Protecting the Owners of Securities

Title 4, Division 2 of the California Corporations Code deals with securities and security owners protection.

Chapter 1 deals with definitions and general provisions.

Section 27000 provides that words used in this division have the meanings prescribed in the Corporate Securities Law.

Section 27001 defines the term “security.”

Section 27002 defines the term “individual.”

Section 27003 contains a severability clause.

Chapter 2 deals with unlawful and fraudulent conduct.

Section 27100 provides that any individual who, within this state, solicits, receives, collects, or solicits any subscription or contract to pay, any contributions, fees, funds, or compensation of any kind, from any owner or holder of any security, for the purpose of protecting, enforcing, or representing the rights of the security owners or holders evidenced by the security, is subject to this division.

Section 27101 states that it is unlawful for any individual, directly or indirectly, in connection with the solicitation, receipt, or collection of, or solicitation of any subscription or contract to pay any contributions, fees, funds, or compensation of any kind, from any owner or holder of any security, for the purpose of protecting, enforcing, or representing the rights of the security owners or holders evidenced by the security, to do any of four specified actions.

Chapter 3 deals with civil liability and crimes.

Section 27200 provides that every individual who solicits, receives, collects, or contracts for the payment of, any contributions, fees, funds, or compensation of any kind, in violation of this division, is civilly liable for the return of the full amount of that contribution, fee, or fund, together with reasonable attorney’s fees. This liability is both joint and several.

Section 27201 prohibits any action from being maintained to enforce any liability created under this chapter unless it is brought before the expiration of two years after the violation upon which it is based or the expiration of one year after the discovery by the plaintiff of the facts constituting the violation, whichever first expires.

Section 27202 states that every individual who willfully violates this chapter is guilty of a public offense punishable by a fine not exceeding $250,000, or by imprisonment for two, three, or four years, or by both fine and imprisonment.