California Corporate Securities Law of 1968

National Credit Union Administration Sues Goldman Sachs Over Sale of MBS

On August 9, 2011, the National Credit Union Administration Board (“NCUA”) sued Goldman Sachs in federal court in Los Angeles over Goldman’s sale of mortgage-backed securities to credit unions. NCUA claims that Goldman misrepresented the quality of the loans backing the securities in its offering documents. It also claims that the loans did not satisfy the underwriting guidelines Goldman included in its offering documents. The Complaint cites the Financial Crisis Inquiry Commission Report issued in January 2011 in support of its claims that mortgage loan originators disregarded prudent underwriting practices and securitizers like Goldman did not perform sufficient due diligence, leaving investors without access to critical information about the loans. NCUA alleges claims under Sections 11 and 12(a)(2) of the ’33 Act, Sections 25401 and 25501 of the California Corporate Securities Law of 1968, and Section 17-12a509 of the Kansas Uniform Securities Act. NCUA seeks more than $491 million in damages. NCUA has brought four actions against other RMBS issuers since June 20, 2011. Complaint.

California Extension of Private Adviser Exemption From State Registration

On July 7, the State of California Department of Corporations issued an emergency regulatory action amending Section 206.204.9 of the California Code of Regulations to extend the exemption from adviser licensing requirements under Section 25230(a) of the California Corporate Securities Law of 1968. This exemption was available to advisers that were able to rely on Section 203(b)(3) of the Investment Advisers Act of 1940 (the “Private Adviser Exemption”). With the repeal of the Private Adviser Exemption by the Dodd-Frank Act on July 21, the action amends Section 206.204.9 by replacing references to Section 203(b)(3) with the substantive conditions of the Private Adviser Exemption. The action is effective as of July 21 and will expire on January 17, 2012. Emergency Regulatory Action.