ORDER

SAUNDRA BROWN ARMSTRONG, District Judge.

Plaintiffs Willard Sharrette, David Goldman, and Esta Goldman (collectively, "Plaintiffs") bring the instant federal securities law putative class action against Defendants Credit Suisse International and Credit Suisse Securities (USA) LLC (collectively, "Credit Suisse") on behalf of themselves and all other persons or entities who purchased or otherwise acquired common stock of Energy Conversion Devices, Inc. ("ECD") between June 18, 2008 and February 14, 2012. The parties are presently before the Court on Credit Suisse's motion to dismiss the consolidated amended complaint ("CAC"). Plaintiffs oppose the motion. For the reasons that follow, the Court ORDERS the parties to show cause why this case should not be transferred to the Southern District of New York under 28 U.S.C. § 1404(a). Because it is unclear at this juncture whether this case should be transferred, the Court will not address Credit Suisse's motion to dismiss. In the event the case is not transferred, the Court will resolve Credit Suisse's motion.

I. BACKGROUND

ECD was a manufacturer of solar power technology; specifically, ECD manufactured photovoltaic laminates that generated renewable energy by converting sunlight into electricity. CAC ¶ 22, Dkt. 48. Plaintiffs are former shareholders of ECD. Id. ¶¶ 10-12. Plaintiff Willard Sharrette is a resident of Michigan, while Plaintiffs David Goldman and Esta Goldman are residents of New York. Id. Defendant Credit Suisse International is an unlimited liability company domiciled in the United Kingdom, doing business in the United States. Id. ¶ 13. Defendant Credit Suisse Securities (USA) LLC is a Delaware company headquartered in New York, New York. Id. ¶ 14.

The instant action arises out of an allegedly fraudulent scheme perpetrated by Credit Suisse and a group of unnamed "predatory hedge funds" to mislead investors and artificially drive down the price of ECD common stock, causing ECD's investors to suffer "astronomical" losses. CAC ¶ 2. According to Plaintiffs, Credit Suisse was the architect of and key participant in the fraudulent scheme, which arose out of a combined offering of convertible notes1 and ECD common stock underwritten by Credit Suisse. CAC ¶¶ 3, 5. As part of the common stock offering, ECD created a pool of shares that were made available to Credit Suisse to loan pursuant to a Share Lending Agreement to facilitate transactions by which investors in the convertible notes would hedge their respective investments through short sales of ECD's stock. CAC ¶¶ 3, 4, 42.

Plaintiffs allege that the offering documents falsely represented that the purpose of the common stock offering, and the attendant Share Lending Agreement, was to promote the sale of the convertible notes by assisting investors in "hedging"2 their investment in these securities. CAC ¶ 4. According to Plaintiffs, the purpose of the simultaneous offerings was not to permit investors in the convertible notes to engage in market neutral hedging, but rather to allow the "predatory hedge funds" that purchased the convertible notes to make huge, coordinated, short sales of ECD's stock in order to decimate the price of the stock and reap huge profits. CAC ¶ 5.

Plaintiffs assert that the unrestrained short selling orchestrated by Credit Suisse and the hedge funds drove the price of ECD common stock down from approximately $72.00 per share on June 18, 2008 to less than $1.00 per share in February 2012, causing massive losses to investors. CAC ¶ 9. Plaintiffs further assert that Credit Suisse and its hedge fund clients reaped enormous profits from the fraudulent scheme. Id. Specifically, Plaintiffs allege that Credit Suisse benefited in two ways from the fraudulent scheme: (1) Credit Suisse was paid a share of the $8.25 million commission for underwriting the convertible note offering; and (2) Credit Suisse was able to promote itself to hedge funds by helping the hedge funds obtain exorbitant profits through short sales of ECD's stock. Id. ¶ 16.

II. DISCUSSION

Plaintiffs allege that Credit Suisse's fraudulent scheme violated §§ 9 and 10(b) of the Securities and Exchange Act of 1934 ("Exchange Act") as well as Rule 10(b)-5 promulgated under the Exchange Act. According to Plaintiffs, venue is proper in this district pursuant to § 27 of the Exchange Act and 28 U.S.C. § 1391(b). CAC ¶ 20.

As an initial matter, because Credit Suisse has waived the issue of whether venue is proper in this district by failing to raise the defense of improper venue in its response to the CAC,3 the Court will not address the issue of whether venue is proper in this district under § 27 of the Exchange Act4 and/or 28 U.S.C. § 1391(b).5 However, even assuming that venue is proper in this district, the Court may sua sponte transfer this case to another district under § 1404(a), so long as the parties are first given the opportunity to present their views on the issue. Costlow v. Weeks, 790 F.2d 1486, 1488 (9th Cir. 1986) (citing Starnes v. McGuire, 512 F.2d 918, 934 (D.C. Cir. 1974) (where neither party has requested transfer, the district court, should, at a minimum, issue an order to show cause why the case should not be transferred)); see Minichino v. Sutidze, 2012 WL 621459, at *2 (N.D. Cal. 2012) (Armstrong, J) ("The Court may sua sponte transfer an action under § 1404(a).").

Section 1404(a) provides: "For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district . . . where it might have been brought or to any district . . . to which all parties have consented." 28 U.S.C. § 1404(a). Given the residence of the parties and the location of the operative events giving rise to this action, the Northern District of California appears to be the wrong venue for this case. None of the parties reside in California, while two of the Plaintiffs reside in New York and one of the Defendants is headquartered in New York City. Further, Plaintiffs do not allege that any of the relevant events occurred in California.6 Rather, the allegations in the CAC suggest that all, or at least a substantial part, of the operative events providing the basis for this action occurred in New York. As such, New York appears to be the appropriate venue for this case. Accordingly, the Court orders the parties to show cause why this case should not be transferred to the Southern District of New York under § 1404(a).

III. CONCLUSION

For the reasons stated above, IT IS HEREBY ORDERED THAT:

1. The parties shall show cause in writing why this case should not be transferred to the Southern District of New York under § 1404(a). The parties shall file briefs, not to exceed ten (10) pages, by no later than seven (7) days from the date this Order is filed. Alternatively, the parties may file a stipulation requesting that this case be transferred to the Southern District of New York under § 1404(a).

2. In the event that this case is not transferred, the Court will resolve Credit Suisse's motion to dismiss.

IT IS SO ORDERED.