Securities Litigation Lawyer San Diego

Securities litigation moves fast once it starts, and it often starts with almost no warning: a subpoena, an SEC formal order, a class action complaint filed the same day a stock drops on bad news. TencerSherman LLP represents corporations, officers and directors, and individual defendants in securities litigation and SEC investigations, and separately represents institutional investors pursuing securities claims of their own.

What securities litigation actually covers

A securities claim generally alleges that someone violated federal or state securities law in connection with buying or selling a security, or breached a fiduciary duty owed to a corporation or its shareholders. The most common fact patterns:

Breach of fiduciary duty. Corporate officers and directors owe duties of care and loyalty to the corporation and its shareholders. A claim typically alleges a decision was made in bad faith, involved a conflict of interest, or fell outside the protection the business judgment rule ordinarily gives to good-faith business decisions.

Section 10(b) and Rule 10b-5 fraud claims. The core federal anti-fraud provision, from the Securities Exchange Act of 1934, prohibits material misrepresentations or omissions made in connection with the purchase or sale of a security. This is the basis for most securities fraud class actions and a large share of SEC enforcement actions.

Insider trading. Trading on material nonpublic information, or tipping someone else who trades on it, violates Section 10(b) and can carry both civil and criminal exposure.

Accounting malpractice and misrepresentation. Claims that financial statements, earnings guidance, or other disclosures misstated the company's actual condition, often surfacing after a restatement or a sudden earnings miss that contradicts prior guidance.

Market manipulation and unauthorized trading. Claims involving artificial price movement, or a broker executing trades without proper authorization from the account holder.

SEC investigations

An SEC investigation typically starts informally: staff request documents and interviews voluntarily, without subpoena power. If the matter escalates, the SEC issues a Formal Order of Investigation, which gives staff subpoena power to compel documents and sworn testimony. Investigations are nonpublic while pending, though they sometimes become public through a company's own disclosure obligations, a parallel civil suit, or the SEC's own eventual announcement.

Near the end of an investigation, if staff believe the evidence supports charges, the SEC typically issues a Wells notice: a letter identifying which violations staff believe occurred and stating their intent to recommend an enforcement action. The recipient can respond with a Wells submission, a written argument against the proposed charges, before the staff makes its final recommendation to the Commission. That submission is often the last real opportunity to change the outcome before an enforcement action is filed, which makes how it's prepared genuinely consequential.

TencerSherman represents companies and individuals at every stage of that process: responding to informal document requests, handling formal subpoenas, and preparing Wells submissions.

Class actions and derivative suits

Much of securities litigation, on both sides, involves either a securities class action or a shareholder derivative suit, and the two are legally distinct in ways that affect strategy from the outset: a class action is brought directly by investors for their own losses, while a derivative suit is brought by a shareholder on behalf of the corporation itself, subject to its own procedural requirements before it can even be filed. See the class actions page for how each actually works, including the federal pleading standards that apply to securities fraud class actions specifically.

California's own securities law matters too

Federal securities claims get most of the attention, but California has run its own anti-fraud regime since 1968: the Corporate Securities Law, codified at Corporations Code sections 25000 through 25707 and administered by the Department of Financial Protection and Innovation. Its core anti-fraud provision, section 25401, prohibits offering, selling, or buying a security in California through a communication containing an untrue statement of material fact or omitting one, and section 25501 provides the remedy: rescission or damages for anyone harmed by a violation.

The practical difference from a federal Rule 10b-5 claim matters here. Under section 25501, a plaintiff generally doesn't have to prove reliance or causation the way a Rule 10b-5 plaintiff does, which can make a state-law claim genuinely easier to plead and prove in situations where those elements would be hard to establish. That makes section 25401 worth considering as an independent theory, not just a fallback, in any case involving a misrepresentation connected to a securities transaction with a California nexus. A 2013 amendment (SB 538) also broadened the statute to include a scheme-or-artifice-to-defraud clause closer to Rule 10b-5's own language, narrowing some of the gap between the two.

Corporate governance counseling

Beyond litigation and investigations, TencerSherman advises officers and boards on risk avoidance and governance compliance under California and federal securities law: how disclosure decisions get made, how a board should document its process on a significant transaction to stay within the business judgment rule's protection, and how to respond when a governance question arises before it becomes a claim rather than after.

How TencerSherman staffs securities matters

Securities litigation and SEC investigations move on compressed timelines, often with real reputational stakes attached from the moment a subpoena or a class action complaint becomes public. TencerSherman keeps a partner directly involved on securities matters from the outset rather than routing initial response through associates, since the first few decisions (how to respond to an informal SEC request, whether to engage before litigation is even filed, how a board should be advised to document a contested decision) tend to shape everything that follows.

For public companies and their officers, that often means TencerSherman working alongside existing corporate and securities counsel on the litigation or investigation specifically, rather than displacing the relationships already in place for routine securities compliance and disclosure work.

Where these cases are filed

Federal securities fraud claims under Section 10(b) and Rule 10b-5 belong exclusively in federal court; there's no option to bring those specific claims in state court. Claims under the Securities Act of 1933 (covering misstatements in a registration statement or prospectus) can still be filed in state court in some circumstances, following the U.S. Supreme Court's 2018 decision in Cyan, Inc. v. Beaver County Employees Retirement Fund, which held that SLUSA didn't strip state courts of jurisdiction over those particular federal claims. California state-law claims under Corporations Code section 25401 are ordinarily filed in San Diego County Superior Court unless removed to federal court on some other basis. Sorting out where a given claim, or combination of claims, actually belongs is often one of the first strategic decisions in a securities matter, not a formality.

Frequently asked questions