changes in their revenues and earnings, paired with two streamlined

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,

Benefit Corporation Files For Initial Public Offering

A few years ago, I participated in the drafting of California’s Flexible Purpose Corporation Act, Cal. Corp. Code § 2500 et seq.  In 2014, the legislature changed the name to “Social Purpose Corporations Act”.  SB 1301 (DeSaulnier).  The purpose of the act was (and still is) to provide an alternate form of corporation that provided greater flexibility

Insider Trading, Newman And Der Prozess


The U.S. Supreme Court’s denial of review in U.S. v. Newman, 773 F.3d 438 (2014) yesterday inspired the following very short tale: Joseph K. knew that he had done nothing wrong, but, one morning, he was arrested.  Joseph K. asked the officer “why have I been arrested?”  The officer replied “insider trading”.  “What statute is that?” asked

Now This Is Truly Discomfiting – The SEC Proposes To Give Itself A 270 Day Extension!


In July 2010, Congress ordered the Securities and Exchange Commission to adopt a resource extraction rule within 270 days (i.e., by April 17, 2011).  The SEC missed that deadline by 1 year, 4 months and 2 days (or a total of 490 days).  In 2013, however, the U.S. District Court for the District of Columbia vacated

Do Public Pension Funds Breach Their Fiduciary Duties By Pursuing Social Issue Proposals?

Yesterday, UCLA Law School Professor Stephen Bainbridge noted the publication of a recent study that reaches some devastating conclusions for public pension funds.  The study by Professor Tracie Woidtke at the University of Tennessee found that “public pension funds’ ownership is associated with lower firm value”.  To make matters even worse, Professor Woidtke found: Social-issue

NASAA Mistakes The Principal

I have frequently commented on the fact that many so-called “investor protections” have the unintended consequence of increasing the risk of investor losses.  One example is limitations on resales.  An illiquid security presents greater risk than a liquid security.  Investors understand this and will apply an illiquidity discount to the price of a security.  In this