section 25504 director liability in California

2020(AREI II Cases (2013) 216 Cal.App.4th 1004, 1013, 1015 [section 25504 extends liability to “secondary actors who assist in the primary violation”; “[u]nlike section 25504, which requires some sort of control person, employee, or agency relationship with the primary violator, section 25504.1 imposes collateral liability upon persons who materially assist in a violation of section 25401 regardless of their business or legal relationship to the primary violator”].) Put simply, section 25504.1 casts a wider net than section 25504.

2016(AREI II Cases, supra, 216 Cal.App.4th at p. 1013 .) Control is " 'the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a corporation.' " (Hellum v. Breyer (2011) 194 Cal.App.4th 1300, 1316 .) Likewise to find an agency relationship between two distinct companies, one company must exercise a degree of control that reflects its "purposeful disregard of the [other's] independent corporate existence." (Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 542 .) Defendants' evidence that FASI and AEI at all times operated

2011(Accord, Hellum v. Breyer (2011) 194 Cal.App.4th 1300, 1310-1311 [ 123 Cal.Rptr.3d 803 ] [federal and state securities laws are not analogous for the purposes of analyzing liability of principal executive officers and directors under § 25504: federal law speaks of persons who control the primary violator, but “in enacting section 25504, the California Legislature used markedly different language, creating liability (subject to an affirmative defense) for numerous categories of individuals, including principal executive officérs and directors of a corporation that is primarily liable”].) Second

2011(Accord, Hellum v. Breyer (2011) 194 Cal.App.4th 1300, 1310-1311 [ 123 Cal.Rptr.3d 803 ] [federal and state securities laws are not analogous for the purposes of analyzing liability of principal executive officers and directors under § 25504: federal law speaks of persons who control the primary violator, but “in enacting section 25504, the California Legislature used markedly different language, creating liability (subject to an affirmative defense) for numerous categories of individuals, including principal executive officérs and directors of a corporation that is primarily liable”].) Second

2011(See, e.g., Bains v. Moores (2009) 172 Cal.App.4th 445, 479 [ 91 Cal.Rptr.3d 309 ]; Durham v. Kelly (9th Cir. 1987) 810 F.2d 1500 ; Underhill v. Royal (9th Cir. 1985) 769 F.2d 1426 ; In re WorldCom (S.D.N.Y. 2007) 377 B.R. 77 .) Section 31302 provides that “[e]very person who directly or indirectly controls a person liable under Section 31300 or 31301, every partner in a firm so liable, every principal executive officer or director of a corporation so liable, every person occupying a similar status or performing similar functions, every employee of a person so liable who materially aids in the

2007(See Durham v. Kelly (9th Cir. 1987) 810 F.2d 1500, 1505 [plaintiff could not establish liability under § 25504 against defendant where evidence showed only that defendant “had actual power or influence over general corporate affairs” but not that the defendant was a “ ‘ “culpable participant” in the alleged illegal activity’ ”]; 1 Marsh & Volk, supra, § 14.03[4][c], p. 14-25 [discussing persons who may be liable under § 25504 and noting that under existing case law “a controlling person may not be found liable for any alleged inaction, such as a failure to investigate and exercise control ove

2011(Openwave, supra, at p. *7.) The court found that “where the language of the California and federal statutes differ, as they do here, the Court finds no basis for holding that the scope of liability under Section 25504 is limited solely to control persons as under federal law.” (Openwave, supra, at p. *7, fn. omitted.) In so holding, the Openwave court relied on the analysis in Courtney v. Waring (1987) 191 Cal.App.3d 1434 [ 237 Cal.Rptr. 233 ] (Courtney), since that case interpreted a section of the California Franchise Investment Law containing identical wording to section 25504.

2011(Openwave, supra, at p. *7.) The court found that “where the language of the California and federal statutes differ, as they do here, the Court finds no basis for holding that the scope of liability under Section 25504 is limited solely to control persons as under federal law.” (Openwave, supra, at p. *7, fn. omitted.) In so holding, the Openwave court relied on the analysis in Courtney v. Waring (1987) 191 Cal.App.3d 1434 [ 237 Cal.Rptr. 233 ] (Courtney), since that case interpreted a section of the California Franchise Investment Law containing identical wording to section 25504.

2011(See, e.g., Bains v. Moores (2009) 172 Cal.App.4th 445, 479 [ 91 Cal.Rptr.3d 309 ]; Durham v. Kelly (9th Cir. 1987) 810 F.2d 1500 ; Underhill v. Royal (9th Cir. 1985) 769 F.2d 1426 ; In re WorldCom (S.D.N.Y. 2007) 377 B.R. 77 .) Section 31302 provides that “[e]very person who directly or indirectly controls a person liable under Section 31300 or 31301, every partner in a firm so liable, every principal executive officer or director of a corporation so liable, every person occupying a similar status or performing similar functions, every employee of a person so liable who materially aids in the

2011(See, e.g., Bains v. Moores (2009) 172 Cal.App.4th 445, 479 [ 91 Cal.Rptr.3d 309 ]; Durham v. Kelly (9th Cir. 1987) 810 F.2d 1500 ; Underhill v. Royal (9th Cir. 1985) 769 F.2d 1426 ; In re WorldCom (S.D.N.Y. 2007) 377 B.R. 77 .) Section 31302 provides that “[e]very person who directly or indirectly controls a person liable under Section 31300 or 31301, every partner in a firm so liable, every principal executive officer or director of a corporation so liable, every person occupying a similar status or performing similar functions, every employee of a person so liable who materially aids in the

2009(See Davies v. Sallie Mae, Inc., supra, 168 Cal.App.4th at p. 1090 [“ ‘The plaintiff has the burden of *480 proving that an amendment would cure the defect’ ”].) We therefore affirm the trial court’s November 15, 2004 order and its related February 15, 2006 order.

2007(See Mirkin v. Wasserman (1993) 5 Cal.4th 1082, 1103, fn. 10 [ 23 Cal.Rptr.2d 101 , 858 P.2d 568 ] [relying on Marsh & Volk treatise for interpretation of the Act while noting that “Professor Harold Marsh, Jr., was the reporter for the committee that drafted the California Corporate Securities Law of 1968” and that “Robert H.

2007(See Mirkin v. Wasserman (1993) 5 Cal.4th 1082, 1103, fn. 10 [ 23 Cal.Rptr.2d 101 , 858 P.2d 568 ] [relying on Marsh & Volk treatise for interpretation of the Act while noting that “Professor Harold Marsh, Jr., was the reporter for the committee that drafted the California Corporate Securities Law of 1968” and that “Robert H.

2007(See Durham v. Kelly (9th Cir. 1987) 810 F.2d 1500, 1505 [plaintiff could not establish liability under § 25504 against defendant where evidence showed only that defendant “had actual power or influence over general corporate affairs” but not that the defendant was a “ ‘ “culpable participant” in the alleged illegal activity’ ”]; 1 Marsh & Volk, supra, § 14.03[4][c], p. 14-25 [discussing persons who may be liable under § 25504 and noting that under existing case law “a controlling person may not be found liable for any alleged inaction, such as a failure to investigate and exercise control ove

2007(See Durham v. Kelly (9th Cir. 1987) 810 F.2d 1500, 1505 [plaintiff could not establish liability under § 25504 against defendant where evidence showed only that defendant “had actual power or influence over general corporate affairs” but not that the defendant was a “ ‘ “culpable participant” in the alleged illegal activity’ ”]; 1 Marsh & Volk, supra, § 14.03[4][c], p. 14-25 [discussing persons who may be liable under § 25504 and noting that under existing case law “a controlling person may not be found liable for any alleged inaction, such as a failure to investigate and exercise control ove