Corporations Code Section 25400 is California’s anti-market manipulation statute. The statute copied clauses (1) through (5) of Section 9(a) of the Securities Exchange Act of 1934 and declares unlawful specified actions intended to affect the market price of a security. Section 25500 establishes a civil remedy against any person who willfully participates in any act or transaction in violation of Section 25400.

Occasionally, issuers will complain that short sellers have issued false statements in order to drive down share prices. Sections 25400 and 25500 would seem to provide relief for these issuers. However, one issuer recently came to grief in its attempt to use these sections.