The financial crisis has prompted a surge in class-action securities lawsuits—although the surge seems largely confined to businesses in the financial services sector for now. Two widely respected scorekeepers—NERA Economic Consulting and Stanford Law School Securities Class Action Clearinghouse—say the number of such lawsuits filed last year was up sharply from 2007 and earlier in […]
Stephen Taub
Posted inRegulatory Enforcement
Decisions to Drive Sub-prime Litigation in ’09
The Supreme Court issued only one significant decision about securities litigation in 2008, ruling that shareholders cannot sue third parties that helped a company commit fraud. But securities lawyers expect a much more portentous 2009. First, courts will continue to apply the 2008 decision—Stoneridge Investment Partners v. Scientific-Atlanta—to other class-action securities lawsuits winding through the […]
Posted inBoards & Shareholders
Companies Find Selves TARPed and Feathered
Shareholder activists are using the governance restrictions imposed on companies participating in the Wall Street bailout as a weapon to wrestle still more concessions out of those companies in the coming proxy season. The Treasury Department’s Troubled Asset Relief Program places numerous curbs on executive compensation, from caps on severance packages to clawback provisions considered […]
Posted inBoards & Shareholders
Investor Activists Plan for an Obama World
Many, many will address the Obama Administration and the newly emboldened Democratic majority in Congress as they try to repair America’s frayed financial and regulatory systems. Investor activists intend to be one of the many. “For activists, our time has really come, and we will be speaking up at the next Congress,” promises Richard Ferlauto, […]
Posted inBoards & Shareholders
Boards, Investors See Improved Relations
It looks like investors and board members are finally learning to play nice with one another, given the growing number of companies that are engaging with shareholder activists. “Efforts by shareholders and boards to improve communications have been ongoing for some time,” but have accelerated in recent years, says Holly Gregory, partner with Weil, Gotshal […]
Posted inRegulatory Enforcement
Collective Scienter Idea Keeps on Ticking
Yet again, collective scienter is proving to be the unwelcome legal theory that refuses to die. Collective scienter presumes that a plaintiff can sue a company for fraud without blaming any specific person at the company; instead, plaintiffs argue that various misdeeds and blunders all total up to collective responsibility assigned to the company overall. […]
Posted inRegulatory Enforcement
Walking a Tightrope With Upjohn Warnings
It’s a simple fact of government investigations: If a company cooperates with prosecutors and gives them the information they want, the prosecutors remember that when the time comes to decide on indictments, sentences, fines, or other penalties. That gives companies powerful incentive to procure as much information about possible wrongdoings as possible, including information gleaned […]
Posted inRegulatory Enforcement
The Fallout of Delaware’s Bylaw Decision
The Delaware Supreme Court dealt shareholder activists a setback last month when it ruled that software giant CA could indeed exclude a shareholder proposal on reimbursement for proxy fights from this year’s proxy statement. Unfortunately for Corporate America, the court also explained in its ruling when such resolutions can be included in the proxy statement—so […]
Posted inRegulatory Enforcement
Delaware Decision Leaves Directors in Lurch
An oddball legal dispute bouncing around the Delaware Chancery court system has yet again produced another legal precedent that should give pause to corporate directors facing lawsuits. The court recently decided that, yes, a company can retroactively sever legal protections to directors after they leave the board. In Schoon v. Troy Corp., the court ruled […]
Posted inBoards & Shareholders
CSX Battle Opens New Front on Disclosure Wars
The titanic clash for board control at CSX Corp. reached its climax last week, as the rail company gathered for its annual meeting. The exact outcome remains unknown for now; shareholder activists say they succeeded in electing four nominees to the board, and CSX says they failed. What is clear: The courtroom battles leading up […]