The CSL And Implied Rights Of Action

The California Corporate Securities Law of 1968 includes numerous “thou shall nots”.  One might assume that a violation of any of these statutory prohibitions lead ineluctably leads to civil liability.  However, the drafters of the CSL explicitly eschewed this result by forbidding the creation of implied causes of action under the CSL. Section 25510 provides “Except as explicitly provided in this chapter, no civil liability in favor of any private party shall arise against any person by implication from or as a result of the violation of any provision of this law or any rule or order hereunder.”

While implied causes of action under the CSL are verboten, the drafter made it clear that the CSL does not eliminate liabilities that may exist under other statutes or even the common law.  Thus, Section 25510 also provides “Nothing in this chapter shall limit any liability which may exist by virture of any other statute or under common law if this law were not in effect.”

Some readers may recall that California, though never an colony of England, has adopted the common law of England.  See Ahistorical Bedfellows: The California Corporations Code And The Common Law.