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CALIFORNIA CORPORATE & SECURITIES LAW

Are California Statutes Authorizing Desist And Refrain Orders Facially Unconstitutional?

In December 2008, the Commissioner of Corporations issued a desist and refrain order based on alleged violations of the Corporate Securities Law and the Finance Lenders’ Law.  Nearly seven years later, the respondents challenged the order by filing a complaint in the U.S. District Court.  The complaint included four causes of action: (1) violation of…

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Private Placement Memorandum Saves The Day For Defendants

Do you ever wonder whether the time and expense of preparing a private placement memorandum is really worth it?  Does anyone ever escape liability because of a well drafted PPM?  A recent opinion by the California Court of Appeal provides one, albeit unexpected, reason for preparing and delivering a PPM.  WA Southwest 2, LLC v.…

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Some Questions About Delaware’s New Law Allowing Parties To Extend The Statute Of Limitations

Delaware recently amended its law to allow parties to a written contract involving at least $100,000 to provide that any action based on that contract may be brought within a period specified in that contract provided that the action is brought prior to the expiration of 20 years from the accrual of the cause of action.  10…

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Defendants Owed No Duty, But Still Liable

In Am. Master Lease Llc v. Idanta, 2014 Cal. App. LEXIS 402 (Cal. Ct. App. 2014), the Second District Court of Appeal resolved the following four questions: Can a defendant be liable for aiding and abetting breach of fiduciary duty without owing the plaintiff a fiduciary duty? Answer: Yes What is the statute of limitations…

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Sealing A Contract May Mean Nothing Or 20 Years!

The California Corporations Code endows corporations with certain rights, including the right to “adopt, use and alter” a seal.  Cal. Corp. Code § 207(a).  The Corporations Code does not define a “seal” but the Code of Civil Procedure does.  Under Section 1930,  a seal “is a particular sign, made to attest, in the most formal manner,…

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Section 25501.5 – “A Riddle, Wrapped In A Mystery, Inside An Enigma”

Last December, I wrote this post about Corporations Code § 25501.5 that asked “What do it mean?”.  In general, the statute authorizes an action for rescission (or damages, if the security is no longer owned) by any person “who purchases a security from or sells a security to a broker-dealer that is required to be licensed and has not”.  However, the statute makes little…

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