Website Heading

CALIFORNIA CORPORATE & SECURITIES LAW

Court Finds No “Road of Imprudence” or “Chasm of Equity” In Section 25504

Faithful readers of this blog will be familiar with the structure of the California Corporate Securities Law.  Part 5 of the CSL (Cal. Corp. Code §§ 25400 – 25404) proscribes various conduct and Part 6 (Cal. Corp. Code §§ 25500 – 25510) establishes the remedies for violations of Part 5.  See Second Circuit Declines To Apply…

Share on:

Assembly Committee Seeks To Fix Securities Fraud Statute

Readers of this blog will be familiar with my criticism of the 2013 amendment of California’s basic securities fraud statute, Corporations Code Section 25401.  See California Creates Complete Chaos By Rewriting Anti-Fraud Statute, But “We Are Against Fraud Aren’t We?”, Die Verwandlung: How The Legislature Likely Raised The Bar On Securities Fraud Actions, When California Copied Rule…

Share on:

Applying Today’s Statute To Yesterday’s Offer And Sale

In September 2013, Governor Jerry Brown signed SB 538 (Hill) into law.  This bill fundamentally rewrote a key anti-fraud provision of the Corporate Securities Law of 1968 – Corporations Code Section 25401.  At the time, I cast a chary eye on the amendment and predicted that it would lead to judicial confusion.  See California Creates Complete…

Share on:

Buyer’s “I Have A Plan” Statement Found To Be Immaterial Puffery

A recent California Court of Appeal decision is a helpful reminder that buyers can also be targets of securities fraud suits.  In Goldsholle v. Brisco, 2014 Cal. App. Unpub. LEXIS 7997 (Cal. App. 2d Dist. Nov. 6, 2014), the seller of a company claimed that the buyer’s assurances that it had a plan to increase website…

Share on:

When California Copied Rule 10b-5 Did It Shut The State Courthouse Door To Securities Fraud Suits?

Section 27 of the Securities Exchange Act of 1934 provides: “The district courts of the United States . . . shall have exclusive jurisdiction of violations of [the Exchange Act] or the rules and regulations thereunder, and of all suits in equity and actions at law brought to enforce any liability or duty created by [the…

Share on:

Has California Lost Its Jurisdictional Anchor For Securities Fraud Actions?

Does California’s securities fraud statute apply to offers and sales of securities that are made in other states, in Europe, or on the moon?  Actually, there is no way to know.  Formerly, California Corporations Code Section 25401 began “It is unlawful for any person to offer or sell a security in this state or offer to buy…

Share on:

This Ruling Appears To “Unravel The Very Fabric Of The Space-time Continuum”

In prior posts, I’ve cast a jaundiced eye on last year’s amendment of California’s general securities fraud statute, Corporations Code Section 25401.  See Die Verwandlung: How The Legislature Likely Raised The Bar On Securities Fraud Actions and California Creates Complete Chaos By Rewriting Anti-Fraud Statute, But “We Are Against Fraud Aren’t We?”.  The amendment took effect on…

Share on:

Court Declines To Apply Rule 9(b) To Section 25401 Claim

A complaint alleging securities fraud under Rule 10b-5 must meet the stringent pleading requirements of Rule 9(b) of the Federal Rules of Civil Procedure as well as the requirements of the Private Securities Litigation Reform Act.  In re Verifone Holdings Securities Litig., 704 F. 3d 694, 701 (9th Cir. 2012).  These are the twin rocks on…

Share on:

The Securities Fraud Device That The Legislature Devised To Omit

Last year, Senator Jerry Hill authored a bill, SB 538, which rewrote Corporations Code Section 25401.  As I posted, the underlying premise was fanciful at best – that California’s statute “has failed to keep up with similar language in federal anti-fraud statutes”.   By metamorphosing Section 25401 from a statute based on Section 12(a)(2) of…

Share on:

Failure To Name Primary Violator Doesn’t Doom Class Action Against Secondary Actors

One might expect plaintiffs to always name the primary violator in a securities fraud suit.  However, what if suing the primary violator is not an option because the primary violator is in bankruptcy or the subject of a court ordered stay?  Can there be a finding of secondary liability when there is no finding of…

Share on: