Yesterday, the California Department of Business Oversight announced that it had "issued an investor advisory on exempt securities offerings, also known as 'private placements,' in light of the coronavirus pandemic." Actually, the release is an update of an advisory issued seven years ago by the North American Securities Administrators Association (NASAA). The DBO's release consists of a general description of private placements, emphasizing their riskiness. The only references to Covid-19 appear in the first paragraph.
Oddly, the release focuses almost exclusively on Rule 506, which is an exemption from the registration requirement of the federal Securities Act of 1933. Technically, Rule 506 is not an exemption from the qualification requirements of the California Corporate Securities Law of 1968. Rather, the CSL's qualification requirements are inapplicable due to federal preemption pursuant to Section 18 of the Securities Act of 1933.
