On July 16, 2012, the Commissioner of Corporations filed with the Office of Administrative Law proposed amendments to Rule 260.204.9. These amendments will create a new framework for exempting advisers to private pooled investment vehicles from the investment adviser registration requirement under the Corporate Securities Law of 1968.
OAL review is the prepenultimate step towards the effectiveness of permanent amendments to Rule 260.204.9. Under California’s Administrative Procedure Act, the OAL has 30 working days in which to review the rulemaking record to determine whether it demonstrates that the rulemaking agency satisfied the procedural requirements of the APA, and to review regulations for compliance with the six standards: Authority, Reference, Consistency, Clarity, Nonduplication, and Necessity. Cal. Govt. Code §§ 11349.1 & 11349.3. If the OAL approves the amendments, then the penultimate step is for the OAL to send the regulation to the Secretary of State. The last step is for the regulation to become effective. This will occur 30 days after filing with the Secretary of State unless the Commissioner requests an earlier or later effective date. Cal. Govt. Code § 11343.4. The final rule will be published in Title 10 of the California Code of Regulations.
On July 21, 2011, the Commissioner promulgated emergency regulations to preserve a state exemption from state registration for investment advisers. (Cal. Code Regs. tit. 10, § 260.204.9). The emergency regulations were re-adopted on January 18, 2012 and April 17, 2012. The emergency regulation remains in effect during OAL’s review (Gov. Code § 11346.1(e)).
Almost An Island And Almost The End
The word “penultimate” is derived from the Latin words paene meaning almost and ultimus meaning farthest or last. The word paene can also be found in the English word “peninsula” which combines paene with the Latin word for island – insula. A peninusula is almost an island. The first century B.C.E. Roman poet Caius Valerius Catullus used the phrase paene insula in writing about his joy in seeing the family villa at Sirmio on lake Garda near Verona. Poem XXXI begins with this memorable line: “Paene insularum, Sirmio, insularumque ocelle . . . (Sirmio! almost of islands and eyelet of islands . . .)”.
I very much doubt that California Attorney General Kamala D. Harris had Sirmio or Catullus in mind when she issued this opinion last month addressing the question of what constitutes an “island” within the meaning of Government Code Section 56375.3. Nonetheless, we can hear an echo of paene insula (almost an island) in her definition of an “island” as territory that is “completely surrounded, or substantially surrounded—that is, surrounded to a large degree, or in the main . . .”.