Court Rules No Scienter Required

Both Corporations Code Section 25401 and Rule 10b-5 concern securities fraud.  Section 25401, however, was modeled on Section 12(2) (now 12(a)(2)) of the Securities Act of 1933 while Section 10b-5 was adopted under Section 10(b) of the Securities...

Is An Annuity Contract A Security?

In general terms, an annuity contract involves the payment of money in return for a promise to receive payments on some periodic basis in the future.  An obvious question therefore might be whether an annuity contract is a security.  The answer...

Court Rules Lot Sales Were Sales Of Securities

After a five week trial, a San Diego jury convicted Ronald Duane Dunham of multiple crimes, including seven counts of securities fraud.  He was sentenced to 12 years in prison.  After unsuccessfully appealing his conviction to the California Court...

National Class Action Settlements Exceed DBO CAFA Notices

Fourteen years ago, Congress enacted legislation intended to protect consumers and investors from settlements in which plaintiffs' attorneys pulled in large fees while their clients (the class members) received little. In one (in)famous case, for...

How Close A Relation Is Section 25110  To Section 12(a)?

Section 12(a) of the Securities Act of 1933 covers two types of civil liability.  Section 12(a)(1) concerns violations of Section 5 which imposes registration and prospectus delivery requirements on the offer and sale of securities.  Section...

In California Not Every Beneficial Interest In A Trust Is A Security

California's statutory definition of "security" lists by name two types of trust certificates - collateral trust certificates and voting trust certificates.  Cal. Corp. Code § 25109.  Both of these certificates are also found in the definition of...

Implied Causes Of Action Under The California Corporate Securities Law

As has been widely reported, the United States Supreme Court has dismissed as improvidently granted the writ of certiorari in Emulex Corporation v. Varjabedian.  This action leaves standing, at least for the time being, the Ninth Circuit Court of...

Court Rules Internal Affairs Doctrine Bars California Insider Trading Claim

California, unlike the federal government, has codified its prohibition on insider trading.  Corporations Code Section 25402 provides:

Will The SEC's Framework Beget Blue Sky Blues For Digital Assets?

Earlier this week, two senior officials at the Securities and Exchange Commission issued this statement elucidating a "framework for 'investment contract' analysis of digital assets".  The Framework applies the tripartite test fashioned by the...

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