Does California’s Anti-Waiver Statute Void Choice Of Forum Agreements?

California Corporations Code Section 25701 is derived from Section 410(g) of the Uniform Securities Act (1956). Section 25701 voids any condition, stipulation or provision purporting to bind any person acquiring any security to waive compliance with any provision of the Corporate Securities Law or any rule thereunder.

Does this statute prevent investors from agreeing that disputes will be decided by courts in other states?

Earlier this year, investors in a Colorado company persuaded the Colorado Court of Appeals that Colorado’s anti-waiver statute voided application of the choice-of-law and choice of forum provisions in their investment applications. Mathers Family Trust v. Cagle, Colo. Court of Appeals Case No. 10CA0093 (May 12, 2011). Colorado’s statute is also based on the USA but includes the words “or disposing”. The Colorado appellate court cited the California decision in Hall v. Superior Court, 150 Cal. App. 3d 411 (1983), a case that I discuss in my article, California Blue Sky Law Problems for Foreign Issues and Foreign Issuers.

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