“Time Cools, Time Clarifies” – The CSL’s Cooling Off Statute

The Corporate Securities Law of 1968 does not provide for a general “cooling off” period in which a purchaser of securities may cancel the transaction for any reason. However, the Department of Corporations in 2000 sponsored legislation, SB 1837 (Figueroa), that added Corporations Code Section 25508.5 establishing a seven calendar day cooling off period with respect to a viatical or life settlement contract (See Corp. Code § 25023).

Under Section 25508.5, a person who purchases a viatical or life settlement contract or a fractionalized or pooled interest therein may “rescind or cancel” the purchase for “any reason”. No specific form is required for the rescission or cancellation. In these details, the statute is relatively clear.

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