BILL NUMBER: SB 726	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MARCH 31, 2016
	AMENDED IN ASSEMBLY  SEPTEMBER 3, 2015

INTRODUCED BY   Senator Hueso

                        FEBRUARY 27, 2015

   An act to  amend Section 25400 of, and to  add
Section 25401.2  to,   to  the Corporations
Code, relating to corporate securities.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 726, as amended, Hueso. Corporate securities: unlawful conduct.

   (1) The Corporate Securities Law of 1968 generally regulates the
offer and sale of corporate securities within the state, and
specifically makes specified conduct with regard to the offer and
sale of corporate securities unlawful.  That law provides that
any willful violation of that law is a crime. 
   This bill would make it unlawful for any person, directly or
indirectly, in this  state, for a consideration, received
directly or indirectly from a broker-dealer or other person selling
or offering for sale or purchasing or offering to purchase the
security, to employ, hire, or pay any 3rd party to induce action by
any state government official and prohibiting that 3rd party from
disclosing on whose behalf the 3rd party is acting. The bill would
also make it unlawful for any person, in connection with the offer,
sale, or purchase of a security, directly or indirectly, to make a
false or misleading statement to any state government official in
order to cause an investigation of a public company.  
state to knowingly make an untrue statement of material fact or omit
to state a material fact necessary in order to make the statements
made, in light of the circumstances under which the statements are
made, not misleading, to any state government official with the
intention of inducing an investigation of a publicly traded company
for the purpose of manipulating the value of a security of that
publicly traded company for financial gain.  
   By expanding the scope of a crime, this bill would impose a
state-mandated local program. 
   (2) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

   SECTION 1.    Section 25401.2 is added to the 
 Corporations Code  , to read:  
   25401.2.  It is unlawful for any person, directly or indirectly,
in this state to knowingly make an untrue statement of material fact
or omit to state a material fact necessary in order to make the
statements made, in light of the circumstances under which the
statements are made, not misleading, to any state government official
with the intention of inducing an investigation of a publicly traded
company for the purpose of manipulating the value of a security of
that publicly traded company for financial gain.  
  SECTION 1.    Section 25400 of the Corporations
Code is amended to read:
   25400.  It is unlawful for any person, directly or indirectly, in
this state:
   (a) For the purpose of creating a false or misleading appearance
of active trading in any security or a false or misleading appearance
with respect to the market for any security, (1) to effect any
transaction in a security which involves no change in the beneficial
ownership thereof, or (2) to enter an order or orders for the
purchase of any security with the knowledge that an order or orders
of substantially the same size, at substantially the same time and at
substantially the same price, for the sale of any such security, has
been or will be entered by or for the same or different parties, or
(3) to enter an order or orders for the sale of any security with the
knowledge that an order or orders of substantially the same size, at
substantially the same time and at substantially the same price, for
the purchase of any such security, has been or will be entered by or
for the same or different parties.
   (b) To effect, alone or with one or more other persons, a series
of transactions in any security creating actual or apparent active
trading in such security or raising or depressing the price of such
security, for the purpose of inducing the purchase or sale of such
security by others.
   (c) If such person is a broker-dealer or other person selling or
offering for sale or purchasing or offering to purchase the security,
to induce the purchase or sale of any security by the circulation or
dissemination of information to the effect that the price of any
such security will or is likely to rise or fall because of market
operations of any one or more persons conducted for the purpose of
raising or depressing the price of such security.
   (d) If such person is a broker-dealer or other person selling or
offering for sale or purchasing or offering to purchase the security,
to make, for the purpose of inducing the purchase or sale of such
security by others, any statement which was, at the time and in the
light of the circumstances under which it was made, false or
misleading with respect to any material fact, or which omitted to
state any material fact necessary in order to make the statements
made, in the light of the circumstances under which they were made,
not misleading, and which he knew or had reasonable ground to believe
was so false or misleading.
   (e) For a consideration, received directly or indirectly from a
broker-dealer or other person selling or offering for sale or
purchasing or offering to purchase the security, to do either of the
following:
   (1) To induce the purchase or sale of any security by the
circulation or dissemination of information to the effect that the
price of such security will or is likely to rise or fall because of
the market operations of any one or more persons conducted for the
purpose of raising or depressing the price of such security.
   (2) To employ, hire, or pay any third party to induce action by
any state government official and prohibiting that third party from
disclosing on whose behalf the third party is acting. 

  SEC. 2.    Section 25401.2 is added to the
Corporations Code, to read:
   25401.2.  It is unlawful for any person, in connection with the
offer, sale, or purchase of a security, directly or indirectly, to
make a false or misleading statement to any state government official
in order to cause an investigation of a public company. 
   SEC. 3.   SEC. 2.    No reimbursement is
required by this act pursuant to Section 6 of Article XIII B of the
California Constitution because the only costs that may be incurred
by a local agency or school district will be incurred because this
act creates a new crime or infraction, eliminates a crime or
infraction, or changes the penalty for a crime or infraction, within
the meaning of Section 17556 of the Government Code, or changes the
definition of a crime within the meaning of Section 6 of Article XIII
B of the California Constitution.