Legal Question in Investment Law in California

Re: Forced to invest

A common comeback to "I was forced to sign...." is to ask if someone had a gun to your head. There is a legal principle that an agreement signed under duress is void because there wasn't any true agreement. Holding a gun to someone's head is an extreme example of conduct amounting to duress, but on the other hand, without some kind of a threat of harm sufficient to make a person do what he would not otherwise do, there probably isn't legal duress. I cannot say for sure how a court would rule on fear of being fired, but mere fear of being politically incorrect doesn't sound like sufficient duress to negate an agreement.

On the other hand, sales of securities are not ordinary contract situations. (LLCs usually don't have "shares" as such, like corporations have shares of stock, but they can. It's more usual for them to have something denominated "memberships" or "members" - but however denominated, ownership interests in LLCs are securities).

I think you have a better chance to get the sale rescinded and get your money back if you approach this as an improper issuance and sale of securities than as duress. Did you get a prospectus or private placement memorandum, or any kind of disclosure document? Anything that showed what percentage of the company you'd own as a result of your investment? Did they tell you what exemption from registration they were relying upon? (Securities are either registered, exempt, or illegal).