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CALIFORNIA CORPORATE & SECURITIES LAW

Can It Be That California, “The Biggest Loser” Is Also Number One?

In February, I published a post entitled Is California “The Biggest Loser”.  My reference was to Professor Lynn LoPucki’s finding that “California, home to 1,210 [public] companies but state of incorporation for only 112, is the biggest loser”.  However, California is not last in all things.  SEC economists Drs. Vladimir I. Ivanov and Anzhela Knyazeva recently issued a…

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California Crowdfunding Bill In Suspense

Yesterday, Broc Romanek published several posts regarding crowdfunding.  Meanwhile here in California, crowd funding has stalled in the legislature.  AB 722 (Perea) passed unanimously out the Assembly Committee on Judiciary and on a 9-2 vote out of the Assembly Committee on Banking and Finance.  Assembly Members Travis Allen, a Republican, and Mark Stone, a Democrat, voted against…

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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…

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Is Crowdfunding Subject To The UCC?

In a recently published essay, Professor Joan Heminway asks “What is a Security in the Crowdfunding Era?”  She observes: Over the years, the lines between securities and financial products regulated under commodities, banking and insurance law have become blurred. Moreover, with the advent of the crowdfunding era, financial interests in business enterprises may look less like investment instruments commonly known…

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Are There Silver Hills In Other States?

In Silver Hills May Tarnish Crowdfunding, I wrote about Justice Roger J. Traynor’s alternative definition of “security” under the predecessor to the Corporate Securities Law of 1968.  Silver Hills Country Club v. Sobieski, 55 Cal. 2d 811 (1961)  Justice Traynor’s definition may cause problems for crowdfunders who are relying on the fact that their arrangements don’t meet the…

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Silver Hills May Tarnish Crowdfunding

Both Section 2(1) of the Securities Act of 1933 and Section 25019 of the Corporate Securities Law of 1968 provide extensional definitions of the term “security”. That is, they each list everything within the term being defined.  See Why the Word “Includes” Conflates the Separation of Powers“.  In each statute, the twelfth item listed is…

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Nevada Secretary of State Cites Three Criminal Convictions As Warning To Crowdfunders

The Nevada Securities Law (Chapter 90 of Nevada Revised Statutes) is administered and enforced by the Securities Division of the Nevada Secretary of State.  Last week, Nevada Secretary of State Ross Miller issued this press release warning investors that three separate criminal convictions in Nevada “point to potential trend in illegal crowdfunding”.  According to the press release,…

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NASAA And The DOC Warn Investors Of The “Madding Crowd’s Ignoble Strife”

Crowdfunding Caveats Issued To say that the North America Securities Administrators Association was not pleased when Congress enacted the JOBS Act is like saying that Captain George Pollard and his crew had an unpleasant cruise on the Essex.  NASAA was especially wounded by Congress’ decision to create a crowdfunding exemption under the Securities Act of 1933 and to preempt state qualification…

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Crowdfunding – There Will Be Investor Losses

With preternatural sagacity, Yogi Berra once observed that “prediction is very hard, especially about the future”.  Although I whole heartedly concur with Mr. Berra’s assessment of the difficulties that inhere in prognistication, I’ve nonetheless decided to make a prediction.  My prediction is that after President Obama signs the Jumpstart Our Business Startups Act, there will be investor losses.  I feel very safe…

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Commissioner Orders Crowdfunding Facilitator To Stop

In November, the U.S. House of Represantatives passed the Entrepreneur Access to Capital Act, HR 2930, to create a new exemption under the Securities Act of 1933 for “crowdfunding” meeting specified conditions.  About the same time, the U.S. Senate weighed in with the Democratizing Access to Capital Act of 2011, S 1791.  According to the bill’s author, Massachusetts…

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