Vice Chancellor’s Order Sparks A Wortwechsel In The Blogosphere

Two weeks ago, Vice Chancellor J. Travis Laster denied a proposed stipulated consolidation and scheduling order.  The proposed order directed that the consolidated cases be captioned “In re Astex Pharmaceuticals, Inc. Shareholders Litigation”.  What could be wrong with that?  The cases, after all were class action lawsuits against Astex Pharmaceuticals, Inc. I don’t know why the

When Directors Are Or Become Bad Actors . . .

I’ve devoted several blog posts to the multifarious problems engendered by the SEC’s new “bad actor” disqualification provisions.  I’ve done so because Rule 506(d) is so poorly drafted that, like the annals of Volusius, its fate should be to provide loose wrappings for fish (“laxas scombris saepe dabunt tunicas“).   Under Rule 506(d), an issuer will

Will Issuers Add Rule 506(d) Bad Acts To The Definition Of “Cause”?

The SEC’s new bad actor rule, Rule 506(d), may cause some issuers to consider expanding the definition of “cause” in their employment agreements with executive officers. Because executive employment agreements typically reduce severance payments significantly in the case of “for cause” terminations, the definition of “cause” is often hotly negotiated. While “cause” definitions often include

If One Bad Actor SpoilsThe Whole Barrel, What’s An Issuer To Do?

The Jackson Five had it wrong.  Under the SEC’s recently adopted Rule 506(d), one bad actor can indeed spoil the whole bunch.  To some extent issuers can exercise some control over who becomes or remains a covered persons.  However, an issuer may not be able to rid itself of all bad actors.  For example, the SEC has

Senator Levin Aims Again To Require Private Companies To Report Beneficial Ownership

In July, I wrote about a white paper prepared by the states of Delaware, Nevada and Wyoming, Encouraging Business While Fighting Fraud.  The report details state efforts to deal with the use of corporations and limited liability companies to facilitate criminal and terrorist activities.  The report mentions Senator Carl Levin’s efforts to enact federal legislation to

Die Verwandlung: How The Legislature Likely Raised The Bar On Securities Fraud Actions

With the availability of a private cause of action under SEC Rule 10b-5, is there any reason to include a cause of action under California Corporations Code Sections 25401 and 25501?  Until the most recent legislative session, there were significant differences between the federal rule and the California’s securities laws. California’s scheme has not required

Money Transmission Act Petition Withdrawn/Initiative Would Presume Harm For Release Of “Personally Identifying Information”

Money Transmission Act Petition Withdrawn Earlier this month, I wrote about a pending petition questioning the failure of the Department of Business Oversight to adopt regulations under the Money Transmission Act.  I’ve recently learned that after receiving assurance from the DBO that it would adopt regulations soon, the petitioner decided to withdraw the petition.  If the

Involuntary Stock Exchange Listings, Affiliated Issuers And Produce

Involuntary Listings A few days ago, Broc Romanek wrote that a number of companies have received letters from the St. Petersburg (Russia) Stock Exchange stating that the exchange is in the process of unilaterally listing the company’s securities.  This reminded me of my own blog post discussing whether a secondary options market could be created in an issuer’s

Differing Perspectives On The SEC’s Proposed CEO Pay Ratio Rule And Who Speaks For CalPERS?

Last Wednesday, a divided Securities and Exchange Commission issued proposed amendments to Item 402 of Regulation S-K.  Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act required the SEC to amend the rule to mandate disclosure of the median of the annual total compensation of all employees of an issuer (excluding the chief executive

California Creates Complete Chaos By Rewriting Anti-Fraud Statute, But “We Are Against Fraud Aren’t We?”

In my very limited encounters with the late Harold Marsh Jr., I recall that he didn’t readily embrace proposed “fixes” to the Corporations Code.  As I too get older, I’ve come to appreciate his perspective.  For example, Governor Brown just signed SB 538 (Hill), a bill that fundamentally changes California’s securities fraud statute. Among other