California Adopts Rule to Exclude Associated Persons of Issuers From Broker-Dealer Definition

An associated person of an issuer is 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, effective June 3, 2011. The California definition models the Exchange Act definition except that in California an associated person may 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 is not 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.