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— In December of last year, the appellate court decisively overturned Lewis's decision. Moores and his confreres took the matter to the California Supreme Court. The U.S. and California Chambers of Commerce, California Business Roundtable, and California Manufacturers & Technology Association, to no one's surprise, wrote letters supporting Moores and his fellow stock dumpers. In March of this year, the state's highest court rejected the appeal without comment. Then the Moores team said it was going to the U.S. Supreme Court. The filing should come the middle of this month.

Friese says that the former board members "are restricted to arguing the points that have been before the court before." The ex-directors will say that the so-called internal affairs doctrine bars a state from interfering in business matters of a corporation based elsewhere. But the appellate court said that California law has long held that insider stock trading is not covered by the internal affairs doctrine. "For the last 100 years, California's corporate securities laws have been applied to foreign corporations [those incorporated elsewhere] who do business in this state or whose business activities in this state have an impact on this state's securities market," said the appellate court. Moores's lawyers are also likely to argue, as they did earlier, that the state is trampling on due process because Peregrine directors were induced to take their jobs believing they would answer only to Delaware's lax laws. Also, the state is interfering with interstate commerce, argue Moores et al. Both arguments are folly, says Friese.

The current U.S. Supreme Court may desire to overturn California securities laws -- as well as the laws of many other states that are tough on fraud. But would the Court choose this case, in which the insider selling and hushing up of devastating information were so egregious? Frankly, I doubt it.

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