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CALIFORNIA CORPORATE & SECURITIES LAW

Why Bassam Salman Should Not Have Been Convicted

A lot of ink has been spilt on the United States Supreme Court’s decision in Salman v. United States, 137 S. Ct. 420 (2016).  In that case, the Supreme Court upheld the criminal conviction of Mr. Bassam Salman who received lucrative trading tips from an in-law, who had received the information from his brother.  The legal issue in…

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A Hollow Nickel, Hollywood And Texas Gulf Sulphur

If you’ve taken a course in securities law, you’ve undoubtedly heard of, and I hope have read, SEC v. Texas Gulf Sulphur Co., 401 F.2d 833 (2d Cir.), cert. denied, 394 U.S. 976 (1968).  That case is famous for the Second Circuit Court of Appeals’ adoption of the “disclose or abstain” rule for corporate insiders.  The…

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Insider Trading, Newman And Der Prozess

The U.S. Supreme Court’s denial of review in U.S. v. Newman, 773 F.3d 438 (2014) yesterday inspired the following very short tale: Joseph K. knew that he had done nothing wrong, but, one morning, he was arrested.  Joseph K. asked the officer “why have I been arrested?”  The officer replied “insider trading”.  “What statute is that?” asked…

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Should The SEC Ask What Would Blackstone Do?

The Securities and Exchange Commission recently trumpeted its enforcement successes for its 2014 fiscal year.  For an agency dedicated to full disclosure, there were some notable omissions, including: A California federal jury verdict finding the former Chief Executive Officer of STEC, Inc. innocent of insider trading; A New York federal jury verdict finding hedge fund…

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Oops! CalPERS Reportedly Violates Insider Trading Policy Again

Jon Ortiz, who writes The State Worker blog for The Sacramento Bee, recently reported that the California Public Employees Retirement System has again violated its insider trading policy by purchasing shares in an initial public offering that were on its “restricted securities” list.  Reportedly, the Securities and Exchange Commission was already looking at possible violations that occurred last spring. …

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CalPERS’ Offbeat Personal Trading Policy

Yesterday’s post discussed a news report of an SEC inquiry into insider trading by CalPERS.  Rather than being abashed by this news, CalPERS responded by congratulating itself on having implemented a personal trading policy. As but one example of the muddle that is this policy, CalPERS defines a “Private Placement Vehicle” as an offering of securities…

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SEC Reportedly Investigating CalPERS’ Stock Trades

In October 12, 2012, I wrote about CalPERS’ proposed adoption of regulations governing personal trading by members of its Board of Administration and employees.  Although I did offer a few technical comments on the proposed rules (see CalPERS’ Final Statement of Reasons), I questioned the conceptual basis for those rules.  In particular, I noted that it seemed…

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Court Decides Demurrer To Derivative Suit – What About California Law?

Yesterday, the California Court of Appeal affirmed California Superior Court Judge James P. Kleinberg’s judgment sustaining a demurrer in a shareholder derivative action against the officers and directors of Yahoo! Inc.  Leyte-Vidal v. Semel, 2013 Cal. App. LEXIS 849 (Cal. Ct. App. 2013).  The Court of Appeal’s opinion contains a clear and cogent explanation of demand…

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The Crime That Knows No Definition

As was widely reported yesterday, a jury failed to find Mark Cuban liable for insider trading.  On the courthouse steps after the verdict, I think that Mr. Cuban made some very insightful and important comments: “There’s [sic] no bright line rules” – It’s important to remember that Congress has never defined by statute what exactly…

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California Bill Would Expand Liability For Securities Fraud, Impose New Fees, Expand Commissioner’s Powers

In late February, Senator Jerry Hill introduced a bill, SB 538, to substantially amend the Franchise Investment Law.  A few days later, the bill was read for the first time and set for hearing by the Senate Banking and Financial Institutions Committee on April 3.  Then something very fishy happened.   Two days before the hearing, Senator…

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