Deep in the darkest depths of winter and now nearly two years into the seemingly never-ending pandemic, my wanderlust yearnings have been calling to me, urging me to take to the road again while at the same time filing me with nostalgia for the places I have been. Call this post a tribute to the travels of the past and a hopeful gesture toward the travels perhaps yet to come. Continue Reading An Incurable Case of Travel Nostalgia
In the latest SPAC-related securities class action lawsuit to be filed, a plaintiff shareholder has filed a post-merger lawsuit against a commercial space launch company that merged with a SPAC in June 2021. As is the case with many of the SPAC-related securities lawsuits, the defendant company was sued after its share price declined following the publication of a short-seller report. A copy of the complaint filed against Astra Space, Inc. on February 9, 2022 can be found here. Continue Reading Post-Merger Commercial Space Launch Company Hit with SPAC-Related Securities Suit
Readers of this blog know that two important current litigation trends involve the filing of claims relating to cybersecurity incidents and the filing of COVID-19-related claims. A new securities class action lawsuit filed this week touched on both of these securities suit filing trends. Secure technology company Telos Corporation was hit with a securities suit following a decline in the price of its shares after the company experienced revenue delays owing to cybersecurity and coronavirus related “headwinds” that postponed the company’s performance of two key contracts. A copy of the plaintiffs’ complaint filed on February 7, 2022 against Telos can be found here. Continue Reading New Lawsuit Reflects Cybersecurity and Coronavirus-Related Litigation Trends
Last summer, I noted on this blog the filing of what turned out to be a total of four separate securities class action lawsuits that were filed against Chinese internet-business firms following a crackdown on their activities by the Chinese cybersecurity regulator. I noted at the time that though these four cases involved circumstances arguably unique to China the cases nevertheless represented examples of the ways in which regulatory risk could translate into securities class action litigation risk.
Last week, two more securities suits were filed against Chinese companies – both involved in the business of providing private educational and tutoring services, a sector that during the past year has been the target of a governmental crackdown – underscoring the extent to which regulatory exposures can lead to securities litigation risk. As discussed below, these latest cases, along with the four prior cases filed last summer, also arguably demonstrate the ways in which securities litigation risk can arise out of political risk. Continue Reading Political Risk as Securities Litigation Risk
The reign of the English King Henry VIII remains one of the most fascinating eras in European history. Today, it is impossible for us to imagine that period without summoning up the images created by the extraordinarily talented artist of the time, Hans Holbein. His paintings of the powerful and famous characterize and embody the entire age, and his endlessly fascinating works continue to dazzle and captivate. The story of how Holbein, a German painter from a relatively modest background, whose success had as much to do with his politically adroitness as his technical brilliance, would go on to become England’s “most celebrated artist,” is well-told in Franny Moyle’s fascinating book, The King’s Painter. Continue Reading Sunday Arts: The King’s Painter
In the latest example of a SPAC-related securities class action lawsuit against a post-SPAC-merger company in the electric vehicle industry, a plaintiff shareholder has filed a securities suit against Electric Last Mile Solutions, Inc. an EV company that merged with a SPAC in June 2021. The lawsuit comes after the company announced the departure of its CEO and its Chairman and the need for the company to restate prior financial statements. A copy of the plaintiff’s February 3, 2022 complaint can be found here. Continue Reading SPAC-Related Securities Suit Filed Against Electric Vehicle Company
Securities class action lawsuit filings “plummeted” in 2021 compared to recent prior years, largely as a result of declines in M&A litigation and in the number of “core” Rule 10b-5 lawsuits, according to the latest annual report from Cornerstone Research. According to the report, entitled “Securities Class Action Filings: 2021 Year in Review,” the number of new federal and state securities class action lawsuit filings decline 35% compared to 2020, but nevertheless remained “in line” with the 2012-2016 average. The report can be found here. Cornerstone Research’s February 2, 2022 press release about the report can be found here. My summary of the 2021 federal court securities class action lawsuit filings can be found here. Continue Reading Cornerstone Research: Securities Suit Filings “Plummet” in 2021
On February 9, 2022, the New York City Bar will be hosting the 10th Annual Securities Litigation & Enforcement Institute in a webcast format. The program will go from 9 am to 5 pm and will include a number of distinguished speakers. The keynote speaker keynote speaker will be Steven Peikin, the former Co-Head of Enforcement of the SEC in the prior administration. Stanford Law Professor Joseph Grundfest will also be among the other speakers. I will be speaking on a panel during the afternoon session on the topic of “Securities Litigation: Major Cases and Trends: Goldman and other Important Cases.” The panel will be moderated by Greg Markel of the Seyfarth Shaw law firm. The panel will include Meredith Kotler of the Freshfields Bruckhaus Deringer law firm; Laura Posner of the Cohen Milstein Sellers & Toll PLLC law firm; and Jeffrey T. Scott of the Sullivan & Cromwell LLP law firm. For further information about the event, including registration information, please refer here.
On January 24, 2022, the U.S. Supreme Court issued its much-anticipated decision in the Hughes v. Northwestern University case (here) of potentially significant importance both for excess fee litigation and to the fiduciary liability insurance market. In the following guest post, Daniel Aronowitz, Owner and Managing Principal of Euclid Fiduciary, a fiduciary liability insurance underwriting company, reviews the decision and discusses its implications. I would like to thank Dan for allowing me to publish his article as a guest post 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 Dan’s article. Continue Reading Bad Facts Make Bad Law – Lessons from the Northwestern Decision
One of the biggest stories in the financial world for the last 18-24 months has been the astonishing surge in SPAC-related activity. Some readers will recall that in the midst of the SPAC ballyhoo, three academics had sounded a serious note of caution. In their conspicuous November 2020 paper, “A Sober Look at SPACs” (here), Stanford Law Professor Michael Klausner, NYU Law Professor Michael Ohlrogge, and Stanford Research Associate Emily Ruan warned, among other things, that SPAC shares were highly diluted, that their post-SPAC-merger performance was poor, and that sponsors’ returns were extraordinarily high.
Critics at the time suggested that the academics’ research was out of date, and that later SPACs addressed the concerns the authors noted in their data set from an earlier time period. In response to the criticisms, the authors have now updated their earlier paper and published their research results in a January 24, 2022 post on the Harvard Law School Forum on Corporate Governance entitled “A Second Look at SPACs: Is This Time Different?” (here). As detailed below, the authors conclude, based on their review of more recent SPAC transactions, that, contrary to the assertion of SPAC defenders, “this time is not different,” and that “SPACs remain highly diluted, and their returns remain poor.”
And in a separate paper that provides additional interesting reading about de-SPAC transactions, on January 24, 2022, the Freshfields law firm published a statistical analysis of 2021 de-SPACs entitled “2021 De-SPAC Debrief” (here), which, as also discussed below, provides an abundance of additional information. Continue Reading SPACs and De-SPACs: Just the Facts