ARTICLE
6 October 2023

Whom Should The Law Protect - The Borrower/Issuer Or Lender/Purchaser?

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Allen Matkins Leck Gamble Mallory & Natsis LLP

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Allen Matkins, founded in 1977, is a California-based law firm with more than 200 attorneys in four major metropolitan areas of California: Los Angeles, Orange County, San Diego, and San Francisco. The firm's areas of focus include real estate, construction, land use, environmental and natural resources, corporate and securities, real estate and commercial finance, bankruptcy, restructurings and creditors' rights, joint ventures, and tax; labor and employment, and trials, litigation, risk management, and alternative dispute resolution in all of these areas. For more information about Allen Matkins please visit www.allenmatkins.com.
The many California laws are intended to protect borrowers. The California Financing Law, for example, provides that it is to be liberally construed to, among other things, "protect borrowers against unfair practices by some lenders, having due regard for the interests of legitimate and scrupulous lenders".
United States California Corporate/Commercial Law

The many California laws are intended to protect borrowers. The California Financing Law, for example, provides that it is to be liberally construed to, among other things, "protect borrowers against unfair practices by some lenders, having due regard for the interests of legitimate and scrupulous lenders". Cal. Fin. Code ยง 22001(a)(4). Other laws, such as the California Corporate Securities Law of 1968, are intended to protect investors in securities transactions.

In some cases, a note will be a security subject to the CSL. In fact, the statutory definition of "security" begins with the words "any note". When a note is a security, the borrower is the issuer. Consequently the objects of protection under the CSL and the CFL will be different in the case of note that is also security, with the CSL intended to protect the purchaser of the note (i.e., the lender) and the CFL intended to protect the issuer of the note (i.e., the borrower).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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