Amended in Assembly June 30, 2016

Amended in Assembly June 8, 2016

Amended in Assembly March 31, 2016

Amended in Assembly September 3, 2015

Senate Bill No. 726

Introduced by Senator Hueso

(Coauthor: Senator Hall)

(Coauthor: Assembly Member Gipson)

February 27, 2015

An act to add Section begin delete 25401.2 end delete begin insert 25401.1 end insert to the Corporations Code, relating to corporate securities.

LEGISLATIVE COUNSEL’S DIGEST

SB 726, as amended, Hueso. Corporate securities: unlawful begin delete conduct. end delete begin insert conduct: regulations. end insert

begin delete

(1) The

end delete

begin insert The end insert 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 requires the Commissioner of Business Oversight to perform specific oversight duties regarding the offer and sale of securities and provides that any willful violation of that law is a crime.

begin delete

This bill would make it unlawful for any person, directly or indirectly, in this state to knowingly or recklessly make

end delete

begin insert Existing law prohibits any person from selling a security in this state by means of a communication that includes end insert an untrue statement of material fact or begin delete omit to state end delete begin insert that omits end insert a material fact necessary in order to make the statements made, in light of the circumstances under which the statements are made, not begin delete misleading, to any California 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. The bill would prohibit these provisions from being deemed to require the commissioner to affirmatively track or investigate anonymous complaints he or she receives, or to publicly disclose the substance of a confidential investigation, relating to this unlawful practice. end delete begin insert misleading. end insert

begin insert

This bill would require the commissioner to adopt regulations to prohibit fraudulent and manipulative practices by persons undertaking short sales in the securities market.

end insert

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:

begin insert

begin insert SECTION 1. end insert   

Section 25401.1 is added to the Corporations
Code, to read:

begin insert 25401.1. end insert   

The commissioner shall adopt regulations to prohibit
fraudulent and manipulative practices by persons undertaking
short sales in the securities market.

end insert

begin delete

SECTION 1.  

Section 25401.2 is added to the Corporations
Code, to read:

25401.2.  

(a) It is unlawful for any person, directly or indirectly,
in this state to knowingly or recklessly 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 California
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.

(b) This section shall not be deemed to require the commissioner
to affirmatively track or investigate anonymous complaints he or
she receives, or to publicly disclose the substance of a confidential
investigation, relating to a violation of this section.

end delete

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.