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CALIFORNIA CORPORATE & SECURITIES LAW

Binary Options And Securities Regulation

Recently, the North American Securities Administrators Association (NASAA) updated and expanded its 2015 advisory warning investors about online binary option schemes.  NASAA offers the following explanation of “binary options”: A binary option is a type of all-or-nothing investment contract, similar to placing a bet. Like the flip of a coin, there are only two possible outcomes: heads…

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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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Court Finds Promissory Notes Are Not Securities

Yesterday’s post concerned the Court of Appeal’s decision in People v. Black, 2017 Cal. App. LEXIS 130 (Cal. App. 6th Dist. Feb. 16, 2017).  The case involved the criminal prosecution of an individual for making false statements in connection with the offer and sale of a security in violation of Corporations Code Section 25401.  The trial…

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Must A Security Be Written?

In yesterday’s post, I covered some of the differences between the laundry lists of securities found in the California Corporate Securities Law of 1968 and the Securities Act of 1933.  Both lists seem to contemplate instruments that are written.  But what does it mean to be “written”?  Before the advent of computers, email and electronics,…

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Making A List Of Securities And Checking It Twice

California Corporations Code Section 25019 defines “security” not by saying what a security is but by providing examples of numerous types of securities.  In this respect, Section 25019 is reminiscent of Section 2(a)(1) of the Securities Act of 1933.  The two statutory lists, however, are not identical.  Below is a brief summary of some of the differences: Securities listed…

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Unregistered Sales Of Certificates Of Deposit

Last spring, the California Department of Business Oversight warned consumers that two related companies have been offering unlicensed online securities broker-dealer services and “unregistered sales of certificates of deposit (CDs)”.  The Department’s announcement raises the question of whether the offer and sale of CDs must be qualified under the Corporate Securities Law of 1968. Section 25019 of…

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Court Rules Fixed Income Annuity Is Not A Security Under The CSL

Because annuity contracts involve the payment of money in the expectation of future payments, one might conclude that they are securities within the meaning of the California Corporate Securities Law of 1968.  Evidently, that is what Mr. Abbit or at least his lawyer believed when they filed a class action lawsuit against an insurer alleging,…

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A Criminal Waste Of Space Foments Securities Law Problem

California Court of Appeal Justice William W. Bedsworth writes the popular syndicated column “A Criminal Waste of Space”.  In this month’s column, Justice Bedsworth expounds on the highly improbable case of a man who purchased a Pick-9 ticket at the track and somehow managed to pick all nine winners.  Szadolci v. Hollywood Park Operating Company,…

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Are LLC Interests Securities in California?

Does California consider membership interests in a limited liability company to be securities?  There are two correct answers to this question – yes and no. As I discussed a few years back, the California Corporate Securities Law preceded even the idea of limited liability companies.  When California’s first LLC law (the Beverly-Killea Act) was adopted,…

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Commodities And The CSL

A recent unpublished opinion by Justice William W. Bedsworth set me to cogitating on the status of commodities under the Corporate Securities Law of 1968.  In Kelly v. Monex Co., 2013 Cal. App. Unpub. LEXIS 5903 (Aug. 21, 2013), the plaintiff had lost substantial amounts in trading gold and silver through the defendant.  She sued and the…

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