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Condominiums And The California Corporate Securities Law

Some four years ago, I wrote about the Ninth Circuit Court of Appeals’ holding in Salameh v. Tarsadia Hotel, 726 F.3d 1124 (9th Cir. 2013).  For those readers who don’t remember the post or the case, the Court of Appeals held that the plaintiffs had failed to allege the sale of a security under federal or California…

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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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Silver Hills Doesn’t Mute Howey

Anyone who has studied securities regulation since 1946 should be familiar with the U.S. Supreme Court’s definition of a “security” as enunciated by Justice Frank Murphy in S.E.C. v. Howey Co., 328 U.S. 293 (1946).  That test asks “whether the scheme involves an investment of money in a common enterprise with profits to come solely from the…

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Mirabile Dictu! “Common Stock Does not Constitute an Investment in ‘Stock'”

Anyone who has picked up a prospectus or a private placement memorandum has undoubtedly seen, if not read, various legends and other warnings.  Recently, I came across the following legend in an offering document: COMMON STOCK DOES NOT CONSTITUTE AN INVESTMENT IN “STOCK” IN THE COMMON SENSE OF THE TERM.  PURCHASERS SHOULD NOT PURCHASE COMMON…

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