Department of Corporations v. Superior Court

The instant petition for a writ of mandate presents the question of whether the California Department of Corporations (the DOC) may be held liable for investment losses suffered by investors who purchased fraudulent securities from brokers subject to “desist and refrain orders” after those orders were rescinded by the DOC. The real parties in interest contend that under Government Code section 815.6, which creates a private right of action against public entities that fail to discharge a “mandatory duty,” the DOC may be held liable for such losses because the DOC violated Corporations Code section 25612’s command not to rescind any order without first finding “that the action is necessary or appropriate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policy and provisions of this law [the Corporate Securities Law of 1968].” (§ 25612.) We disagree.

As explained below, when viewed in context, section 25612 is discretionary and does not create any mandatory duty under Government Code section 815.6. In addition, it is clear that the Legislature intended that violations of section 25612 would not give rise to…