As readers of this blog know, as a follow-on effect to the massive wave of SPAC activity in the U.S., there has also been a surge of securities class action lawsuits involving companies that engaged in SPAC transactions. Many of these suits have only just been filed, so it is too early to tell how they will fare. But some of the cases are now reaching the motion to dismiss stage. If the recent motion to dismiss ruling in the SPAC-related lawsuit against mobile gaming technology company Skillz is any indication, many of these cases could encounter substantial hurdles as they go forward. Continue Reading Motion to Dismiss Granted in SPAC-Related Securities Suit Against Gaming Company

The number of securities class action lawsuit filings in the first half of 2022 remained at the lower levels that prevailed last year and below the more elevated levels that prevailed during the period 2017-2020. Though the number of securities class action lawsuit filings in the year’s first six months is below the recent higher levels, the number of suits filed is still consistent with long-term averages. The difference in the number of filings so far this year and the elevated numbers during the recent period were both largely due to merger objection lawsuit filings patterns. Continue Reading Pace of Securities Suit Filings in First Half 2022 Slightly Below Last Year’s Annual Level

In a recent post, I noted that while companies may face investor and regulator pressure to address ESG-related issues, ESG-related actions can also entail operational and financial risks — and litigation risks, as well. In the latest example of a company whose ESG-motivated actions went awry, leading to securities litigation, Wells Fargo has been sued in a securities class action lawsuit after media reports that its efforts to diversify its work force led to fake job interviews, allegedly contrary to the company’s disclosures concerning its diversity efforts. A copy of the June 28, 2022 complaint against Wells Fargo can be found here. Continue Reading Another Example of ESG-Related Actions Leading to a Securities Lawsuit

According to a new report about SPACs and SPAC-related securities litigation, even though the market for SPAC IPOs may have cooled in recent months, SPAC-related litigation has “yet to heat up.” Indeed, according to the report, litigation involving the 977 SPACs that completed IPOs during the period January 2019 and April 2022 “may continue to grow over the next few years.” The report, which is entitled “SPAC Federal Securities Litigation Analysis” and was written by David P. Abel, Managing Attorney, U.S. Market Advisors Law Group PLLC, can be found here. Continue Reading Further SPAC-Related Securities Litigation Filings Likely in the Months Ahead?

In an article published last month, the Wall Street Journal chronicled the difficulties that many of the SPACs launched during the SPAC IPO frenzy in late 2020 and early 2021 are having trying to identify a suitable merger target. Many of the SPACs, the article suggested, might be forced to liquidate; still others, the article suggested, could “pursue low-quality companies” as the SPAC sponsors seek to “stave off possible losses.” I had occasion to recall the Journal article as I read the allegations in a newly filed SPAC-related shareholder derivative suit. The new lawsuit illustrates the one of the types of litigation risk some SPACs could face as they mull last minute mergers before the approaching end of their 24-month search period. Continue Reading Derivative Suit Alleges SPAC Merged with Company Outside the Targeted Industry

In the now more than two-and-a-quarter years since the initial COVID-19 outbreak in the U.S., a significant number of COVID-related securities class action lawsuits have been filed. What is surprising is not that the suits have been filed; rather, it is that even at this late date, the COVID-related suits continue to be filed. As time has gone by, however, it has become increasingly challenging to say with clarity whether a particular lawsuit is or is not “COVID-related.” The securities class action lawsuit filed late last week against online information platform, Yext, illustrates the increasing difficulty of making the COVID-related categorization, as discussed below. Continue Reading The Growing Challenge of Identifying COVID-Related Securities Suits

ESG is a hot topic. There is a general perception in certain circles – including the D&O insurance community — that ESG awareness and activism are essential  attributes of good corporate citizenship. There is even a perception in certain parts of the D&O insurance community that strong ESG credentials makes individual companies better D&O risks. However, as the securities class action lawsuit recently filed against U.K consumer products company Unilever shows, activism on ESG issues can, in fact, lead to D&O claims. The complaint in the Unilever action, which makes for interesting reading and arguably has important implications, can be found here. Continue Reading Can ESG-Motivated Company Actions Lead to Corporate and Securities Litigation?

Regular readers of this blog know that class action securities fraud lawsuits almost never go to trial. But “almost never” is not the same as “never.” Every now and then, there is an unusual case that does go to trial. This past week, a federal court jury reached a verdict in one of those rare and unusual cases. On June 14, 2022, a federal jury in the Southern District of New York held after trial that Michael Reger, co-founder of Dakota Plains Holdings, Inc. was liable for securities fraud and control person fraud, but not for insider trading. Reger was the sole remaining defendant in the case after the other defendants last month reached a settlement. A copy of the jury’s June 14, 2022 verdict form can be found here. Continue Reading Rare Jury Verdict in Securities Fraud Lawsuit

Businesses currently face a host of challenging operating circumstances: supply chain issues; labor shortages; economic inflation; the war in Ukraine; and the continuing disruptive effects of the pandemic. As a new securities class action lawsuit filed this week against the consumer product company Tupperware shows, these kinds of operating conditions not only create business and financial risk for many companies, but these conditions can also translate into litigation risk, as well. A copy of the securities lawsuit complaint filed recently against Tupperware can be found here. Continue Reading Business and Litigation Risk in a Challenging Operating and Economic Environment