by John J. Tollefsen | Mar 8, 2015 | Blog, Securities OR
Although the Oregon securities law statute does not on its face require proof of scienter (intent to manipulate, deceive or defraud), the Oregon Court of Appeals read the requirement into the statute if the theory for relief is fraud on the market. Copy of the decision: 150211-Oregon-v-Marsh-&-McLennan In 2003 the legislature amended the Oregon securities law to provide a good faith defense from securities law violations for secondary violators (one who materially aids or is a control person) and to eliminate the defense for sellers and all those in a fraud on the market case. The court reasoned the legislature did not provide a good a good faith defense for those who material aid (or control the issuer) in a fraud on the market case because it assumed that federal securities law applied. That meant the participants are liable because of their culpable intent to defraud and a good faith defense would not make sense. Even though ORS 59.137 does not require scienter by its terms, that is what it means. In a fraud on the market case, Oregon law is the same as federal law under SEC Rule 10b-5. Whatever one thinks of the Oregon Court of Appeals “correcting” the words of the statute, there is a troubling use of language in the case. The court distinguishes fraud on the market from “direct, face-to-face securities transactions”. This is not a valid description of the distinction. Either type of securities transaction can occur in face-to-face situations. Telephones have been available in Oregon for over 100 years and private issuer transactions are often sold over the phone without any face-to-face meeting. One of the...
by John J. Tollefsen | Aug 24, 2014 | Blog, Oregon, Securities OR
Fifteen categories of securities transaction are exempt from registration.1ORS 59.035 Transactions are not exempt from the antifraud provisions of the Oregon Securities Law including a harsh aider and abettor liability interpretations that reaches even lawyers doing routine securities work. This summary of Oregon Securities Law exemptions provides general information only. A thorough review of the securities transaction is required to know if the transactions is exempt from Oregon law. Federal covered securities Since federal law trumps state law, federal covered securities are exempt. The Oregon Securities Law defines a federal covered security as “any security that is a covered security under § 18 of the Securities Act of 1933, as amended, and for which such Act provides that the Director may require filing of a notice and payment of a fee.” ORS 59.015(5). The Oregon Securities Law also includes definitions and provisions for federal covered investment advisers, investment adviser representatives, and state investment adviser. ORS 59.015(4), (8)(a), (20)(a). The notice filing provisions for covered securities are contained in ORS 59.049: ORS 59.049(1) provides for notice filing and fees for investment companies (mutual funds, unit investment trusts); ORS 59.049(2) provides for notice filings for all other covered securities except Rule 506; and ORS 59.049(3) provides for notice filings for Rule 506 offerings. Practice Tip: A security may be a “covered security” and simultaneously be exempt under ORS 59.025 or 59.035. In such cases, no notice filing under ORS 59.049 is required. A notice filed under ORS 59.049 expires one year after its effective date.2ORS 59.075(2); OAR 441-049-1021(5). The Director is authorized to establish procedures for renewing notice filings. 3ORS 59.075(3)....
