Not only were securities class action lawsuit filings in 2015 at their highest levels since 2008, but the likelihood that a U.S.-listed company would get hit with a securities suit was at the highest level at any time since the PSLRA was enacted, according to the latest annual report from Cornerstone Research. Cornerstone Research’s report, issued in conjunction with the Stanford Law School Securities Class Action Clearinghouse and entitled “Securities Class Action Filings: 2015 Year in Review,” can be found here. Cornerstone Research’s January 26, 2016 press release about the report can be found here. My own analysis of the 2015 securities class action lawsuit filings can be found here.
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NERA Report: 2015 Securities Class Action Filings at Highest Level Since 2008
Securities class action lawsuit filings in 2015 were at their highest level since 2008, according to the latest annual report from NERA Economic Consulting. The report also states that not only as the number of lawsuits filed increased in 2015, but the rate of lawsuit filings relative to the number of publicly traded companies has also increased compared to historic levels as well. The report entitled “Recent Trends in Securities Class Action Litigation: 2015 Full-Year Review,” can be found here. NERA’s January 25, 2016 press release describing the report can be found here. My own analysis of the 2015 securities class action filings can be found here.
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Big Changes in the Merger Objection Litigation Marketplace
Since merger objection litigation became one of the most distinctive phenomena on the corporate and securities landscape, it has been both chronicled and measured in a series of annual papers by Matthew Cain, now an SEC economist, and Steven Davidoff Solomon, a law professor at the U.C. Berkeley. In their latest update, “Takeover Litigation in 2015” (here), published last week, the authors confirm that while merger objection litigation continued to be filed at significant levels last year, the litigation levels declined compared to recent years. Of particular note, starting in the Fall 2015, after Delaware Vice Chancellor Laster rejected the disclosure only settlement in the Aruba/H-P merger lawsuit, the filings of the merger objection lawsuits showed a decline that was “sharp and significant” and that the authors expect will continue in the new year.
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PLUS Webinar This Thursday: “The Top Ten D&O Stories of 2015”
On Thursday, January 21, 2016, I will be participating as the speaker in a Professional Liability Underwriting Society (PLUS) webinar to discuss this past year’s top stories in the world of directors and officers’ liability and insurance. The webinar will be based on my recent blog post, The Top Ten D&O Stories of 2015. This webinar, which is free for both PLUS members and non-members, is a lead-in for the 2016 PLUS D&O Symposium, to be held February 3-4, 2016, in New York. The webinar will begin at 11 am EST and last one hour. Information about the webinar, including registration instructions, can be found here.
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Merck Agrees to Settle Long-Running Vioxx-Related Securities Class Action Lawsuit for $830 Million
In my recent review of the past year’s top D&O stories, I noted the current trend toward increased numbers of securities class action lawsuits involving smaller companies, and also towards smaller securities suit settlements. In the midst of this era of generally smaller cases and settlements has now come a huge settlement reminiscent of earlier time – perhaps because it involves a lawsuit that is itself a vestige of another era. On January 15, 2016, Merck announced that it had reached an $830 million settlement of the long-running Vioxx-related securities class action lawsuit. This case, whose extended procedural history included a trip all the way to the U.S. Supreme Court to address statute of limitations issues, has been pending since November 2003. The proposed settlement is subject to court approval. Merck’s January 15, 2016 press release about the settlement can be found here.
Continue Reading Merck Agrees to Settle Long-Running Vioxx-Related Securities Class Action Lawsuit for $830 Million
Oregon Supreme Court Holds Delaware Corporation’s Forum Selection Bylaw Valid and Enforceable
As readers of this blog will recall, Delaware’s courts have held that under Delaware law bylaws designating Delaware’s courts as the exclusive forum for corporate and shareholder disputes are facially valid. Last summer, Delaware’s legislature adopted a statutory provision adding the permissibility of forum selection bylaws to the Delaware Corporations Code. In response to these judicial and legislative developments, many Delaware corporations have adopted forum selection bylaws. But whether these new bylaw provisions will have their intended effects will depend in part on what the courts in other jurisdictions do. If an action in another jurisdiction is permitted to go forward notwithstanding the bylaw specifying Delaware’s courts as the designated forum, the bylaw’s purpose would be frustrated. A recent decision from the Oregon’s highest court suggests that this potentially frustrating outcome is less likely.
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Guest Post: Boards of Directors and Cybersecurity: Applying Lessons Learned From 70 Years of Financial Reporting Oversight
In this day and age, the members of the boards of directors of most companies understand that cybersecurity issues are both important and should be a board-level priority. But while these issues and responsibilities are now well-recognized, many boards still struggle to translate these issues into action. In the following guest post from John Reed Stark, President, John Reed Stark Consulting LLC, and David R. Fontaine, President, Corporate Risk Holdings[1] take a look at these challenges and propose that in addressing their cybersecurity-related responsibilities boards should draw upon the same governance procedures they have longed used for with respect to financial accounting and reporting. The authors suggest well-advised boards will take this approach in light of the very real, difficult to control and ever increasing enterprise threat that cyber-attack represent for their organizations.
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Guest Post: The Danger of Unfounded Assumptions
In the following guest post, Donna Ferrara, Esq., Senior Vice-President, Managing Director, Management Liability Practice, Arthur J. Gallagher, takes a look at a recent federal appellate court decision highlighting the problems that can arise when anyone – including outside counsel – makes assumptions about insurance without actually looking at the relevant policies. Donna also examines the lessons that can be learned from this unfortunate case. My thanks to Donna for her willingness to publish her article on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Donna’s guest post.
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Report: SEC Filed a Record Number of Enforcement Actions in FY 2015, Aggregate Fines and Penalties Declined
The SEC filed a record number of enforcement actions during FY 2015, but the aggregate value of fines, penalties, and disgorgements the agency collected during the fiscal year was well below the prior year’s total and long term averages, according to a detailed January 12, 2016 report produced in cooperation between the NYU Pollack Center for Law Business and Cornerstone Research. The report, which can be found here, is entitled “SEC Enforcement Activity Against Public Company Defendants: Fiscal Years 2010-2015,” is based on date collected in the Securities Enforcement Empirical Database (SEED), which is an online resource the two organizations sponsor and that provides data on SEC actions filed against public companies traded on the U.S. exchanges. The January 12, 2016 press release that accompanied the report can be found here.
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Delaware Courts’ Rejection of Disclosure-Only Settlements Results in Fewer Merger Objection Lawsuit Filings
In my recent survey of the top stories in 2015 in the world of D&O, I noted that one of last year’s most important developments was the signal that several of the judges on the Delaware Court of Chancery sent in a series of rulings that they would not longer routinely approve the kind of “disclosure-only settlement” that frequently resolves merger objection lawsuits. According to Liz Hoffman’s January 11, 2016 Wall Street Journal article focused on Delaware Vice Chancellor J. Travis Laster and entitled “The Judge Who Shoots Down Merger Lawsuits” (here), after Laster’s October 2015 decision rejecting the proposed settlement in the H-P/Aruba Networks merger objection lawsuit, there were dramatically fewer merger objection lawsuits filed in Delaware, and in fact some previously filed lawsuits are being withdrawn.
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