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californiacorporate&securities 2/24/2017
Officers And The Business Judgment Rule

Last weekend, I attended a symposium at the UCLA School of Law entitled “Can Delaware Be Dethroned? Evaluating Delaware’s Dominance of Corporate Law”.  The event, organized by ever erudite Professor Stephen Bainbridge, featured presentations by leading scholars and practitioners from around the country.  I was therefore surprised when the discussion turned to whether Delaware applies the business…

The post Officers And The Business Judgment Rule appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 2/23/2017
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…

The post Court Finds Promissory Notes Are Not Securities appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 2/22/2017
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…

The post Silver Hills Doesn’t Mute Howey appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 2/21/2017
What Do You Know? Bill Proposes To Eliminate Scienter

Corporations Code Section 25401 is California’s basic securities antifraud statute: It is unlawful for any person to offer or sell a security in this state, or to buy or offer to buy a security in this state, by means of any written or oral communication that includes an untrue statement of a material fact or…

The post What Do You Know? Bill Proposes To Eliminate Scienter appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 2/17/2017
Is California “The Biggest Loser”?

I am very excited to be moderating a panel discussion this weekend at a symposium entitled Can Delaware Be Dethroned? Evaluating Delaware’s Dominance Of Corporate Law.  The symposium is being presented by the Lowell Milken Institute for Business Law and Policy at UCLA’s School of Law.  My panel consists of distinguished legal scholars from around the country: Michal Barzuza…

The post Is California “The Biggest Loser”? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 2/16/2017
Bill Introduced To Require Registration Of Finders Under The California Finance Lenders Law

The California Finance Lenders Law, Financial Code § 22000 et seq., currently requires licensing of finance lenders and brokers.  A finance lender is defined as any person who is engaged in the business of making consumer loans or making commercial loans. Cal. Fin. Code § 22009.  The business of making consumer loans or commercial loans may include…

The post Bill Introduced To Require Registration Of Finders Under The California Finance Lenders Law appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 2/15/2017
Investment Advisers And Broker-Dealers Face Scant Likelihood Of California Examinations

The California Department of Business Oversight recently issued a report on its Broker-Dealer/Investment Adviser Program.  This report was required by the Budget Act of 2014. Although short, the report provides some interesting data about California’s oversight of investment advisers and broker-dealers. In the last five years, the number of investment adviser firms subject to examination by the BDO has increased…

The post Investment Advisers And Broker-Dealers Face Scant Likelihood Of California Examinations appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 2/14/2017
Getting To The Point On Director Elections

Last week in The Mentor Blog, Broc Romanek mentioned a blog posting of mine from September 2015: Was This Director Duly Elected Or Appointed?  My post was concerned Intelligent Digital Systems, LLC v. Beazley Ins. Co., Inc., 2015 U.S. Dist. LEXIS 82742 (June 23, 2015).  Briefly, an insurer claimed that the director had been duly elected or appointed and this triggered a…

The post Getting To The Point On Director Elections appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 2/13/2017
Can The Legislature Hire Its Own Lawyer?

In early January, California Senate President pro Tempore Kevin de León and Assembly Speaker Anthony Rendon jointly announced that the California Legislature had hired outside legal counsel to advise on potential legal challenges with the incoming administration of Donald Trump.  I found this interesting as I could not recall a prior circumstance in which the legislature had ever…

The post Can The Legislature Hire Its Own Lawyer? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 2/10/2017
Homographic Cases Indeed!

Homographs are words that share the same spelling but have different meanings.  One such word that is very familiar to lawyers is the word “case”.  Lawyer’s try cases, shelve books in cases, and write in upper case and lower case letters.  How can one word share the same spelling and pronunciation and yet have such different…

The post Homographic Cases Indeed! appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 2/9/2017
Applying The Statute Of Frauds To “Et Al.”

Charles II, aka the “Merry Monarch”, was sitting on the English throne when the original Statute of Frauds was enacted in 1677.  Therefore, one should be forgiven for the mistaken presumption that all questions involving the application of the statute have been raised and duly answered.  Just yesterday, in fact, the California Court of Appeal addressed the apparently…

The post Applying The Statute Of Frauds To “Et Al.” appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 2/8/2017
Magistrate Judge Rules SEC’s Attorney-Conduct Rules Preempt State Law

Last December, Chief Magistrate Judge Joseph C. Spero ruled that the SEC’s attorney-conduct rules preempt California’s statutory and professional rules requiring attorneys to maintain inviolate the confidences.  Wadler v. Bio-Rad Laboratories, Inc., 2016 U.S. Dist. LEXIS 176166  (N.D. Cal. Dec. 20, 2016).  This is a topic that I and other members of the Corporations Committee of…

The post Magistrate Judge Rules SEC’s Attorney-Conduct Rules Preempt State Law appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 2/7/2017
Ninth Circuit Accords Chevron Deference To The SEC, What Would Judge Gorsuch Say?

Last week, I noted that Judge Gorsuch has expressed a certain skepticism of Chevron deference.  The next day, the Ninth Circuit Court of Appeals held that the Securities and Exchange Commission’s interpretation of Section 19(d)(2) of the Securities Exchange Act is entitled to Chevron deference. Sharemaster v. United States SEC, 2017 U.S. App. LEXIS 1827 (9th…

The post Ninth Circuit Accords Chevron Deference To The SEC, What Would Judge Gorsuch Say? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 2/6/2017
LLC Bound By Agreement Signed By Manager’s Manager

Justice Kenneth R. Yegan clearly and concisely frames the question in Western Surety Co. v. La Cumbre Office Partners, LLC, 2017 Cal. App. LEXIS 77 (2017): ” natural person is the managing member of a limited liability company (LLC 1) that is the sole manager of another limited liability company (LLC 2). The person signs an…

The post LLC Bound By Agreement Signed By Manager’s Manager appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 2/3/2017
U.S. District Court Finds Personal Jurisdiction In Derivative Suit

I think it is beyond peradventure that a state enjoys personal jurisdiction over corporations incorporated within that state.  What about the personal jurisdiction over the corporation’s directors and officers?  That was the question addressed by U.S. District Judge Jennifer A. Dorsey in Sonoro Invest, S.A. v. Miller, 2017 U.S. Dist. LEXIS 9657 (D. Nev. Jan. 24,…

The post U.S. District Court Finds Personal Jurisdiction In Derivative Suit appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 2/2/2017
Court Of Appeal Voids Jury Trial Waiver Notwithstanding New York Choice of Law

A New York state of mind, but California dreaming A sophisticated lender and borrower negotiate a loan agreement in New York, the lender disburses the loan proceeds in New York, and both parties agree that New York law governs.  This choice-of-law is memorialized in bold face type and capital letters in the loan agreement.  In…

The post Court Of Appeal Voids Jury Trial Waiver Notwithstanding New York Choice of Law appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 2/1/2017
Must A False Statement To A Franchisee Be Made “In this state”?

The list of instruments and interests included within the definition of a “security” in California Corporations Code Section 25019 is long.  A franchise, however, is not to be found amongst the named.  In fact, the statute specifically excludes a franchise subject to registration under the California Franchise Investment Law (Corporations Code Section 31000 et seq.) or exempt…

The post Must A False Statement To A Franchisee Be Made “In this state”? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 1/31/2017
Will Congress Deep Six The SEC’s Resource Extraction Rule?

In December of last year, I wrote about how the Securities and Exchange Commission’s Resource Extraction Rule might meet an untimely end.  See There’s Still Time For Congress To Void The SEC’s Resource Extraction Rule (Dec. 14, 2016).  The rule, Rule 13q-1 and an amendment to Form SD, had an extraordinarily difficult birth: Congress had ordered…

The post Will Congress Deep Six The SEC’s Resource Extraction Rule? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 1/30/2017
Court Rules Plaintiff Is Not Required To Advance Defendant’s Legal Expenses

Imagine how frustrated you would be if you sued someone and the defendant responded by demanding that you advance his legal expenses in defending your lawsuit.  The plaintiff in Allergia, Inc. v. Bouboulis, 2017 U.S. Dist. LEXIS 7759 (S.D. Cal. Jan. 19, 2017) found itself in just that situation.  U.S. District Judge Janis L. Sammartino, however, spared the…

The post Court Rules Plaintiff Is Not Required To Advance Defendant’s Legal Expenses appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 1/27/2017
Will The Bureau Of Real Estate Get A Promotion?

 “Not since Clytemnestra and Agamemnon has there been such a mismatch.” Almost five years ago, I decried the demotion and relocation of the Department of Real Estate: Although the DRE issues professional licenses, it is fundamentally a business regulatory department that regulates an industry with an enormous impact on California’s economy.  The activities of its…

The post Will The Bureau Of Real Estate Get A Promotion? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 1/26/2017
The Right To Dissent And Fractional Shares

I’ve devoted several posts to how California’s General Corporation Law deals with fractional shares.  Nevada’s approach to fractional shares is somewhat different.  For example, Nevada permits rounding up to a full share in all cases.  NRS 78.205(2)(b).  However, if a Nevada corporation elects to cash out or issue scrip for fractional shares, the stockholders may…

The post The Right To Dissent And Fractional Shares appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 1/25/2017
SEC Continues To Pay Out Millions In Secrecy

Earlier this week, the Securities and Exchange Commission announced awards to three whistleblowers totaling more than $7 million.  That is about all anyone can say about the awards.  The SEC’s order is only 448 words long, including numerous occurrences of the word “redacted”.  It doesn’t name the company or describe the nature of the investment scheme. Even…

The post SEC Continues To Pay Out Millions In Secrecy appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 1/24/2017
How Independent Is The SEC And How Independent Should It Be?

Can the President say “You’re Fired!” to an SEC Commissioner? In a recent post, John Jenkins emphasized the commonly held understanding that the Securities and Exchange Commission is an “independent agency”.  The independence of the SEC, however, is not be beyond debate.  In Free Enter. Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S. 477, 546 (2010), Justice…

The post How Independent Is The SEC And How Independent Should It Be? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 1/23/2017
The DBO As Religious Regulator

In December last, the Department of Business Oversight published the 2016 Commissioner’s Report on the Offer or Sale of Securities by Permit under Corporations Code Section 25113.  This report, which is required by California Corporations Code Section 25113(d), provides data on the permits issued by the Commissioner under the Corporate Securities Law of 1968.  Qualification by…

The post The DBO As Religious Regulator appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 1/20/2017
Fractions And Squeeze Outs

The last two posts have discussed what a corporation may do with fractions of shares.  I entitled the first of these posts “Breaking Up Is Not Hard To Do – Fractions, Scrip And Scrippage” in partial reference to the song by Neil Sedaka and Howard Greenfield.  The title was also a reference to the etymological…

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Blogs 1 - 25 of 200