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CALIFORNIA CORPORATE & SECURITIES LAW

Court Rules Indirect Purchaser Claims Against Theranos May Proceed

Theranos’ anni horrorum began in October 2015 with the publication of a story by investigative reporter John Carreyrou at The Wall Street Journal.  Lawsuits and government investigations ensued.  Although the Theranos recently announced agreements with the Arizona Attorney General and the Centers for Medicare & Medicaid Services, U.S. District Court Magistrate Judge Nathanael M. Cousins last week dealt a setback to the…

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Second Circuit Declines To Apply California Securities Law In Auction Rate Securities Case

In May 2011, I wrote about U.S. District Court Judge Susan Illston’s decision allowing a purchaser of auction rate securities to pursue claims under the California Corporations Code against Deutsche Bank Securities Inc.  Anschutz Corp. v. Merrill Lynch & Co., 785 F. Supp. 2d 799 (N.D. Cal. 2011).  Judge Illston distinguished her ruling from a…

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Court Slaps Down Section 25400 Market Manipulation Claim Against Convicted Felon

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…

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Court Applies California Common Law To New York Rating Agencies

In another auction rate securities (ARS) case, The Anschutz Corporation (TAC) brought suit against several rating agencies alleging negligent misrepresentation.  The Anschutz Corp. v. Merrill Lynch & Co., Fed. Sec. L. Rep. (CCH) P96,258 (N.D. Cal. March 27, 2011).  District Judge Susan Illston’s opinion is interesting because she tackles the question of whether California or New…

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Is Privity Required Or Not Required Under Section 25500?

California Corporations Code Section 25400 lists a variety of acts that are considered to manipulate the price of securities.  Section 25400 was modeled on Section 9(a) – (e) of the Securities Exchange Act of 1934.  Although Section 25400 declares these acts to be “unlawful”, the statute does not technically impose liability.  The legislature left that duty to…

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