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California Corporate and Securities Law

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californiacorporate&securities 12/8/2017
Another Foolish Inconsistency – This Time For Broker-Dealers

Yesterday’s post chided Glass, Lewis & Co., LLC for its inconsistent positions on majority rule.  Today’s post tackles a foolish inconsistency in the California Codes.  Section 25217(c) of the California Corporations Code provides: A broker-dealer licensed under this chapter making loans to its customers which are subject to the provisions of Division 9 (commencing with…

The post Another Foolish Inconsistency – This Time For Broker-Dealers appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 12/7/2017
Would Glass Lewis Have Anything To Do If It Were Consistent?

Ralph Waldo Emerson famously derided a foolish consistency, famously writing in his essay, Self-Reliance: “With consistency a great soul has simply nothing to do. He may as well concern himself with his shadow on the wall. Speak what you think now in hard words, and to-morrow speak what to-morrow thinks in hard words again, though it…

The post Would Glass Lewis Have Anything To Do If It Were Consistent? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 12/6/2017
Court: Operating Agreement Did Not Grant Terminated Employees Lifetime Jobs

An employment agreement is one thing and an operating agreement quite another.  In ITV Gurney Holding Inc. v. Gurney, Cal. Ct. Appeal Case No. B281694, the board of a limited liability company fired two employees who were also managers.  The two employees did not challenge the LLC’s right to terminate their employment, but they contended…

The post Court: Operating Agreement Did Not Grant Terminated Employees Lifetime Jobs appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 12/5/2017
Of Touting, Tweets and Advertising

Last month, the Securities and Exchange Commission issued this public statement warning about touting of securities by celebrities: Celebrities and others are using social media networks to encourage the public to purchase stocks and other investments.  These endorsements may be unlawful if they do not disclose the nature, source, and amount of any compensation paid, directly…

The post Of Touting, Tweets and Advertising appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 12/4/2017
Home On The Grange

As a child, I was always puzzled when I saw a Grange Hall.  Was Grange a misspelling of “range”?  If not, what was a “grange”?  Only later did I learn that “grange” was derived from the Latin word, granum, meaning a seed.  The word forms part of the name of the National Grange of the Order…

The post Home On The Grange appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 12/1/2017
Is Someone Else’s Purpose An Improper Purpose?

This post on the Harvard Law School Forum on Corporate Governance and Financial Regulation discusses Vice Chancellor J. Travis Laster’s recent decision in Wilkinson v. A. Schulman, Inc., 2017 Del. Ch. LEXIS 798.  The case involved a stockholder’s demand for inspection under Section 220 of the Delaware General Corporation Law.  Vice Chancellor Laster denied inspection…

The post Is Someone Else’s Purpose An Improper Purpose? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/29/2017
Can A Corporation Be An Officer?

William & Mary Law Review recently published Professor Stephen Bainbridge’s article, Corporate Directors in the United Kingdom.  The abstract begins withe following observation: In the United States, state corporation law uniformly provides that only natural persons may serve as directors of corporations. I haven’t surveyed every state, but I concur as to California and Nevada.  See Cal.…

The post Can A Corporation Be An Officer? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/28/2017
FTB Publishes Disinformation About Corporations

Recently, I happened across a summary of the “key features” of a corporation on the California Franchise Tax Board’s website.  Recognizing that it is always a challenge to summarize accurately complex legal matters, I do beg to differ with some of the FTB’s assertions. A corporation must register with the California Secretary of State before conducting…

The post FTB Publishes Disinformation About Corporations appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/27/2017
Court Finds Tort Claims To Be Covered By Forum Selection Agreement

Contractual forum selection provisions are often broadly written so as to encompass not just claims involving enforcement of the contract but claims arising out of or related to the contract.  But how far do these clauses reach?  In the case of Laboratory Specialists International, Inc. v. Shimadzu Scientific Instruments, Inc., 2017 Cal. App. LEXIS 1036, the…

The post Court Finds Tort Claims To Be Covered By Forum Selection Agreement appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/22/2017
Does ISS’ Voting Recommendations Reflect Analysis Or Consensus?

I always appreciate comments from readers of this blog.  One reader responded to yesterday’s post concerning ISS opposition to classified boards: “You seem to be under the impression that ISS comes up with its guidelines through academic research.  Although that CAN come into play, it is much more directly shaped by the policies of its customers.”…

The post Does ISS’ Voting Recommendations Reflect Analysis Or Consensus? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/21/2017
Is ISS A Board Declassification Denier?

Institutional Shareholder Services (aka ISS) recently published its 2018 Americas Proxy Voting Guidelines Update.  Among other changes, ISS will now recommend a vote against or withhold from the entire board of directors (except new nominees, who will be considered case-by-case) if the company has opted into, or failed to opt out of, state laws requiring a classified…

The post Is ISS A Board Declassification Denier? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/20/2017
Is Every Agent A Fiduciary?

In common parlance, a fiduciary is someone you can trust.  The word itself is related to the Latin word, fidere, meaning to trust.  We name our dogs “Fido” because dogs are trustworthy companions.  For example, a dog named Hachiko (忠犬ハチ公) faithfully returned every day for nine years to Shibuya Station in Tokyo to greet his master…

The post Is Every Agent A Fiduciary? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/17/2017
Shareholders Sues Officer Of Delaware Corporation In California State Court, Should Texas Law Apply?

Yesterday’s post discussed one aspect of the California Court of Appeal’s opinion in Central Laborers’ Pension Fund v. McAfee, Inc., 2017 Cal. App. LEXIS 1008.  The case arose from Intel Corporation’s acquisition of McAfee, Inc., a Delaware corporation.  Among other things, the plaintiff complained that David DeWalt, McAfee’s erstwhile president and CEO, in pursuit of his…

The post Shareholders Sues Officer Of Delaware Corporation In California State Court, Should Texas Law Apply? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/16/2017
Court Of Appeal Finds No Right To Jury In Shareholder Class Action

In several blog posts, I have commented on the right to a jury trial under California law.  This may seem like an inapposite subject for a blog devoted to corporate and securities law issues.  Nonetheless, I have prognosticated that the right to a jury trial may be a basis for challenging a Delaware choice of law bylaw. …

The post Court Of Appeal Finds No Right To Jury In Shareholder Class Action appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/15/2017
California Securities Law Claims Founder On Personal Jurisdiction

Establishing personal jurisdiction may seem mundane, but without it a plaintiff may soon find itself out of court, as did the plaintiff in Marshall v. Galvanoni, 2017 U.S. Dist. LEXIS 185530. In Marshall, the plaintiff sued a half dozen companies and four individuals over failed investments.  Among other things, the plaintiff alleged violations of California…

The post California Securities Law Claims Founder On Personal Jurisdiction appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/14/2017
Judge Rules Internal Affairs Doctrine Governs California Insider Trading Statute

As I have mentioned on numerous occasions, California has its own insider trading statute – California Corporations Code Section 25402.  The statute is included in the California Corporate Securities Law of 1968.  In general, the jurisdiction of organization of an issuer is irrelevant to the application of the CSL.  Thus, in most instances, the operative issue will…

The post Judge Rules Internal Affairs Doctrine Governs California Insider Trading Statute appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/13/2017
Do You Have To Be Old To Be A Veteran?

On Saturday, the country honored its veterans.  November 11 was originally designated as “Armistice Day” in recognition of the date on which fighting in the First World War ended.  It became a legal holiday in 1938, only a few years before the United States’ entry into the Second World War in 1941.  52 Stat. 351;…

The post Do You Have To Be Old To Be A Veteran? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/10/2017
Judge Alex Kozinski On Debt Versus Equity

Judge Alex Kozinski succinctly frames the debt versus equity battle in this opinion issued yesterday: It’s a timeless and tiresome question of American tax law: Is a transaction debt or equity?  The extremes answer themselves.  The classic equity investment entitles the investor to participate in management and share the (potentially limitless) profits—but only after those…

The post Judge Alex Kozinski On Debt Versus Equity appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/9/2017
More On Disclosure Under SEC Rule 701(e)

As mentioned yesterday, Corporation Finance (often referred to as “Corp Fin”) recently issued a Compliance & Disclosure Interpretation with respect to the disclosure delivery requirements under Rule 701(e).  I find myself befuddled by the following statement in the C&DI: “Once access to the required information has been granted, however, the medium used to communicate the…

The post More On Disclosure Under SEC Rule 701(e) appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/8/2017
Corp Fin’s New Rule 701 C&DI And California’s Compensation Plan Exemption

Yesterday, Broc Romanek reported that Corp Fin has published a new C&DI addressing the permissibility of electronic delivery of disclosures under Rule 701(e).  Readers will recall that Rule 701 is an exemption from the registration requirements of the Securities Act for offer and sales of securities pursuant to compensatory benefit plans and contracts.  The rule is…

The post Corp Fin’s New Rule 701 C&DI And California’s Compensation Plan Exemption appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/7/2017
Does The California Finance Lenders Law Prohibit “Table Funding”?

A loan is “table funded” when at settlement it is contemporaneously assigned to the person that provides the funds.  Is table funding an illegal business practice under the California Finance Lenders Law?  The Fourth District Court of Appeal has its doubts: Preciado premises these claims on an assertion table funding is an illegal business practice…

The post Does The California Finance Lenders Law Prohibit “Table Funding”? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/6/2017
BrokerCheck – FINRA’s Dread Permanent Record

Many a school child has received the awful warning to be careful lest some offense be entered on his or her “permanent record”.  As required by statute (15 U.S.C. § 78o-3(i)), the Financial Industry Regulatory Authority, Inc. (aka FINRA) has maintained a sort of permanent record for securities professionals known as “BrokerCheck“.  See FINRA Rule 8312.  Just…

The post BrokerCheck – FINRA’s Dread Permanent Record appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/3/2017
What’s The Plural Of Condominium?

Wednesday’s post was entitled “Condominiums And The California Corporate Securities Law“.  Today’s post concerns whether I used the proper plural form of “condominium”. “Condominium” is derived from the Latin words, cum and dominium.  Cum means with or together and dominium means right of ownership.  Dominium is a neuter noun in the Latin Second Declension, meaning that its plural form is formed by…

The post What’s The Plural Of Condominium? appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/2/2017
Promoters And California’s Limited Offering Exemption

I was admitted to the bar the same year that the legislature completed its parturition of a new limited offering exemption under the Corporate Securities Law of 1968 – California Corporations Code Section 25102(f).  AB 1518, Cal. Stats. 1981, ch. 1120.  Section 25102(f) exempts the offer and sale of securities from the issuer qualification requirement established by…

The post Promoters And California’s Limited Offering Exemption appeared first on CALIFORNIA CORPORATE & SECURITIES LAW.

 
californiacorporate&securities 11/1/2017
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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