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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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When Directors Are Or Become Bad Actors . . .

I’ve devoted several blog posts to the multifarious problems engendered by the SEC’s new “bad actor” disqualification provisions.  I’ve done so because Rule 506(d) is so poorly drafted that, like the annals of Volusius, its fate should be to provide loose wrappings for fish (“laxas scombris saepe dabunt tunicas“).   Under Rule 506(d), an issuer will…

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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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Does A Lawyer Who Files A Derivative Action Have An Attorney-Client Relationship With The Corporation?

Because the California Corporations Code requires that the business and affairs of a corporation be managed by or under the direction of its board of directors, any decision of whether a corporation should bring suit on behalf of the corporation is ultimately vested in the corporation’s  board.  Cal. Corp. Code § 300(a).  Derivative actions are an exception…

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