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CALIFORNIA CORPORATE & SECURITIES LAW

Applying The Statute Of Frauds To “Et Al.”

Charles II, aka the “Merry Monarch”, was sitting on the English throne when the original Statute of Frauds was enacted in 1677.  Therefore, one should be forgiven for the mistaken presumption that all questions involving the application of the statute have been raised and duly answered.  Just yesterday, in fact, the California Court of Appeal addressed the apparently…

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Senator Introduces Bill To Allow LLCs To Be Licensed As Real Estate Brokers

Section 17701.04(b) of the California Corporations Code provides: A limited liability company may have any lawful purpose, regardless of whether for profit, except the banking business, the business of issuing policies of insurance and assuming insurance risks, or the trust company business. A domestic or foreign limited liability company may render services that may be…

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Commissioner Ponders Whether To Exempt Real Estate Brokers From Investment Adviser Registration

Last week, the Commissioner of Business Oversight issued an invitation for comment on whether to exempt real estate brokers from the investment adviser certification requirement under the Corporate Securities Law of 1968.  The exemption would require a real estate broker to be operating under the scope of a license issued by the Bureau of Real…

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SEC No-Action Letter Addresses “M&A Brokers”

Martin A. Hewitt alerted me to this no-action letter issued on January 31, 2014 by the SEC’s Division of Trading and Markets.  The letter was issued in response to a request by six lawyers, including Mr. Hewitt.  In very broad terms the letter states that the Division would not recommend enforcement “if an M&A Broker…

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

Last week, I discussed the real estate broker exemption from broker-dealer licensing requirements in California Corporations Code § 25206.  Commissioner’s Release 62-C provides additional clarifying comments regarding this exemption. The Commissioner of Corporations has also adopted a rule that provides an additional exemption for real estate brokers licensed by the California Real Estate Commissioner. Rule 260.204.1 exempts real estate brokers…

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

A developer wants to acquire a piece of property but lacks sufficient capital.  She forms a limited partnership to acquire the land and begins looking for investors.  If a licensed real estate broker is involved, must that broker be licensed as a broker-dealer under the Corporate Securities Law of 1968? Some may be surprised to…

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Merger and Acquisition Specialists

The question of whether an unlicensed person may be compensated in a securities transaction continues to bedevil practitioners.  Usually, the question arises in the context of a private placement or other capital raising activity.  However, the question also crops up in merger and acquisition transactions. Some may not be aware that California has adopted a…

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