BILL NUMBER: AB 667	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JULY 8, 2015
	AMENDED IN ASSEMBLY  APRIL 6, 2015

INTRODUCED BY   Assembly Member Wagner

                        FEBRUARY 24, 2015

   An act to add Section 25206.1 to the Corporations Code, relating
to securities.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 667, as amended, Wagner. Broker-dealers: exemptions: finders.
   Under existing law, the Corporate Securities Law of 1968, the
Commissioner of Business Oversight regulates the activities of a
broker-dealer which is defined as, among other things, any person
engaged in the business of effecting securities transactions in
California for the account of others or his or her own account, and
it specifies those persons or entities excluded from the definition.
Existing law requires, among other things, that a broker-dealer apply
for and secure a certificate authorizing that person to act in that
capacity, unless the person is exempted from this requirement, as
prescribed. Existing law prohibits a person acting on behalf of a
licensed broker-dealer or an issuer, from effecting any transaction
in, or inducing or attempting to induce the purchase or sale of, any
security in this state unless the broker-dealer and agent have
complied with certain rules.
   This bill would exempt from those provisions an individual who is
a finder, as defined, who satisfies specified requirements,
including, among other things, filing an initial statement of
information with the Commissioner of Business Oversight and paying a
filing fee.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


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

  SECTION 1.  Section 25206.1 is added to the Corporations Code, to
read:
   25206.1.  (a) For purposes of this section, a "finder" is a
natural person who, for direct or indirect compensation, introduces
or refers one or more accredited investors, as that term is defined
in Rule 501(a) of Regulation D under the Securities Act of 1933 (17
C.F.R. 230.501(a)), to an issuer or an issuer to one or more
accredited investors, solely for the purpose of a potential offer or
sale of securities of the issuer in an issuer transaction in this
state, and who does not do any of the following:
   (1) Provide services to an issuer for a transaction or a series of
related transactions for the offer or sale of securities of the
issuer that exceeds a securities purchase price of fifteen million
dollars ($15,000,000) in the aggregate.
   (2) Participate in negotiating any of the terms of the offer or
sale of the securities.
   (3) Advise any party to the transaction regarding the value of the
securities or the advisability of investing in, purchasing, or
selling the securities.
   (4) Conduct any due diligence on the part of any party to the
transaction.
   (5) Sell or offer for sale in connection with the issuer
transaction any securities of the issuer that are owned, directly or
indirectly, by the finder.
   (6) Receive, directly or indirectly, possession or custody of any
funds in connection with the issuer transaction.
   (7) Knowingly receive compensation in connection with any offer or
sale of securities unless the sale is qualified under this division
or unless the security or the transaction is exempt or not otherwise
subject to qualification.
   (8) Make any disclosure to a potential purchaser other than the
following:
   (A) The name, address, and contact information of the issuer.
   (B) The name, type, price, and aggregate amount of any securities
being offered in the issuer transaction.
   (C) The issuer's industry, location, and years in business.
   (b) A finder who satisfies all of the conditions set forth in
subdivisions (c) to (f), inclusive, shall be exempt from the
provisions of Section 25210.
   (c) (1) The finder shall file with the commissioner before
engaging in any activities described in subdivision (a), on a form
prescribed by the commissioner, an initial statement of information
that shall include both of the following:
   (A) The name and complete business or residential address of the
finder.
   (B) The mailing address of the finder, if different from the
business or residential address.
   (2) A filing fee of three hundred dollars ($300) shall be
submitted to the Department of Business Oversight along with the
initial statement of information required by this subdivision.
   (d) (1) In addition, the finder shall file with the commissioner
within 30 days of the anniversary of the finder's initial statement
of information required by subdivision (c), and annually thereafter,
on a form prescribed by the commissioner, a renewal statement of
information that includes all of the following:
   (A) The following affirmative representations by the finder:
   (i) The finder has complied and will continue to comply with the
conditions of subdivision (a).
   (ii) The finder has not performed any acts or satisfied any
circumstances prohibited by Section 25212 or by Rule 506(d) of
Regulation D under the Securities Act of 1933 (17 C.F.R. 230.506(d)),
and the finder has not been sanctioned by the commissioner pursuant
to Section 25212.
   (iii) The finder has obtained the written agreement described in
subdivision (e) with respect to each transaction in which the finder
has participated in the prior 12 months.
   (B) An indication by the finder as to whether the finder has
received transaction-based compensation that is subject to the actual
sale of securities by the issuer in any transaction in which the
finder has participated in the prior 12 months.
   (2) A filing fee in the amount of two hundred seventy-five dollars
($275) shall accompany each renewal statement of information.
   (e) (1) Concurrently with each introduction, the finder shall
obtain the informed, written consent of each person introduced or
referred by the finder to an issuer, in a written agreement signed by
the finder, the issuer, and the person introduced or referred,
disclosing the following:
   (A) The type and amount of compensation that has been or will be
paid to the finder in connection with the introduction or referral
and the conditions for payment of that compensation.
   (B) That the finder is not providing advice to the issuer or any
person introduced or referred by the finder to an issuer as to the
value of the securities or as to the advisability of investing in,
purchasing, or selling the securities.
   (C) Whether the finder is also an owner, directly or indirectly,
of the securities being offered or sold.
   (D) Any actual and potential conflict of interest in connection
with the finder's activities related to the issuer transaction.
   (E) That the parties to the agreement shall have the right to
pursue any available remedies at law or otherwise for any breach of
the agreement.
   (2) To satisfy the requirements of this subdivision, the agreement
shall also include a representation by the person introduced or
referred by the finder to the issuer that the person is an accredited
investor, as that term is defined in Rule 501(a) of Regulation D
under the Securities Exchange Act of 1933 (17 C.F.R. 230.501(a)), and
that the person knowingly consents to the payment of the
compensation described therein.
   (f) The finder shall maintain and preserve, for a period of five
years from the date of filing of the notice prescribed in subdivision
(d), a copy of the notice, the written agreement required in
subdivision (e), and all other records relating to any offer or sale
of securities in connection with which the finder receives
compensation, as the commissioner may by rule require. The finder,
upon written request of the commissioner, shall furnish to the
commissioner any records required to be maintained and preserved
under this subdivision.
   (g) (1) A natural person who is engaged in the business of
effecting transactions in securities and is not otherwise exempt from
Section 25210 shall be subject to the requirements of Section 25210,
if the individual fails to meet the definition of "finder" set forth
in subdivision (a), or does not satisfy all the conditions set forth
in subdivisions (c) to (f), inclusive.
   (2) In the event a natural person does not meet the definition of
"finder" set forth in subdivision (a) or does not satisfy all the
conditions set forth in subdivisions (c) to (f), inclusive, any
person introduced or referred by that natural person to an issuer,
who purchases securities of that issuer in an issuer transaction
following that introduction or referral, shall have the right to
pursue any applicable remedy afforded under state law, including,
without limitation, any applicable remedies pursuant to Section
25501.5. 
   (h) The commissioner may from time to time make, amend, and
rescind such rules, forms, and orders as are necessary to carry out
the provisions of this section, including rules and forms governing
applications and reports, and defining any terms, whether or not used
in this law, insofar as the definitions are not inconsistent with
the provisions of this law. For the purpose of rules and forms, the
commissioner may classify securities, persons, and matters within his
or her jurisdiction, and may prescribe different requirements for
different classes.