State Jurisdiction Over Interstate Transactions

Congress contemplated that federal law would generally only supplement, not replace, state laws that would otherwise apply in this area of securities regulation. As the Supreme Court observed when turning aside a challenge to the application of California's state securities laws to interstate securities sales: "The contention that state exercise of jurisdiction over interstate transactions would somehow be inconsistent with federal law and thus violate the supremacy clause (U.S. Const., art. VI, cl. 2) also lacks merit. The Securities Exchange Act of 1934 (15 U.S.C. 78bb (a)) makes it clear that, except to the extent it has been subsequently modified by the Securities Litigation Uniform Standards Act of 1998, federal law in this arena supplements, but does not displace state regulation and remedies." (Diamond, supra, 19 Cal. 4th at pp. 1056-1057.) "Congress plainly contemplated the possibility of dual litigation in state and federal courts relating to securities transactions." (Matsushita Elec. Industrial Co. v. Epstein (1996) 516 U.S. 367, 383 [116 S. Ct. 873, 882, 134 L. Ed. 2d 6]; Merrill Lynch, Pierce, Fenner & Smith v. Ware (1973) 414 U.S. 117, 137-140 [94 S. Ct. 383, 394-396, 38 L. Ed. 2d 348] [statutory remedies available under California state law were not preempted by rules of the New York Stock Exchange or congressional enactments].)