Section 25501.5 – “A Riddle, Wrapped In A Mystery, Inside An Enigma”

Last December, I wrote this post about Corporations Code § 25501.5 that asked “What do it mean?”. In general, the statute authorizes an action for rescission (or damages, if the security is no longer owned) by any person “who purchases a security from or sells a security to a broker-dealer that is required to be licensed and has not”. However, the statute makes little sense when the security was acquired in transaction in which the unlicensed broker-dealer acted as agent rather than as principal.

Which Statute of Limitations Governs?

More recently, U.S. District Court Judge Dana Sabraw struggled with another unanswered question involving Section 25501.5 – what is the applicable statute of limitations?

Please see full article below for more information.

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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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