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CALIFORNIA CORPORATE & SECURITIES LAW

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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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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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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All The World’s A Stage, But The SEC Isn’t Allowing All Actors To Play Upon It

Every Rule Must Play It’s Part, But This Part Is A Sad One There is much to dislike in the SEC’s recent “bad actor” rule amendments.  While Congress conceived the idea of disqualifying bad actors (Section 926 of the Dodd-Frank Act), the SEC was more than a midwife.  Here are a few reasons why I believe that the SEC’s naughty…

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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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The Most Important Thing You Need To Know Now About The Lifting Of The General Solicitation Ban

I’m tempted to begin this post with the following: Last week, the Securities and Exchange Commission lifted the ban on general solicitation in Rule 506 and Rule 144A offerings. The problem with that sentence is that it simply isn’t true.  The SEC did not lift the ban – Congress lifted the ban over a year…

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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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SEC Faces A Swarm Of Legal Issues In Considering The Investor Advisory Committee’s Recommendations Concerning General Solicitation

The SEC’s Investor Advisory Committee held another meeting last week with Elisse B. Walter making her first public appearance as SEC Chairman.  She and Commissioner Luis A. Aguilar had many kind words for the Committee’s recommendations with respect to lifting the ban on general solicitations in Rule 506 offerings.  The insouciance of their remarks, however,…

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Revealed! The Investor Advisory Committee’s Recommendations On Lifting The General Solicitation Ban In Rule 506 Offerings

I was not the only one who was perturbed by the Investor Advisory Committee’s procedures for considering the Securities and Exchange Commission’s proposed rulemaking to lift the ban on general solicitation and Advertising in Rule 506 offerings.  Niels Holch, the Executive Director of the Coalition of Mutual Fund Investors, submitted this comment letter that concludes:…

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Hedge Fund Advertising – What’s The Wall Street Journal Talking About?

Last week, the Wall Street Journal published an article stating: “The JOBS Act, signed by President Obama on April 5, lifted a decades-old restriction on how hedge funds can go after new investors, clearing the way for managers to speak more publicly about their strategies and performance and even to advertise.” Later, a WSJ blog asserted:…

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