Section 25401 of the California Corporations Code declares generally declares unlawful to make false statements of a material fact or or omit material facts when buying or selling a security. It is therefore similar to Rule 10b-5 under the Securities Exchange Act of 1934. As originally enacted, however, Section 15401 was based on Section 12(a)(2) of the Securities Act of 1933.

Several years ago when the California legislature amended Section 25401 to mirror Rule 10b-5 more closely, I posed the question of whether California had effectively closed the state courthouse door to securities fraud suits because of the federal courts' exclusive jurisdiction over claims under the Securities Exchange Act of 1934. That question became less acute when the legislature reverted Section 25401 to its original form. Nonetheless, Section 25401 remains similar to Rule 10b-5(b). 

Recently, the defendants in a securities lawsuit attempted to remove the suit to federal court in part on this basis:

Defendants contend that Plaintiff “also alleges what would be actionable under [the Exchange Act], which establishes exclusive federal jurisdiction over claims brought under the Act, and therefore compels removal.” Id. at 6 (emphasis omitted); 15 U.S.C. § 78aa(a).