Thursday, December 01, 2011

California Release Differentiates Treatment of Issuers' Officers/Directors as BDs Falling Within or Being Excluded from the California BD Definition

A release issued by the California Department of Corporations in 2008 on the treatment of issuers' officers and directors as broker-dealers or agents requiring their registration or as excluded from the California "broker-dealer" definition, was revised to reflect the 2011 adoption of Rule 260.004.1 that excludes an associated person of an issuer from the California "broker-dealer" definition if the associated person is not considered a broker-dealer under Rule 3a4-1 of the Securities Exchange Act of 1934. According to the revised release, an issuer's officers and directors may be: (1) included in the California "broker-dealer" definition if they effect securities transactions; (2) excluded from the "broker-dealer" definition if they do not effect securities transactions; (3) "agents" if they are included in the "broker-dealer" definition and receive a commission for effecting securities transactions; (4) excluded from the "broker-dealer" definition if they effect securities transactions without receiving a commission; or (5) excluded from the "broker-dealer" definition if they meet the conditions of California Rule 260.004.1.

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