Bill Aims To Free Subversive Organizations From Registration Law And NASAA Shoots For Mandatory Form D Filings


Is It Subversive To Borrow Money From A Foreign Government?

The California Subversive Organization Registration Law, Corporations Code Section 35000 et seq., has been on the books for decades. The law purports to require registration any organization that borrows from a foreign government or agency as well as actual revolutionaries. However, the last time I checked, no organization had registered with the California Secretary of State. See Borrowing Money From A Foreign Government May Make You A Subversive Organization In California. Now, the Assembly Committee on Judiciary has introduced legislation, AB 1405, that would repeal the Subversive Organization Registration Law.

NASAA Urges Mandatory Form D Filings

Early last month, the North American Securities Administrators Association released its legislative agenda for the 113th Congress. NASAA is clearly looking for more teeth in the securities laws. For example, it urges stronger penalties in administrative and civil actions by the Securities and Exchange Commission. NASAA also wants to mandate the filing of Form Ds:

In fact, because filing a Form D currently is not a condition of any Regulation D exemptions, it is hard for regulators and the public to use the filing or non‐filing of a Form D as an indicator of securities law compliance. The fact that filing is not currently a condition of the exemptions at the federal level also creates confusion as to the necessity of filing with the SEC as well as the states and serves as a roadblock to enforcement efforts.

Already, I’ve heard that the states have established a working group to identify Form D “red flags” from desk reviews. This is yet another example of the “mission creep” that has afflicted Form D more than three decades ago. See Is Form D Afflicted With Mission Creep?


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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