Corporations Code Section 25501.5 generally authorizes an action for rescission (or damages, if the security is no longer owned) by any person “who purchases a security from or sells a security to a broker-dealer that is required to be licensed and has not”. A right of rescission makes sense when the unlicensed broker-dealer is acting as a principal (i.e., as a dealer). The statute makes less sense when the broker-dealer is acting as an agent (i.e., as a broker). When a broker-dealer is acting as an agent, the purchaser acquires the security from the security’s owner - not from the broker. It is certainly debatable whether a security owner should face a claim for rescission or damages when it is the broker-dealer that is violating the licensing requirement.
In Jackson v. Fischer, 2015 U.S. Dist. LEXIS 32128 (March 13, 2015), Judge Phyllis J. Hamilton considered whether Section 25501.5 could be invoked against a broker-dealer who acted as placement agent for the "actual seller". She ruled that Section 25501.5 "expressly requires privity of contract as a condition to liability". Because the plaintiff alleged that she had purchased the securities from the issuers, not the allegedly unlicensed broker-dealer, she failed to establish a primary violation. As a result, Judge Hamilton did not consider whether Section 25501.5 authorizes a private right of action against secondary actors who participate in a primary violation of Section 25501.5.
The question "What do it mean?" comes from this song by a High School classmate.