Many corporate law scholars watched in amazement as merger litigation exploded over the past 15 years. In 2005, only 37 percent of mergers involving U.S. public companies and with a transaction size of at least $100 million were challenged in court. Today, approximately 85 percent of such mergers are challenged in court. And these suits look different from the merger suits of the past. Instead of money, for example, shareholders today typically receive additional disclosures about the merger that have little value. Instead of being filed in Delaware and other state courts, more cases are brought in federal court. And … Read more
When it comes to corporate litigation, is more necessarily better? The legal system has developed a broad array of litigation options to address corporate wrongdoing. Under state law, shareholders can file a derivative suit or class action alleging that directors and officers breached their fiduciary duty. Under federal law, shareholders can file a securities class actions alleging that the directors and officers misled the market. These private lawsuits are often filed alongside government enforcement actions brought by the Securities & Exchange Commission, the Department of Justice, or state regulators.
In our article, Piling On: An Empirical Study of Parallel Derivative … Read more