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CALIFORNIA CORPORATE & SECURITIES LAW

New Rule 506 C&DI’s Require Some Explaining

Nancy Wojtas, the head of the public companies group at Cooley LLP, alerted me to the fact that the SEC staff yesterday issued 14 new Compliance & Disclosure Interpretations (C&DIs) relating to Rule 506 under Regulation D.  Here’s my take on three of them. Question 260.15 Question: If a placement agent or one of its covered control persons,…

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Just Who Is A Promoter And Why You May Want To Know

The California General Corporation Law uses, but does not define, the term “promoter”.  For example, a promoter can be criminally prosecuted.  Corporations Code Section 2251 provides that any promoter “who knowingly and willfully issues or consents to the issuance of certificates for certificated securities, or initial transaction statements or written statements for uncertificated securities, in…

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Should There Be “Bad Actor” Risk Factor?

I’ve devoted several recent posts to the Securities and Exchange Commission’s new “bad actor” rule because it is awash with a sea of troubles for issuers, both private and publicly traded.    The rule prevents issuers from relying on Rule 506 if they are or have been subject to any of a long list of…

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This Picture Is Worth 471 Words (More or Less)

Monday is the big day for the SEC’s “Bad Actor” and “General Solicitation” rule amendments.   I’ve previously observed that many are likely to find the Bad Actor amendments to be bad rules when it comes to compliance.  Today’s blog is devoted to just one interpretational problem with the Bad Actor amendments. Under the SEC’s rule, the disqualification…

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All The World’s A Stage, But The SEC Isn’t Allowing All Actors To Play Upon It

Every Rule Must Play It’s Part, But This Part Is A Sad One There is much to dislike in the SEC’s recent “bad actor” rule amendments.  While Congress conceived the idea of disqualifying bad actors (Section 926 of the Dodd-Frank Act), the SEC was more than a midwife.  Here are a few reasons why I believe that the SEC’s naughty…

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SEC Proposes John Wilkes Booth Rules

On Wednesday, the Securities and Exchange Commission proposed rules disqualifying felons and other “bad actors” from Rule 506 offerings.  In 2007, I submitted this comment letter arguing, among other things, that the SEC should not impose mandatory disqualification on Regulation D offerings.  Now, the SEC no longer has a choice because Section 926 of the Dodd-Frank Act mandates…

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