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CALIFORNIA CORPORATE & SECURITIES LAW

Five Gnostic Exemptions From The Qualification Requirements Of The Corporate Securities Law

When looking for exemptions from the qualification requirements of the California Corporate Securities Law of 1968, a good place to start is Chapter 1, Part 2, Division 1 of Title 4 of the Corporations Code.  Cal. Corp. Code § 25100 et seq.  If you don’t find an usable exemption there, another promising place to look is the rules of the Commissioner…

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Unregistered Sales Of Certificates Of Deposit

Last spring, the California Department of Business Oversight warned consumers that two related companies have been offering unlicensed online securities broker-dealer services and “unregistered sales of certificates of deposit (CDs)”.  The Department’s announcement raises the question of whether the offer and sale of CDs must be qualified under the Corporate Securities Law of 1968. Section 25019 of…

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The Commissioner’s Precedent Decisions – Another Route To Rulemaking?

The Commissioner of Corporations may issue desist and refrain orders under the Corporate Securities Law of 1968.  Cal. Corp. Code § 25532.  If the respondent wishes to contest the order, s/he must do so by filing a request for hearing within 30 days of service of the D&R order. A hearing must then be held…

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“Time Cools, Time Clarifies” – The CSL’s Cooling Off Statute

The Corporate Securities Law of 1968 does not provide for a general “cooling off” period in which a purchaser of securities may cancel the transaction for any reason.  However, the Department of Corporations in 2000 sponsored legislation, SB 1837 (Figueroa), that added Corporations Code Section 25508.5 establishing a seven calendar day cooling off period with…

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Thinking About Converting? You May Need The Commissioner’s Approval!

In 1999, the Business Law Section of the California State Bar sponsored AB 197 (Ackerman).  That bill established a comprehensive scheme under the California Corporations Code for the conversion of limited partnerships and limited liability companies into other forms of business entities.  The bill, however, did not address the application of the Corporate Securities Law…

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CA AG Files Criminal Complaint Against Sellers of Movie Loans

Last week, the California Attorney General filed this 89 count criminal complaint against three individuals.  The complaint alleges that these individuals offered and sold securities without qualification under the Corporate Securities Law of 1968.  An interesting aspect of this cases is that it involved the alleged offer and sale of securities in the form of loans.  According…

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Does George Babbitt Need a Broker-Dealer License (Part III)?

Yesterday’s post concerned additional exemptions for real estate brokers under the California Corporate Securities Law.  Today’s post is the final in this series (for now). Corporations Code § 25004 defines the term “broker-dealer”.  Subdivision (a)(6) excludes a broker licensed by the California Real Estate Commissioner when engaged in transactions in securities: exempted by subdivision (f)…

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Dodd-Frank Act Preempts CSL Qualification of Certain Securities

Most securities lawyers are familiar with federal preemption of state qualification requirements pursuant to Section 18 of the Securities Act of 1933 (“Securities Act”).  See, e.g., my post regarding preemption and Rule 506 offerings.  I expect that fewer lawyers are familiar with preemption pursuant to Section 28(a) of the Securities Exchange Act of 1934 (“Exchange Act”).  In…

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