Staff Releases Report on its Review of the Definition of “Accredited Investor”

On Friday, the Securities and Exchange Commission staff published a report of its review of the definition of “accredited investor”.  Congress directed the SEC to review the definition every four years in Section 413(b)(2)(A) of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  Below are the staff’s recommendations: The Commission should revise the financial thresholds

Can In-House Counsel Have Sexual Relations With His Or Her Client?

Can an in-house lawyer have sexual relations with his or her client?  To answer this question, it is necessary to identify the lawyer’s client.  The California Rules of Professional Conduct provide a clear answer to this question: In representing an organization, a member shall conform his or her representation to the concept that the client

Court Decides Successor In Merger May Enforce Arbitration Clause

Can a party to written agreement that does not include an arbitration clause enforce an arbitration provision in another agreement to which it is not a party?  Boiled down to the essentials, this is the question decided yesterday by the Court of Appeal in Jenks v. DLA Piper Rudnick Gray Cary US LLP, Cal. Ct. of Appeal Case No.

How Many Signatures Are Required For An Agreement of Merger?

Corporations Code Section 313 generally provides that a contract, note or other instrument will not be invalidated as to a corporation by any lack of authority if it is signed by the corporation’s chairman of the board, the president or any vice president and the secretary, any assistant secretary, the chief financial officer or any assistant treasurer.  See If You’re Relying On The

Is The FTB’s Argument Nothing More Than Blowing In The Wind?

Readers may remember this blog post from September of last year: Nevada Supreme Court Upholds Fraud Verdict Against The California Franchise Tax Board.  The subject of the post was Franchise Tax Bd. v. Hyatt, 335 P.3d 125 (Nev. 2014) in which the Nevada Supreme Court partially affirmed a Nevada jury verdict against the California Franchise Tax Board. 

Section 12(g)(1)(A) – How The SEC Is Putting Words In Congress’ Mouth

Section 501 of the Jumpstart Our Business Startups (JOBS) Act amended Section 12(g)(1) of the Securities Exchange Act of 1934 to increase the thresholds for mandatory registration of a class of equity securities.  The Securities and Exchange Commission describes the amendment as follows: The holders of record threshold for triggering Section 12(g) registration for issuers

Sellers May Find The FAST Act To Be Not So Fast


I’ve devoted several recent posts to the new secondary trading exemption that Congress tacked on to Section 4 of the Securities Act of 1933.  The exemption is poorly drafted and in many cases may prove unusable.  Perhaps this reflects its provenance as part of a large bill devoted primarily to transportation matters – the Fixing

Court Holds Extrinsic Evidence Was Inadmissible


As generally understood, the parol evidence rule prohibits the introduction of extrinsic evidence to alter, vary or add to the terms of an integrated agreement.  “Parol” is derived from the French word, “parole” meaning speech.  The parol evidence rule came into being as society became increasingly literate.  It was then that the written word began

Congress’ Strange New Secondary Trading Exemption

Yesterday’s post introduced new Section 4(a)(7) of the Securities Act of 1933, as added by the Fixing America’s Surface Transportation Act or the “FAST Act”.  Boiled down to the essentials, this is a secondary trading exemption.  This is made clear by Section 4(d)(7) which is captioned “Issuers Disqualified”: The transaction is not for the sale of a

Strawberries and Raspberries – Truly Strange Bedfellows

When I served as Deputy Secretary and General Counsel of the California Business, Transportation & Housing Agency, the Departments of Transportation and Corporations were part of that agency.  As a result, my days often involved a concatenation of transportation and securities law legislative issues.  After leaving government service, I didn’t expect to see this unusual pairing