Department Of Corporations Issues Crowd Funding Bulletin

Last week, the Department of Corporations issued this bulletin which it styled as a “Crowdfunding Update”.  The Bulletin makes several important points. Until the Securities and Exchange Commission adopts regulations, there is no federal crowd funding exemption.  It should be noted that Congress mandated that the SEC adopt these regulations by December 31, 2012.  As

“Great Caesar’s Ghost!” SOS Battles Backlog With 3 x 5 Cards

As part of the state budget process, state agencies must appear and testify before legislative budget committees.  I recall some stressful moments testifying on the Corporations Committee Budget before a budget committee chaired by then Senator Steve Peace who who was already famous for writing and producing Attack of the Killer Tomatoes! among other solanum lycopersicum attack films.

Can A Security Be Oral?

Yesterday’s post identified some of the differences between the lists of securities in the California Corporate Securities Law and the federal Securities Act of 1933.  One difference that I did not mention was California’s explicit statement that all of the listed items “are securities whether or not evidenced by a written document”. This may seem

“Security” Definitions In CSL And ’33 Act – Similar But Not The Same

Both the California legislature and the U.S. Congress have enacted extensional definitions of “security” – that is Section 25019 of the Corporate Securities Law of 1968 and Section 2(a)(1) of the Securities Act each provides a list of what constitutes a security.  These lists, however, are not the same. Here’s what’s on the California list that isn’t

Legislator Fires Broadside At Franchisors

California has not one, but two franchise laws.  The Franchise Investment Law (“FIL”), Corporations Code Section 31000 et seq., is administered and enforced by the the Commissioner of Corporations.  The Franchise Relations Act (“FRA”) is located in the Business & Professions Code (Section 20000 et seq.) and is not administered or enforced by the Commissioner.

Are Political Contributions Ultra Vires?

It’s been three years, but the Supreme Court’s decision in Citizens United v. Federal Election Comm’n, 558 US 50 (2010) continues to foment a fierce debate about corporate political spending.  In February, Representative Adam Schiff of California introduced a resolution, H.J. Res. 31,  to amend the Constitution as follows: Nothing in this Constitution shall be construed to forbid Congress

How Much Would You Charge For A Rule 144 Opinion?

Yesterday, the Securities and Exchange Commission announced that it had filed a civil complaint against a California lawyer for “churning out baseless legal opinion letters for penny stocks through his website without researching and evaluating the individual stock offerings.”  According to the SEC, the lawyer advertised a $285 rate for each letter and a “volume

Does California Really Limit Sellers To Not More Than 10 Sales In A 12 Month Period?

The Mentor Blog this week noted the publication of a recent study of Blue Sky exemptions covering private resales.  The study was prepared by SecondMarket, which describes itself as an “online marketplace for illiquid assets”.  The study was submitted to the North American Securities Administrators Association (NASAA) in support of SecondMarket’s push for adoption of a nationwide uniform exemption for

Like Elmer Gantry, Supreme Court Breathes New Life Into Revivals

The state, of course, likes to see corporations pay their taxes.  When a corporation fails to do so, “the corporate powers, rights and privileges of a domestic taxpayer may be suspended, and the exercise of the corporate powers, rights, and privileges of a foreign taxpayer in this state may be forfeited”.  Cal. Rev. & Tax.

Wager, Insurance, Bucketing or Swap?

In yesterday’s post, I mentioned Professor Joan Heminway’s recent essay on crowd funding.  She notes that some crowd funding arrangements may “may look less like investment instruments commonly known as common stock or debentures, and more like loans, gambling bets, rights to consumable products or services or charitable or other nonprofit donations.”  See “What is