The percentage of M&A transactions valued over $100 million attracting at least one merger objection lawsuit continued to decline in 2017, according to a recent Cornerstone Research study. The July 18, 2018 study, entitled “Shareholder Litigation Involving Acquisitions of Public Companies: Review of 2017 M&A Litigation” (here), also reports that the average number of lawsuits filed per M&A deal and the percentage of M&A deal litigation voluntarily dismissed declined in 2017, as well. Cornerstone Research’s July 18, 2018 press release about the report can be found here.
Continue Reading Percentage of M&A Deals Attracting Litigation Continued to Decline in 2017
Another D&O Lawsuit Arising from Sexual Misconduct Allegations
In the latest example of a D&O lawsuit arising in the wake of allegations against a corporate executive of sexual misconduct, a shareholder has filed a securities class action lawsuit against National Beverage Corp. and certain of its executives following news reports that the company’s Chairman and CEO allegedly had inappropriately touched company pilots while traveling on the Chairman’s business jet. (National Beverage manufactures the ubiquitous LaCroix brand mineral water, with which the author of this blog has absolutely no connection.) The complaint, a copy of which can be found here, also contains separate allegations relating to allegedly misleading financial disclosures. This new lawsuit, like the prior D&O lawsuits filed following revelations of sexual misconduct allegations, underscores the fact as corporate executives are called out for alleged misbehavior, the accountability process may extend not only the alleged wrongdoers themselves, but may also extend to their company and other executives.
Continue Reading Another D&O Lawsuit Arising from Sexual Misconduct Allegations
More About Climate Change Disclosure
As I have previously noted on this site, climate change-related disclosure is a hot button issue for certain activist investors and non-governmental organization. A series of recent actions underscores the extent to which some groups are attempting to escalate these disclosure issues, with significant impact. As described below, a number of companies have joined collaborative efforts to advance climate change disclosure initiatives within their industries. These developments have relevance not only for companies’ disclosures to investors, but they may also have liability implications as well.
Continue Reading More About Climate Change Disclosure
The Growing Costs of Merger Objection Litigation
As most readers are aware, litigation involving objection to mergers and acquisitions transactions has been proliferating in recent years, to the point that virtually every deal draws at least one lawsuit. While many of these actions are nuisance lawsuits, they are not without their costs. Indeed, according to one recent study, the costs to defend and settle these suits are growing.
Continue Reading The Growing Costs of Merger Objection Litigation
California Enacts Sweeping Privacy Legislation
Earlier this year, after Facebook was sued in a securities class action following news that it had given access to personal user information to Cambridge Analytica, I questioned whether privacy issues might represent the next big corporate liability exposure. Among other things, in making this suggestion, I was taking into consideration that fact that the EU’s General Data Protection Regulation (GDPR) was about to go into effect. More recent developments confirm my view that privacy issues likely will represent an area of specific and growing concern and potential liability for companies, their management, and their boards.
Continue Reading California Enacts Sweeping Privacy Legislation
Torrid Securities Suit Filing Pace Continues in Year’s First Half
The torrid pace of securities class action lawsuit filings continued in the first half of 2018, coming in at a rate only very slightly below last year’s record-setting pace. While a significant number of the first half filings are attributable to merger objection lawsuit lawsuits, the number of traditional filing alone during the first half of the year were well above historical levels. If the first half’s pace continues in the second half of the year, the projected number of year-end filings would approach last year’s elevated total.
Continue Reading Torrid Securities Suit Filing Pace Continues in Year’s First Half
SEC Public Company Enforcement Action Continue Steep Decline in First Half FY 2018
The number of SEC enforcement actions against public companies and their subsidiaries declined in the first half of FY 2018 compared to the comparable year prior period, continuing a sharp downward trend that began in the second half of FY 2017 and falling to the lowest level in years, according to a new report from Cornerstone Research, written in collaboration with the NYU Pollack Center for Law & Business. Monetary settlements during the first half of fiscal 2018 also fell to their lowest level in years. The report, entitled “SEC Enforcement Activity: Public Companies and Subsidiaries, Midyear FY 2018 Update” (here), reports on SEC enforcement activity involving public companies and their subsidiaries for the first half of fiscal 2018, which ended March 31, 2018. Cornerstone Report’s May 15, 2018 press release about the report can be found here.
Continue Reading SEC Public Company Enforcement Action Continue Steep Decline in First Half FY 2018
Wendy’s Settles Data Breach-Related Derivative Lawsuit
More recent data breach-related D&O lawsuits have been filed in the form of securities class actions, one of which, the Yahoo securities class action lawsuit, recently resulted in a sizable settlement. Before that though, during the period 2014 to 2016, there was a series of data breach related suits filed in the form of shareholder derivative actions. By and large, these cases did not fare particularly well, largely resulting in dismissals. The last of these data breach-related derivative lawsuits that remained pending is the one filed against fast-food company Wendy’s. Now the Wendy’s case has also settled, albeit for a combination of cybersecurity and governance therapeutics and agreement to pay the plaintiffs’ attorneys fees. The resolution of this last remaining shareholder derivative suit again raises a question that has been much discussed, of the extent to which data breach-related issues will lead to more D&O litigation.
Continue Reading Wendy’s Settles Data Breach-Related Derivative Lawsuit
Another Look at 2017 Securities Litigation Against Life Sciences Companies
As I have previously noted, the elevated number of securities class action lawsuits against life sciences companies was an important factor in the increase of securities lawsuit filings in 2017. The significant volume of securities suits involving life sciences companies has been the subject of focused analysis, as discussed here. Now the Sidley Austin law firm has released its exhaustive review of the 2017 securities litigation against life sciences companies. Among other things, the report finds that while the numbers of securities suit filings against life sciences companies has increased in recent years, the companies are faring worse at the dismissal motion stage in the district courts relative to the most recent years. The report summary can be found here. The full report can be found here.
Continue Reading Another Look at 2017 Securities Litigation Against Life Sciences Companies
Fewer U.S. Listed Companies – Is That a Problem?
Between 1996 and 2016, the number of U.S. listed companies declined by about 50 percent. There are now fewer U.S. listed companies than there were in 1976. Some observers have raised the alarm about this decline. For example, SEC Chair Jay Clayton in a speech last summer called the decline in the number of U.S. listed companies “a serious issue for our markets and the country.” But before we can decide whether or not the lower number of public companies is a problem, much less what to do about it, we need to take a look at what is happening and why it is happening. A closer look suggests that the situation is more complex than it might appear at first glimpse.
Continue Reading Fewer U.S. Listed Companies – Is That a Problem?