Thursday, October 07, 2010

California Proposed Rule Excluding Associated Persons from BD Definition Further Revised

A proposed rule to exclude associated persons of issuers from the “broker-dealer” definition would be further revised as proposed by the California Department of Corporations. An associated person of an issuer would be excluded from the definition of broker-dealer in Section 25004 of the California Securities Law of 1968 if the associated person is not considered a broker-dealer under Rule 3a4-1 of the Securities Exchange Act of 1934. The California definition would model the Exchange Act definition except that in California an associated person could not rely on the California rule if subject to an order involving the person’s having engaged in certain statutory prescribed “bad boy” disqualification provisions. NOTE: An associated person of an issuer would not be presumed to be a broker-dealer just by participating in the offer and sale of the issuer’s securities if he or she does not meet the conditions of Rule 3a4-1.

15-Day Written Comment Period. Interested persons may submit written comments about the proposed rule to Karen Fong, Staff Securities Analyst, Office of Legislation and Policy at the Department of Corporations, 1515 K Street, Suite 200, Sacramento, CA 95814. Comments may also be sent to Karen Fong’s attention by fax to (916) 322-5875 or by email to Comments must be received by 5 p.m. on October 21, 2010.

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