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CALIFORNIA CORPORATE & SECURITIES LAW

The JOBS Act And The Convergence Of Private And Public Sales Under The UCC

Section 9610(b) of the California Commercial Code provides that if commercially reasonable, a secured party may dispose of collateral by public or private proceedings, by one or more contracts, as a unit or in parcels, and at any time and place and on any terms.  The Commercial Code, however, does not override applicable securities laws:…

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Section 12(g)(1)(A) – How The SEC Is Putting Words In Congress’ Mouth

Section 501 of the Jumpstart Our Business Startups (JOBS) Act amended Section 12(g)(1) of the Securities Exchange Act of 1934 to increase the thresholds for mandatory registration of a class of equity securities.  The Securities and Exchange Commission describes the amendment as follows: The holders of record threshold for triggering Section 12(g) registration for issuers…

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Will California Require Notice Filings For Regulation A Offerings?

Last month, the Securities and Exchange Commission adopted amendments to Regulation A as required by Section 3(b)(2) of the Securities Act of 1933, which was added by Section 401 of the Jumpstart Our Business Startups (JOBS) Act. Section 3(b)(2) requires the SEC to adopt rules exempting from the registration requirements of the Securities Act offerings of up to…

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Questions About Third-Party Confirmations Of Accredited Investor Status

Countless memoranda and alerts have been issued about the SEC’s adoption of rule amendments eliminating the prohibition against general solicitation and general advertising in Rule 506 and Rule 144A offerings.  Congress ordered the SEC to adopt these amendments as part of the Jumpstart Our Business Startups Act, or JOBS Act.   Issuers that wish to engage in general solicitation take “reasonable…

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With General Solicitations Soon To Be Permitted, It’s Time To Recall The Commissioner’s Advertising Rules

Over a year ago, Congress directed the Securities and Exchange Commission to amend its rules to permit general solicitations in Rule 506 and Rule 144A offerings.  The SEC failed to meet Congress’ deadline by over a year.  See The Most Important Thing You Need To Know Now About The Lifting Of The General Solicitation Ban.  When…

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Emptores Caveant! Buyer Liability In Securities Offerings

Much of the focus of securities litigation is on the liability of sellers, but what about buyers?  Can buyers prevaricate with impunity? Corporations Code Section 25401 prohibits misstatements and omissions of material facts.  Section 25401 explicitly covers persons who “buy” or who “offer to buy” a security.  California’s insider trading statute, Section 25402, also reaches purchases. …

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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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Could The Product Of Two Debts Really Be A Fortune?

In 628 in the Gurjar capital city of Bhillamala (now, Bhinmal, India), the mathemetician Brahmagupta set out to explain how zero and negatives numbers work.  In his book, Brahmasphutasiddhanta, he set forth the rule that the product of two negative numbers (debts) is a positive number (fortune).  Translating this fundamental mathematical concept into the present century, I’m pondering (pondering, not…

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How Many Errors Can You Make In 9,000 Words, More Or Less?

The Jumpstart Our Business Startups Act (JOBS Act) is a very modest 9,000+ words.  In comparison, the Dodd-Frank Act is a hefty 360,000+ words.  Thus, I find the number of technical errors in the JOBS Act to be surprising.  One such error is likely to cause some consternation. Before there was a JOBS Act, a Dodd-Frank Act…

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NASAA Slams The JOBS Act, But Have The States Really Been Handcuffed?

NASAA isn’t in the business of firing off rockets but it did launch a missile yesterday targeted directly at the JOBS Act.  In this press release, NASAA’s president, Jack E. Herstein, is quoted as saying: The JOBS bill the President signed today is based on faulty premises and will seriously hurt all investors by either eliminating or reducing transparency…

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