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CALIFORNIA CORPORATE & SECURITIES LAW

Must A False Statement To A Franchisee Be Made “In this state”?

The list of instruments and interests included within the definition of a “security” in California Corporations Code Section 25019 is long.  A franchise, however, is not to be found amongst the named.  In fact, the statute specifically excludes a franchise subject to registration under the California Franchise Investment Law (Corporations Code Section 31000 et seq.) or exempt…

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Chevron Deference In California

In mid July, the House of Representatives passed the Separation of Powers Restoration Act of 2016, H.R. 4768 (SOPRA).  If enacted, the SOPRA would amend the federal Administrative Procedure Act to require a reviewing court to decide “de novo all relevant questions of law, including the interpretation of constitutional and  statutory provisions, and rules made by agencies”.   The…

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SEC Seeks To “Overrule” Fifth Circuit Whistleblower Interpretation

In Asadi v. G.E. Energy United States, L.L.C., 720 F.3d 620 (5th Cir. 2013), the Fifth Circuit Court of Appeals held that an employee who reported a suspected Foreign Corrupt Practices Act violation internally but not to the Securities and Exchange Commission did not qualify as a whistleblower under the whistleblower protection provisions of the…

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Should Judicial Deference To The SEC Be Strong, Weak or Non-Existent?

This post yesterday by Broc Romanek alerted me to Judge Leonard P. Stark’s recent opinion in Trinity Wall Street v. Wal-Mart Stores, Inc., 2014 U.S. Dist. LEXIS 165431 (D. Del. Nov. 26, 2014).  The case involved Wal-Mart’s decision to exclude a shareholder proposal from its 2014 proxy statement after receiving favorable no-action advice from the staff of…

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Will The Courts Stop Deferring To SEC Interpretations?

In 1984, the U.S. Supreme Court announced a foundational principle of administrative law.  When a court reviews an agency’s construction of a statute that it administers, the court should: Ascertain whether the statute is ambiguous.  If it is unambiguous, both the court and the agency are bound to apply the clear meaning of the statute.…

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Finding Ambiguity – The Future Of Mandatory Rule Making Under The Dodd-Frank Act

When Congress says that an agency “shall” adopt a rule, is there any room for discretion on the part of the agency?  That was the question for U.S. District Court Judge Robert L. Wilkins in International Swaps & Derivatives Ass’n v. U.S. Commodity Futures Trading Comm’n, Civil Action No. 11-cv-2146 (RLW) (D. D.C. Sept. 28,…

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DOC Calls It Fair

Notes on the Facebook fairness hearing At the conclusion of a hearing held yesterday morning, the Department of Corporations approved the acquisition of Instagram, Inc. by Facebook, Inc.  Technically, the Department approved the issuance of a permit to offer and sell the securities.  The hearing was was held pursuant to Corporations Code Section 25142.  See A…

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The Case Of The Board Member Who Didn’t Show Up – Or Did She?

Consider a board with a total of five authorized members but with only three members in office.  The board is facing a various contentious decision on whether to engage in a transaction.  Two of the board members favor approval and one opposes.  All three board members vote on whether to proceed with negotiations.  As expected,…

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