(a) A limited liability company is liable for a civil penalty in an amount not exceeding one million dollars ($1,000,000) if the limited liability company does both of the following:

1. (1) Has actual knowledge that a member, officer, manager, or agent of the limited liability company does any of the following:

   1. (A) Makes, publishes, or posts, or has made, published, or posted, either generally or privately to the members or other persons, either of the following:

      1. (i) An oral, written, or electronically transmitted report, exhibit, notice, or statement of its affairs or pecuniary condition that contains a material statement or omission that is false and intended to give membership shares in the limited liability company a materially greater or a materially less apparent market value than they really possess.
      2. (ii) An oral, written, or electronically transmitted report, prospectus, account, or statement of operations, values, business, profits, or expenditures that includes a material false statement or omission intended to give membership shares in the limited liability company a materially greater or a materially less apparent market value than they really possess.
   2. (B) Refuses or has refused to make any book entry or post any notice required by law in the manner required by law.
   3. (C) Misstates or conceals or has misstated or concealed from a regulatory body a material fact in order to deceive a regulatory body to avoid a statutory or regulatory duty, or to avoid a statutory or regulatory limit or prohibition.

2. (2) Within 30 days after actual knowledge is acquired of the actions described in paragraph (1), the limited liability company knowingly fails to do both of the following:

   1. (A) Notify the Attorney General or appropriate government agency in writing, unless the limited liability company has actual knowledge that the Attorney General or appropriate government agency has been notified.
   2. (B) Notify its members and investors in writing, unless the limited liability company has actual knowledge that the members and investors have been notified.

(e) For purposes of this section:

1. (1) “Manager” means a person defined by subdivision (m) of Section 17701.01 having both of the following:

   1. (A) Management authority over the limited liability company.
   2. (B) Significant responsibility for an aspect of the limited liability company that includes actual authority for the financial operations or financial transactions of the limited liability company.
2. (2) “Agent” means a person or entity authorized by the limited liability company to make representations to the public about the limited liability company’s financial condition and who is acting within the scope of the agency when the representations are made.
3. (3) “Member” means a person as defined by subdivision (o) of Section 17701.01 that is a member of the limited liability company at the time the disclosure is required pursuant to subparagraph (B) of paragraph (2) of subdivision (a).
4. (4) “Notify its members” means to give sufficient description of an action taken or about to be taken that would constitute acts or omissions as described in paragraph (1) of subdivision (a). A notice or report filed by a limited liability company with the United States Securities and Exchange Commission that relates to the facts and circumstances giving rise to an obligation under paragraph (1) of subdivision (a) shall satisfy all notice requirements arising under paragraph (2) of subdivision (a) but shall not be the exclusive means of satisfying the notice requirements, provided that the Attorney General or appropriate agency is informed in writing that the filing has been made together with a copy of the filing or an electronic link where it is available online without charge.

5. (5) “Appropriate government agency” means an agency on the following list that has regulatory authority with respect to the financial operations of a limited liability company:

   1. (A) Department of Financial Protection and Innovation.
   2. (B) Department of Insurance.
   3. (C) Department of Managed Health Care.
   4. (D) United States Securities and Exchange Commission.
6. (6) “Actual knowledge of the limited liability company” means the knowledge a member, officer, or manager of a limited liability company actually possesses or does not consciously avoid possessing, based on an evaluation of information provided pursuant to the limited liability company’s disclosure controls and procedures.

7. (7) “Refuse to make a book entry” means the intentional decision not to record an accounting transaction when all of the following conditions are satisfied:

   1. (A) The independent auditors required recordation of an accounting transaction during the course of an audit.
   2. (B) The audit committee of the limited liability company has not approved the independent auditor’s recommendation.
   3. (C) The decision is made for the primary purpose of rendering the financial statements materially false or misleading.

8. (8) “Refuse to post any notice required by law” means an intentional decision not to post a notice required by law when all of the following conditions exist:

   1. (A) The decision not to post the notice has not been approved by the limited liability company’s audit committee.
   2. (B) The decision is intended to give the membership shares in the limited liability company a materially greater or a materially less apparent market value than they really possess.

9. (9) “Misstate or conceal material facts from a regulatory body” means an intentional decision not to disclose material facts when all of the following conditions exist:

   1. (A) The decision not to disclose material facts has not been approved by the limited liability company’s audit committee.
   2. (B) The decision is intended to give the membership shares in the limited liability company a materially greater or a materially less apparent market value than they really possess.
10. (10) “Material false statement or omission” means an untrue statement of material fact or an omission to state a material fact necessary in order to make the statements made under the circumstances under which they were made not misleading.
11. (11) “Officer” means a person appointed pursuant to Section 17703.02, except an officer of a specified subsidiary limited liability company who is not also an officer of the parent limited liability company.