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District Court Rules Plaintiff Failed To Plead Real Estate Investment Was A “Security”

Both the Securities Act of 1933 and the California Corporate Securities Law of 1968 provide similar, but not the same, definitions of a “security”.  See Making A List Of Securities And Checking It Twice.  Although these lists are expansive, courts continue to explain why some items on the lists are not securities and why some…

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Sunshine May Be Free But It May Take A Security To Harvest It

Harvesting the sunlight as a source of “clean” energy is the dream of many.  Although the energy provided by the sun is free, converting that energy into electricity continues to require significant financial resources.  One model for local solar energy development is “community shared solar”.  Under this model, local consumers invest in the development of…

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Department Of Corporations Issues Crowd Funding Bulletin

Last week, the Department of Corporations issued this bulletin which it styled as a “Crowdfunding Update”.  The Bulletin makes several important points. Until the Securities and Exchange Commission adopts regulations, there is no federal crowd funding exemption.  It should be noted that Congress mandated that the SEC adopt these regulations by December 31, 2012.  As…

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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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“Sweat Equity” Means No Security

There was no such thing as a limited liability company in 1933, 1934 or even 1968.  Thus, Congress and the California legislature had no reason to consider whether a membership interest in an LLC constitutes a security when they drafted the Securities Act, the Exchange Act and the Corporate Securities Law.  When California enacted the Beverely-Killea Limited…

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SEC Argues That Sales Of Hotel Rooms Are Sales of A Security

In June, I wrote this post about U.S. District Court Judge Dana Sabraw’s opinion in Salameh v. Tarsadia Hotels, 2011 U.S. Dist. LEXIS 30375.  The case involved the question of whether ownership interests in individual units of the Hard Rock Hotel San Diego constitute securities under either the investment contract test enunciated by the U.S. Supreme Court in…

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