Broker-Dealer Safe Harbor Rule Nears Adoption


In 2007, the California Court of Appeal fired what I called at the time “a shot not heard” when it issued its opinion in People v. Cole, 156 Cal. App. 4th 452 (2007). Seemingly, a key holding of that case was that corporate officers and directors of issuers are required to be licensed as broker-dealers unless they receive a commission for the sale of securities!

Fortunately, the Commissioner of Corporations heard the shot and issued this release “to provide some clarity regarding licensure requirements for directors and officers of issuers who do not receive commissions for effecting securities transactions”. The Commissioner also initiated rulemaking at the request of the Corporations Committee of the Business Law Section of the California State Bar to create a non-exclusive safe harbor for associated persons of issuers. Now, at long last, the rulemaking package has been submitted to the California Office of Administrative Law which will review the package for compliance with the rulemaking provisions of the California Administrative Procedure Act. The OAL’s deadline for completing this review is May 4, 2011.

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