Fraudulent Securities Practices

California Corporations Code Title 4, Division 1, Part 5 deals with fraudulent and prohibited practices under the Corporate Securities Law of 1968.

Section 25400 provides that it is unlawful for any person, directly or indirectly, in this state to engage five specified, prohibited activities.

Section 25401 makes it unlawful for any person to offer or sell a security in this state, or to buy or offer to buy a security in this state, by means of any written or oral communication that includes an untrue statement of a material fact or omits to state a material fact necessary to make the statements made, in the light of the circumstances under which the statements were made, not misleading.

Section 25402 makes it unlawful for an issuer or any person who is an officer, director or controlling person of an issuer or any other person whose relationship to the issuer gives him access, directly or indirectly, to material information about the issuer not generally available to the public, to purchase or sell any security of the issuer in this state at a time when he knows material information about the issuer gained from the relationship which would significantly affect the market price of that security and which is not generally available to the public.

Section 25403 specifies that every person who with knowledge directly or indirectly controls and induces any person to violate any provision of this division or any rule or order thereunder is to be deemed to be in violation of that provision, rule, or order to the same extent as the controlled and induced person.

Section 25404 makes it unlawful for any person to knowingly alter, destroy, mutilate, conceal, cover up, falsify, or make a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence the administration or enforcement of this division.