The Department of Corporations has completed its rulemaking package for a proposed rule that would establish a non-exclusive safe harbor from California's broker-dealer registration requirement for associated persons of an issuer.  The new rule would be designated 10 CCR § 260.004.1.  The Commissioner undertook this rulemaking project following the Court of Appeal's decision in People v. Cole, 156 Cal. App. 4th 452 (2007). 

The DOC recently sent the rulemaking package to the Office of Administrative Law (the OAL) for review.  The OAL does not review the wisdom of the policy decisions of the Department but does review the rulemaking package for compliance with the APA.  Assuming the OAL approves the rulemaking package, it sends the rule to the Secretary of State for filing.  Usually regulations take effect in 30 days after filing with the Secretary of State.  See Government Code Section 11343.4.

For more background on the Cole decision, see my article, A Shot Not Heard—The Court of Appeal Holds that an Issuer’s Directors and Officers Must Be Licensed as Securities Broker-Dealers, Business Law News (Issue No. 3, 2008).  Members of the Business Law Section of the California State Bar can read this article online.