In the world of directors’ and officers’ liability, securities class action lawsuits dominate the dialogue. Securities lawsuits generate headlines and produce eye-popping settlements. There are even websites (refer here and here) devoted exclusively to providing the latest information about securities lawsuits. The same cannot be said for derivative lawsuits, but it has not always
Yukos Shareholders Case Dismissed
In prior posts (refer here), I have discussed the jurisdictional issues and other questions arising when foreign domiciled companies are sued in securities lawsuits in U.S. courts. But the November 26, 2007 opinion (here) in the Yukos shareholders’ lawsuit raises some unique and uniquely interesting issues. And as discussed further below, other
Brave New Securities Lawsuit World: Qwest Opt-Out Settlements Exceed Class Settlement
In the latest in the series of significant opt-out settlements, two different state pension funds have announced settlements with Qwest in their separate securities actions against the company. In both instances, the funds announced that their separate settlements far exceeded the amounts that they would have recovered in Qwest’s $400 million class action settlement
Subprime Litigation Wave Hits Bond Insurer, Freddie Mac; Larger Problems Loom
On November 21, 2007, plaintiffs’ lawyers initiated separate securities class action lawsuits against the Federal Home Loan Mortgage Corporation (better known as Freddie Mac) and against bond insurer ACA Capital Holding. Both of these lawsuits reflect the deepening seriousness of the credit problems arising from the subprime lending meltdown, and the problems besetting
Web Notes: Backdating, Subprime, “F-cubed” Claimants, and More
Thanksgiving is nigh, but big things are still happening. The Apple options backdating derivative complaint has been dismissed, AIG has been sued in a subprime-related derivative lawsuit, the Non-U.S. claimants were excluded from the Royal Dutch Shell Class, a leading plaintiff’s lawyer had some interesting things to say about subprime lawsuits, and a disappointed busted
Fraud Detection and the “Expectations Gap”
As a result of the Sarbanes-Oxley Act and other reforms, a variety of structures and procedures were put into place to try to prevent or detect fraud. A number of these reforms involve auditors and the audit profession, in the implicit assumption that auditors have an important role to play in preventing and detecting corporate
Buy-Out Bust-Ups and Other Web Notes
A November 18, 2007 New York Times article entitled "If Buyout Firms Are So Smart, Why Are They So Wrong?" (here) takes a critical look at many buyout firms’ sudden haste to walk away from deals that were much ballyhooed only a short time ago. Clearly the bloom has gone off the buyout
Options Backdating Developments
As the options backdating cases flooded in a year ago, the standard explanation of the plaintiffs’ lawyers preference for shareholders derivative lawsuits over securities class action lawsuits was that stock price declines rarely accompanied companies’ options backdating disclosures. (A list showing the predominance of derivative lawsuits among options backdating cases can be found here.)
Can Investors Blame the Rating Agencies for Mortgage Investment Losses?
For those keen to cast blame for the subprime meltdown, the rating agencies have already emerged as a favored target. For example, when Citigroup recently announced (here) a significantly increased write-down of subprime mortgage assets, it attributed the action to recent rating agency asset downgrades.
The rating agencies’ own shareholders have already jumped
Subprime Litigation Wave Hits Citigroup
In the days following Citigroup’s November 4, 2007 announcement (here) that it would be writing off an additional $8 to $11 billion due to declines in values of U.S. subprime related debt exposures, as well as its announcement (here) of the departure of its Chairman and CEO Charles O. Prince,