A common misconception is that the securities laws of an issuer's state of formation govern all offers and sales of that issuer's securities.  In California, however, the application of the state's securities laws turns on whether an offer or sale has been made in the state.  It seems that the same principle applies in Kansas.

In State v. Lundberg, 2019 Kan. LEXIS 195, the state criminally charged two Minnesota residents with selling or offering to sell unregistered securities and committing fraud in selling or offering to sell securities.  These two individuals had formed four Kansas limited liability companies of which they were the sole members.  They then recruited intermediaries in California who hosted seminars and round tables in California at which they made presentations.  From Minnesota, the defendants provided some information and materials included in these presentations, but the intermediaries prepared the actual presentations. None of the investors were Kansas residents and the defendants signed documents in Minnesota.  The trial court dismissed all of the counts related to sales involving the California intermediaries, finding a lack of jurisdiction.  The Court of Appeals reversed the trial court and the Kansas Supreme Court reversed the Court of Appeals.

The Kansas Supreme Court found support for its position in an interpretive opinion issued by the California Commissioner of Corporations - Opinion No. 81/10C, 11 Cal. Corp. Comm'n Official Op., 1981 Cal. Sec. LEXIS 1 [Nov. 12, 1981].  In conclusion, the Court acknowledged that its ruling may seem anomalous:

"We appreciate the Court of Appeals' and dissenters' inclination to conclude jurisdiction attaches here. In some ways it seems anomalous that Kansas could not exercise jurisdiction over Lundberg's and Elzufon's conduct as principals and shareholders in business entities they knowingly formed or registered to do business under color of Kansas law. They planned to rehabilitate and manage real property in Kansas, maintained Kansas offices, and issued securities for the Kansas LLCs' benefit. We are concerned this result encourages the unscrupulous to form enterprises under Kansas law, then scrupulously avoid taking any step in the sales or offer process in Kansas to avoid our jurisdiction—particularly in this time when working from anywhere as long as one has a phone and a computer is a common occurrence. But the KUSA [Kansas Uniform Securities Act] is designed to punish the acts taken as part of the sales or offer of a security within the territorial boundaries of Kansas. And here, all of those acts, according to the stipulated facts, occurred outside Kansas. Criminal enforcement, if there is to be any, must lie in one of the jurisdictions in which Lundberg's and Elzufon's actions allegedly occurred."