Today's Law As Amended


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SB-766 Securities violations: remedies.(2003-2004)



As Amends the Law Today


SECTION 1.
 (a) The Legislature finds and declares the following:
(1) Sections 25400 and 25500 of the Corporations Code are intended to protect California residents and investors from fraudulent manipulation of the financial markets, and California pension funds are the primary beneficiaries of the protections provided by these statutes.
(2) Section 25400 of the Corporations Code makes various acts unlawful that create a false or misleading impression concerning securities transactions, and Section 25500 of the Corporations Code provides a civil remedy for the willful participation in an act or transaction in violation of Section 25400 of the Corporations Code.
(3) The Court of Appeals for the Sixth Appellate District of California, in Kamen v. Lindly (2001) 94 Cal.App.4th 197, recently held that the phrase “willfully participates” in Section 25500 of the Corporations Code does not apply to participants who are not engaged in “market activity.” This holding incorrectly and unfairly prevents California investors from seeking redress from perpetrators of corporate and securities fraud.
(b) It is the intent of the Legislature to abrogate the holding in Kamen v. Lindly (2001) 94 Cal.App.4th 197, as indicated in Section 2 of this act.

SEC. 2.

 Section 25500 of the Corporations Code is amended to read:

25500.
 (a)  Any person who willfully participates in any act or transaction in violation of Section 25400 shall be liable to any other person who purchases or sells any security at a price which that  was affected by such that  act or transaction for the damages sustained by the latter as a result of such that  act or transaction. Such The  damages shall be the difference between the price at which such the  other person purchased or sold securities and the market value which such that the  securities would have had at the time of his or her  purchase or sale in the absence of such the  act or transaction, plus interest at the legal rate.
(b) For the purpose of this section, the term “participates” does not require that the person be a market participant to be found liable under this section.
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