After starting employment at eCommission Solutions, LLC in 2015, Mr. Aja Doshi was offered the position of Vice President, Product Engineering.  Among other things, the offer stated: "You will be granted one hundred fifty thousand (150,000) stock options pursuant to this Agreement".   The company, however, did not have a "stock" option plan and never implemented such a plan.  Mr. Doshi sued for, among other things, a violation of Section 25401 of the California Corporations Code, which in 2015 provided:

"It is unlawful for any person, in connection with the offer, sale, or purchase of a security, directly or indirectly, to do any of the following: (a) Employ a device, scheme, or artifice to defraud. (b) Make an untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading. (c) Engage in an act, practice, or course of business that operates or would operate as a fraud or deceit upon another person."

The defendants argued that the misrepresentations were not material, but U.S. District Court Judge Janis L. Sammartino had no trouble concluding that the options were material.   Doshi v. eCommission Solutions, LLC, 2018 U.S. Dist. LEXIS 163491.  The moral of the story is that you can commit securities fraud even when the security doesn't exist.