News & Publications

Yesterday’s post discussed virtual currencies (e.g., Bitcoin) and the General Corporation’s law prohibition on issuing or putting into circulation money.  But what exactly is money?  The General Corporation Law has no answer.  I’m aware of at least three different California statutes that define “money”. Government Sanction Seems To Be The Sine Qua Non Of Money First, we have the California Uniform Commercial Code which defines “money” in [...]

I’ve been seeing an increasing number of references to Bitcoin and other forms of virtual or crypto currencies in the news.  For example, Jeffrey Sparshott and Robin Sidel of the Wall Street Journal reported last week that the Department of Homeland Security had frozen the account “tied to the largest Bitcoin exchange”.  In March, the Financial Crimes Enforcement Network (“FinCEN”) issued this guidance [...]

It is widely assumed that if a contract, note or other instrument is signed by a corporation’s president and its secretary, it will not be invalidated as to the corporation by any lack of authority of the signing officers.  After all, Section 313 of the California Corporations Code provides: Subject to the provisions of subdivision (a) of Section 208, any note, [...]

Artistotle didn’t think much of the idea of paying interest:  (“As this is so, usury is most reasonably hated, because its gain comes from money itself and not from that for the sake of which money was invented. For money was brought into existence for the purpose of exchange, but interest increases [...]

No Harm, No Foul The late Lakers broadcaster Chick Hearn was known for coining or popularizing numerous basketball expressions, including “air ball” and  ”no harm, no foul”.   Now, the U.S. Supreme Court may soon decide whether the principle of “no harm, no foul” applies to Section 16, the other insider trading statute. Do Section 16 Plaintiffs Suffer Injury In Fact? In 2009/2010, [...]

Yesterday’s blog discussed California’s requirement that many domestic and foreign corporations send financial statements to their shareholders.  If a corporation has 100 or more holders of record (determined in accordance with Section 605), then the annual report must also provide a brief description of the following: Any transaction during the previous fiscal year involving an amount in excess of $40,000 to which the [...]

Rachel Anderson is a law professor at the University of Nevada, Las Vegas Boyd School of Law.  She has a website, Salon Sub Rosa, which carries the subtitle of “Musings in the Harlem Renaissance”.  Her site provides a wealth of information on Business Law & Policy, Education Law & Policy, and Nevada Law & Policy.  Recently, she was kind enough to include this [...]

Anyone who has submitted a business filing to the California Secretary of State’s office know that a serious problem exists.  At present, the Secretary of State has 122,000 documents waiting to be filed.  The delays are simply intolerable for the conduct of business in a modern commercial state.  For example, the Secretary of State is processing today merger documents that were filed [...]

The formation of a subsidiary under the laws of a foreign country may not seem to implicate the California Corporate Securities Law.  Yet, an offer and sale may occur “in this state” within the meaning of Corporations Code Section 25008. See California’s Blue Sky Law Problems for Foreign Issues and Foreign Issuers, 23 Insights 28 (July 2009) and Yes, There Is [...]

Jacob was in love with Rachel, but he had a problem.  What could he offer Rachel’s father, Laban, for her hand?  Not having much, he offered to work for seven years.  Laban seemed to find this acceptable, but when the seven years service was completed, he tricked Jacob into marrying Leah instead.  Jacob was allowed to marry Rachel, but had to work [...]

In Section 4.13 of  Bishop & Zucker on Nevada Corporations and Limited Liability Companies, we discuss who may be liable on pre-incorporation contracts.  In Hotel Last Frontier Corp., v. Universal Match Co., 358 P.2d 896 (Nev. 1961), the Nevada Supreme Court held that a corporation could be held liable to a seller of matchbooks when it signed a purchase agreement [...]

For more than thirty years, I’ve driven by, but never stopped at, the Roy Rogers and Dale Evans Museum in Victorville, California.  The museum eventually relocated to Missouri but reportedly did not survive for long.  Despite this notable defection, Victorville has grown remarkably in the last three decades.  Unfortunately, it now finds itself accused of a variety of securities law [...]

Section 25018 of the California Corporations Code provides a definition of several of the better known federal securities laws: “Securities Act of 1933,” “Securities Exchange Act of 1934,” “Public Utility Holding Company Act of 1935,” “Investment Advisers Act of 1940,” and “Investment Company Act of 1940” mean the federal statutes of those names as amended before or after the effective [...]

Ten years ago, there was concern about so-called “expatriate corporations”.  These were corporations that incorporated in foreign jurisdictions to minimize their tax liability.  In reaction to this phenomenon, the legislature added The California Taxpayer and Shareholder Protection Act of 2003 to the Public Contract Code.  2003 Cal. Stats. ch. 657.  In general, this act prohibits a state agency from contracting with [...]

Lately, I’ve been reading Theodore C. Bestor’s, Tsukiji: The Fish Market at the Center of the World.  Thus, it is no surprise that my thoughts of late have been on piscatorial matters. For example, I’ve always been encouraged by the fact that the California Constitution explicitly guarantees the right to fish.  It’s right there in the Declaration of Rights (Article [...]

If you are in the business of making loans in California, there’s a good chance that you need a license.  Some lenders are licensed under the Real Estate Law while others are licensed under laws governing banks, credit unions or residential mortgage lending.  If a lender doesn’t fall within any of these categories, that lender may be subject to the [...]

Corporations Code Section 25234 generally prohibits an investment adviser registered in California to be compensated on the basis of a share of capital gains.  This prohibition is analogous to the prohibition found in Section 205(a)(1) of the Investment Advisers Act of 1940 (IAA).  Congress included this prohibition because it was believed that performance fees might induce advisers in search or higher [...]

All fees, reimbursements, assessments, and other money or amounts charged and collected by the Department are required to be deposited into the the State Corporations Fund.  Cal. Gov’t Code § 13978.6(b).  The legislature created the fund to “effectively support the Department of Corporations” in its administration of the laws subject to its jurisdiction.  Id. In this recent post, I lamented [...]

Much of the focus of securities litigation is on the liability of sellers, but what about buyers?  Can buyers prevaricate with impunity? Corporations Code Section 25401 prohibits misstatements and omissions of material facts.  Section 25401 explicitly covers persons who “buy” or who “offer to buy” a security.  California’s insider trading statute, Section 25402, also reaches purchases.  Although not California cases, two [...]

The last agenda item for Monday’s meeting of the Investment Committee of the Public Employees’ Retirement System was an ongoing ”Discussion of Investment Beliefs”.   No, this wasn’t a theological discussion.  For the last two years, the CalPERS investment office has been involved in discussions about developing a set of “investment beliefs”.   Last fall, CalPERS even retained a consultant to assist in [...]

Section 15 of the Securities Act of 1933 imposes liability on control persons for violations of Sections 11 and 12 of that act.  Section 25504 of the California Corporations Code imposes liability on persons who control persons liable under either Section 25501 (liability for violation of Section 25401 (false statements or omissions) or Section 25503 (liability for failure to qualify).   Do these [...]

This weekend, I watched the Oregon Shakespeare Festival’s production of  King Lear in beautiful Ashland, Oregon.  Thus, my thoughts are on the Bard today.  It turns out that the play is no stranger to several recent California opinions. For example, Justice William W. Bedsworth of the Fourth District Court of Appeal began Estate of Giraldin, 199 Cal.App.4th 577 (2011) with the following: [...]

In this November of 2010 post, I considered whether venue selection agreements are valid in California.  I noted that the California Supreme Court had held that venue selection provisions are void. General Acceptance Corp. v. Robinson, 207 Cal. 285, 289 (1929).  I also noted two more recent decisions by the Courts of Appeal that appear to follow the holding in General Acceptance:  Alexander v. Superior Court, [...]

Last week, I was in Washington, D.C., where I served as the moderator of a panel discussion on current securities law issues for small business.  As part of my presentation, I discussed the following list of securities transactions that have not been preempted by the National Securities Markets Improvement Act of 1996 (aka the NSMIA): Offers and sales made pursuant to [...]

California’s Statutory Prohibition on Forced Patronage California Labor Code Section 450(a) forbids employers from coercing the patronage of their employees:  It provides: “No employer, or agent or officer thereof, or other person, may compel or coerce any employee, or applicant for employment, to patronize his or her employer, or any other person, in the purchase of any thing of value.” [...]