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In The DBO’s World, Money, Money, Money Transmitters

Many may not realize that the Money Transmitter Division of the California Department of Business Oversight licenses and regulates money transmitters. Money transmitters include issuers of payment instruments (money orders),...more

Corporation Owes No Duty To Warn Former Director Of Impending Option Expiration

Does a corporation commit constructive fraud if it fails to warn a former director of the impending expiration of a stock option? That was one question decided earlier this month by Judge Jennifer A. Dorsey in Nelson v....more

Will You Be Gulled By This Notice?

Some Nevada corporations have been receiving the above notice and paying a $150 fee to the Division of Corporate Services. According to the Nevada Secretary of State...more

Victims Of Corporate Fraud Compensation Fund

In the waning days of the 2001-2002 legislative session, then Assemblymember Kevin Shelley gutted and amended AB 55. As introduced, AB 55 would have amended the Elections Code. Instead, AB 55 became the vehicle for the...more

This Is One Form 8-K, You’ll Never Want To File

In a recently filed Form 8-K, an international money transmitter, Xoom Corporation, reported that been the victim of a criminal fraud. This was no small heist. According to company, over $30 million had been transferred to...more

Nevada’s Business Judgment Rule: FDIC – 4; Management – 0

In recent weeks, the U.S. District Court has issued four separate rulings in cases brought by the Federal Deposit Insurance Corporation (FDIC) against former bank managers for breach of fiduciary duty. Here is a brief recap...more

Nevada Supreme Court Upholds Fraud Verdict Against The California Franchise Tax Board

The Franchise Tax Board’s Shande - This is case that has been more than two decades in the making. It began in the 1990s when inventor Gilbert Hyatt filed a California tax return showing that he relocated from...more

Has California Lost Its Jurisdictional Anchor For Securities Fraud Actions?

Does California’s securities fraud statute apply to offers and sales of securities that are made in other states, in Europe, or on the moon? Actually, there is no way to know. Formerly, California Corporations Code Section...more

This Court’s Ruling Puts The Opinion In Auditor’s Internal Control Opinion

A brief ruling issued this week by U.S. District Court Judge James C. Mahan makes it clear that an auditor isn’t always liable even when a subsequent auditor uncovers fraud. In Oaktree Capital Mgmt., L.P. v. KPMG, 2014 U.S....more

The Securities Fraud Device That The Legislature Devised To Omit

Last year, Senator Jerry Hill authored a bill, SB 538, which rewrote Corporations Code Section 25401. As I posted, the underlying premise was fanciful at best – that California’s statute “has failed to keep up with similar...more

3/25/2014  /  Fraud , Securities Fraud

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...more

Do Misstated Financial Statements Cause CEOs To Speed?

Should companies look into the driving records of the CEOs that they hire? Robert H. Davidson, Aiyesha Dey, and Abbie Smith answer that question in a forthcoming Journal of Economics paper. These authors examined a sample...more

Just Who Is A Promoter And Why You May Want To Know

The California General Corporation Law uses, but does not define, the term “promoter”. For example, a promoter can be criminally prosecuted. Corporations Code Section 2251 provides that any promoter “who knowingly and...more

Tender Of Inflated Price Under Right Of First Refusal Does, And Doesn’t, Confer Standing

In a short ruling, U.S. District Court Judge Jeffrey S. White recently tackled a claim by a former employer that its departed employee had committed securities fraud when he allegedly failed to disclose that the price offered...more

California Creates Complete Chaos By Rewriting Anti-Fraud Statute, But “We Are Against Fraud Aren’t We?”

In my very limited encounters with the late Harold Marsh Jr., I recall that he didn’t readily embrace proposed “fixes” to the Corporations Code. As I too get older, I’ve come to appreciate his perspective. For example,...more

Beware Of Fraudulent On-Line Escrows

From time to time, the Department of Business Oversight posts warnings about fraudulent on-line escrow companies. According to the Department, these fraudsters use stolen identities and credit card numbers to open a Web...more

8/1/2013  /  Escrow Accounts , Fraud , Internet , Licenses

Advertising Securities As Safe – A “No, No” In California

As discussed in yesterday’s post, Section 25302 of the California Corporations Code prohibits any person from publishing an advertisement after the Commissioner of the Department of Business Oversight has given notice to that...more

California Bill Aims To Promote Green Energy Investment Scams

“Today I’d like to tell you a little bit about the color green . . .” Green energy is popular. That popularity makes not just likely, but inevitable that promoters will use the cachet of green energy to attract and...more

6/25/2013  /  Energy Projects , Fraud , Green Energy , NASAA , Scams

Did The FBI Violate The CSL?

Earlier this week, the Securities and Exchange Commission announced that it had charged a penny stock promoter in the San Diego area with fraudulently arranging the purchase of $2.5 million worth of shares in a penny stock...more

6/21/2013  /  FBI , Fraud , Investors , SEC , Stock Promoters

If You Did This, It Would Be Fraud!

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...more

Court Clears Way For Case Against CalPERS, Judicial Council & Prison Healthcare Receiver

Nearly two years ago, Mr. Daniel E. Francis filed a petition for writ of mandamus against CalPERS and other based on allegations that the penstion fund had laundered the salary of the receiver appointed by the U.S. District...more

3/27/2013  /  CalPERS , Fraud , Pensions
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