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M&A Shareholder Lawsuits Surging

Bruce Carton | February 5, 2010

As I discussed here last month, reports counting the number of securities class action lawsuits filed in 2009 have been pouring in, with the authors reaching varying conclusions (capped off, of course, by Joe Grundfest's annual proclamation that "the pig has moved through the python" ... just kidding, Joe!).

According to securities defense lawyers, however, another kind of securities lawsuit has been surging recently: shareholder lawsuits over mergers and acquisitions. The Recorder reports that an increase in M&A activity recently has also led to "more cases filed over the last three months than in the comparable period the year before, both here in California and in Delaware," according to Kevin Muck of Fenwick & West.

Litigator Boris Feldman of Wilson Sonsini Goodrich & Rosati believes that the number of traditional securities fraud lawsuits has fallen, leading plaintiffs lawyers to "replenish their inventory" with M&A cases. Others like William Freeman of Cooley Godward believe the situation has reached the point where a lawsuit is "almost an automatic response to a public company M&A transaction.... now it seems that virtually no deal is safe from lawsuits."