News & Publications


Blogs 1 - 25 of 611
californiacorporate&securities 4/18/2014
Is This Proposed Amendment To Delaware’s Stockholder Consent Statute Really Needed?

Recently, I wrote about a proposal to amend Section 141(f) of the Delaware General Corporation Law to permit inchoate directors to take action by written consent.  The Corporation Law Section of the Delaware State Bar is proposing a parallel amendment to Section 228(c) of the DGCL to allow for springing stockholder consents.  The proposed amendment would add the following: Any [...]

California Wireless Law Blog 4/10/2014
Will Google’s presence trigger a market shift?

Wireless data traffic continues to grow at a rapid pace and there is no end in sight.  Indeed, the current numbers indicate that the number of mobile Internet users has surpassed desktop users as tablets erode the PC markets.  Currently, macro cell towers serve as the primary source to implement a wireless network, which broadcast network coverage within the line […]

californiacorporate&securities 4/3/2014
Just How Binding Are SEC Statements In An Adopting Release?

Two years ago, I coined the term ““ARR Ratio”.  The ARR Ratio (Adopting Release to Rule Ratio) is calculated by dividing the total number of words in the Adopting Release by the total number of words in the actual text of the rule being adopted.  For example, I calculated the ARR Ratio of the SEC’s Compensation Committee Rule to be 14.44.  [...]

californiacorporate&securities 3/31/2014
Why A Form LLC-1 May Be Only Half Right

Under California’s new Revised Uniform Limited Liability Act, an LLC is formed when the California Secretary of State’s Office files the articles of organization.  Cal. Corp. Code § 17702.01(d).  Only five items of information are required to be disclosed in the articles.  Cal. Corp. Code § 17702.01(b)  These five items are included on the Secretary of State’s form of articles of [...]

californiacorporate&securities 3/28/2014
How Will The Courts Interpret This?

I recently commented on the awkwardness of Subdivisions (a) and (b) Corporations Code Section 17703.04 that seemingly are intended to establish that the members of an LLC aren’t liable qua members for the obligations of the LLC.  The statute also includes the following provision: Nothing in this section [17703.04]  shall be construed to affect the liability of a member of [...]

californiacorporate&securities 3/26/2014
Court Declines To Apply Rule 9(b) To Section 25401 Claim

A complaint alleging securities fraud under Rule 10b-5 must meet the stringent pleading requirements of Rule 9(b) of the Federal Rules of Civil Procedure as well as the requirements of the Private Securities Litigation Reform Act.  In re Verifone Holdings Securities Litig., 704 F. 3d 694, 701 (9th Cir. 2012).  These are the twin rocks on which many a poorly drafted [...]

californiacorporate&securities 3/21/2014
Some Corporations Code Mysteries

While many disagree with the policy choices made by the drafters of the California General Corporation Law, I think many would agree that the GCL is well drafted from a technical perspective.  I find it far better organized and accessible than Delaware’s code.  Nonetheless, there are a few mysteries that I find intriguing and at times frustrating.  These include: Section [...]

californiacorporate&securities 3/20/2014
Just What Does “Deem” Mean?

The Legislature likes to deem things, but what does it really intend when it does so?  Consider the following examples: “When an involuntary proceeding for winding up has been commenced, the jurisdiction of the court includes: . . . The making of orders for the bringing in of new parties as the court deems proper for the determination of all questions [...]

californiacorporate&securities 3/19/2014
Before This LLC Was Formed, These Members Knew It

The new California Revised Uniform Limited Liability Company Act contains some weird inversions of time and logical order.  For example, it allows for the formation of an operating agreement even before an LLC is formed.  In defining “operating agreement”, the CRULLCA provides that the term “may include, without more, an agreement of all members to organize a limited liability company [...]

californiacorporate&securities 3/14/2014
Another Modest Proposal – Risk Factors

This week, Broc Romanek launched  No, it’s not a live video feed of boardroom dalliances.  One of Broc’s first videos, Dramatic Risk Factors: We Face Competition (Vol. 1), inspired me to write about an idea that has been percolating in my cranium for some time. As Broc so entertainingly points out, many risk factors, such as “we face competition”, can [...]

californiacorporate&securities 3/13/2014
This Interest May Be Common, But It’s Still Privileged

Section 954 of the California Evidence Code establishes a privilege “to refuse to disclose, and to prevent another from disclosing, a confidential communication between client and lawyer”.  A “confidential communication between client and lawyer” is defined in Section 952 of the Evidence Code.  Under that statute, the presence of third persons does not result always in the loss of the [...]

californiacorporate&securities 3/10/2014
“Don’t tell me not to worry, and please don’t call me partner.”
How many websites and marketing materials have you seen that identify a company’s suppliers and other vendors as “partners”?  Does this mean that the company actually intends to communicate that it has formed a legal partnership with the named suppliers and vendors?  In most cases, probably not.  So, why would a company describe its vendors as its “partners”? In some [...]
californiacorporate&securities 3/7/2014
Joint Venturer May Be Partner By Estoppel

Benjamin Disraeli is often credited with saying “With words we rule men”.  I haven’t found a source for that particular quotation.  Even if he never uttered or wrote those words, I like the quote and the idea that the former prime minister may have said them. A case handed down this week by the Nevada Supreme Court demonstrates the importance [...]

californiacorporate&securities 3/6/2014
Should Corporations Conserve Water Because A Shareholder Believes It’s The Right Thing To Do?

Last month, the California Public Employees Retirement System (CalPERS) sent a letter to its California real estate and private equity managers asking that they take a number of steps to conserve water.  I found CalPERS’ justification provocative in light of the current hue and cry about whether corporations may reflect the beliefs of their owners: We are seeking conservation measures because [...]

californiacorporate&securities 3/5/2014
In The Year 2525, If Man Is Still Alive, If Woman Can Survive, They May Find Limited Liability Worker Cooperatives

In 1886, then Senator Leland Stanford introduced a bill in the U.S. Senate to authorize the formation of cooperative worker associations in the District of Columbia.  In an interview with the New York Tribune shortly thereafter, he asserted “I have always been fully persuaded that, through co-operation, labor could become its own employer.”  Co-operation of Labor, Leland Stanford (May 4, [...]

californiacorporate&securities 3/4/2014
Legislator Proposes To Eliminate Flexibility In Name And Purpose
In 2011, the California legislature enacted not one, but two, laws allowing for the incorporation of for-profit businesses with broader purposes.   The Corporate Flexibility Act of 2011, SB 201 (DeSaulnier), 2011 Stats. ch. 740, was the product of a diverse collection of lawyers in California (including to a very small extent this post’s author).   Corporations formed under this act are defined as “flexible purpose [...]
californiacorporate&securities 2/28/2014
How Chadbourne & Parke, LLC v. Troice Threatens The Defense Of The Guilty And The Innocent

The U.S. Supreme Court’s recent decision in Chadbourne & Parke, LLC v. Troice, 571 U.S. ___ (2014) arose out of the a multibillion dollar Ponzi scheme perpetrated by Allen Stanford.  The scheme involved the sale to investors of certificates of deposit in Stanford International Bank.  Mr. Stanford was convicted of mail fraud, wire fraud, conspiracy to commit money laundering, and obstruction of a Securities and [...]

californiacorporate&securities 2/27/2014
Oops! CalPERS Reportedly Violates Insider Trading Policy Again

Jon Ortiz, who writes The State Worker blog for The Sacramento Bee, recently reported that the California Public Employees Retirement System has again violated its insider trading policy by purchasing shares in an initial public offering that were on its “restricted securities” list.  Reportedly, the Securities and Exchange Commission was already looking at possible violations that occurred last spring.  See SEC Reportedly Investigating CalPERS’ [...]

californiacorporate&securities 2/26/2014
Courts Tackle Meaning of “May” Under the Finance Lenders Law

Section 22340(a) of the California Financial Code provides that a licensee “may sell promissory notes . . . to institutional investors.”  Does this mean that a licensee may only sell promissory notes to institutional investors or that selling promissory notes to institutional investors is something that licensees are permitted to do?  U.S. Magistrate Judge Nathanael M. Cousins answered that question a few [...]

californiacorporate&securities 2/25/2014
Securities Regulator “Surprised and Offended” By SEC’s Regulation A+ Proposal

Section 401 of the JOBS Act directs the Securities and Exchange Commission to adopt rules exempting offerings of up to $50 million of securities annually from the registration requirements of the Securities Act of 1933, as amended.  Last December the SEC proposed rule amendments to Regulation A to implement this mandate.  This is sometimes referred to as the “Regulation A+” [...]

californiacorporate&securities 2/24/2014
The Legality Of Corporate Giving

According to the Chronicle of Philanthropy, the top three corporate philanthropists (Wells Fargo, Walmart and Chevron) in 2012 gave nearly $900 million in cash in 2012.  At the most fundamental level, do corporations have the power to make donations? For corporations governed by the California General Corporation Law, the answer is generally yes.  Section 207(e) of the California Corporations Code provides that a corporation [...]

californiacorporate&securities 2/21/2014
SEC Acknowledges Ethical Obligations May Preclude Voluntary Reporting Out By Attorneys

In 2003, the Securities and Exchange Commission adopted rules that purportedly immunized attorneys who, subject to specific conditions, reveal confidential information to the SEC.  17 C.F.R. § 205.3(d)(2).  Technically, the rule permits, but does not require such disclosure without the consent of the “issuer” (who may or may not be the attorney’s client). The SEC’s adoption of this rule caused widespread [...]

californiacorporate&securities 2/20/2014
What’s The Matter With The SEC’s Unbundling Interpretation?

Rule 14a-4 requires, among other things, that a form of proxy “identify clearly and impartially each separate matter intended to be acted upon, whether or not related to or conditioned on the approval of other matters, and whether proposed by the registrant or by security holders.”  This language was part of the SEC’s 1992 proxy rule amendments. SEC Release No. 34-31326 [...]

California Wireless Law Blog 2/19/2014
Lights, Ballasts … Interference???

On February 7, the FCC cited a Los Angeles landlord for operating industrial, scientific and medical (ISM) equipment that is causing harmful interference at a downtown Los Angeles high rise.  The offending ISM equipment  involves two-lamp fluorescent ballasts installed at the building which are the same ballasts responsible for interfering with an AT&T site in San Antonio last year.  The […]

californiacorporate&securities 2/19/2014
California Court Issues Non-Competition Order

Covenants not to compete have been in legislative disfavor in California since 1872.  This animus is currently codified at Section 16600 of the Business and Professions Code which provides that with certain statutory exceptions ”every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void”.  Thus, I was [...]

Blogs 1 - 25 of 611