Does Section 25400 of the California Stock Exchange Act restrict out-of-state shareholders from selling shares in other states?

It is true a state may not claim that its interest in protecting nonresident shareholders offsets a burden the state law imposes on interstate commerce. (See Edgar v. MITE Corp., supra, 457 U.S. at p. 644, 102 S.Ct. 2629.) As noted earlier, however, section 25400 does not regulate stock transactions in other states and section 25500 does not penalize or discourage such transactions. Section 25400 may discourage fraudulent inducement of those transactions, but any indirect burden that places on out-of-state sales is clearly offset by the state interest in preventing fraud and protecting the integrity of the capital market for all investors.