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HomeFinancial CodeDiv. 1.1Ch. 21Art. 1§ 1881 State Liability Misrepresentation Ban

§ 1881 State Liability Misrepresentation Ban

Financial Code·California
AI Summary·Official Text·Key Terms·Related Statutes·References
AI SummaryVerified

§ 1881 State Liability Misrepresentation Ban

Key Takeaways

  • •Don't say California will pay for a company's debts or mistakes.
  • •If you work for a company and lie about California owing money for the company, you can get in big trouble.
  • •The punishment can be a fine up to $10,000 and jail time.

Example

A manager at a big company tells investors that if the company can't pay its bills, the State of California will cover the costs.

This is against the law because the manager is lying about California being responsible for the company's debts. The manager could be fined up to $10,000 and sent to jail.

AI-generated — May contain errors. Not legal advice. Always verify source.

Official Source
View on CA.gov

§ 1881 State Liability Misrepresentation Ban

Whoever being connected in any capacity with any corporation represents in any way that the State of California is liable for the payment of any bond or other obligation, or the interest thereon, issued or incurred by any corporation, or that the State of California incurs any liability in respect of any act or omission of the corporation, shall be punished by a fine of not more than ten thousand dollars ($10,000) and by imprisonment pursuant to subdivision (h) of Section 1170 of the Penal Code. (Added by Stats. 2011, Ch. 243, Sec. 14. (SB 664) Effective January 1, 2012.)

Last verified: January 23, 2026

Key Terms

State of Californialiabilitybond or other obligationcorporationfineimprisonment

Related Statutes

  • § 1861 Corporate Price Fixing Ban
  • § 1850 Corporation Definition Under Article
  • § 1852 Corporation Formation Authorization
  • § 1857 Corporate Stock Ownership Restrictions
  • § 1862 Corporate Shareholder Equity Requirement

References

  • Official text at leginfo.legislature.ca.gov
  • California Legislature. Financial Code. Section 1881.
View Official Source