Court Rules That Section 25400 Requires That Manipulative Conduct Occur Within California

less-, Inc. filed a lawsuit in the San Francisco Superior Court alleging that various investment firms had caused the price of its shares to decline by manipulating the securities markets. Earlier this week, Judge John E. Munter granted summary judgment to four of the defendants., Inc. v. Morgan Stanley & Co., Inc., Superior Court Case No. CGC-07-460147 (Jan. 10, 2012).

California Corporations Code Section 25400 prohibits market manipulation and Section 25500 provides the remedy. Section 25400 begins as follows: “It is unlawful for any person, directly or indirectly, in this state . . .”. In today’s electronic world, it is becoming increasingly difficult to identify where anything occurs. Rather than occurring in physical space, things seem to occur in cyberspace.

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