A more thorough explanation:

Definition: Manufactured diversity is a term used to describe the improper or collusively created diversity of citizenship for the sole or primary purpose of creating federal jurisdiction. It is prohibited by 28 USCA § 1359.

Example: If two parties from the same state collude to create a false claim that they are from different states, just to bring their case to a federal court, it is an example of manufactured diversity.

This practice is not allowed because it undermines the integrity of the federal court system. The federal court system is designed to handle cases that involve parties from different states or countries, and manufactured diversity goes against this principle.