Posts Tagged ‘Cornerstone’

Shareholder Litigation Involving Acquisitions of Public Companies

Posted by John Gould, Cornerstone Research, on Monday March 9, 2015 at 9:02 am
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Editor’s Note: John Gould is senior vice president at Cornerstone Research. This post discusses a Cornerstone Research report by Olga Koumrian, titled “Shareholder Litigation Involving Acquisitions of Public Companies,” which is available in full here.

A new report shows that the percentage of 2014 lawsuits filed by shareholders in M&A deals remained consistent with the previous four years, while other key indicators suggest a slowdown. The report, Shareholder Litigation Involving Acquisitions of Public Companies, released February 25, 2015 by Cornerstone Research, reveals that investors contested 93 percent of M&A transactions in 2014. Despite this typically high percentage, shareholders brought a smaller number of competing lawsuits per deal and in fewer jurisdictions, challenged fewer deals valued below $1 billion, and took slightly longer to file lawsuits.

In a significant shift from recent years, 60 percent of contested M&A deals had lawsuits filed against them in only one jurisdiction. Just 4 percent of these deals were challenged in more than two courts, the lowest number since 2007.

…continue reading: Shareholder Litigation Involving Acquisitions of Public Companies

Securities Class Action Filings—2014 Year in Review

Posted by John Gould, Cornerstone Research, on Wednesday February 11, 2015 at 9:14 am
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Editor’s Note: John Gould is senior vice president at Cornerstone Research. This post discusses a Cornerstone Research report by Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse, titled “Securities Class Action Filings—2014 Year in Review,” available here.

Number and Size of Filings

  • Plaintiffs filed 170 new federal class action securities cases (filings) in 2014—four more than in 2013. The number of 2014 filings was 10 percent below the historical average of 189 filings observed annually between 1997 and 2013.
  • The total Maximum Dollar Loss (MDL) of filings in 2014 was $215 billion, or 66 percent below the historical annual average of $630 billion. MDL was at its lowest level since 1997.

…continue reading: Securities Class Action Filings—2014 Year in Review

Securities Class Action Filings—2014 Midyear Assessment

Posted by John Gould, Cornerstone Research, on Thursday August 28, 2014 at 9:09 am
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Editor’s Note: John Gould is senior vice president at Cornerstone Research. This post discusses a Cornerstone Research report by Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse, titled “Securities Class Action Filings—2014 Midyear Assessment,” available here.

Number and Size of Filings

  • Plaintiffs filed 78 new federal class action securities cases (filings) in the first six months of 2014—13 fewer than in the second half of 2013, but slightly higher than the 75 filings in the first half of 2013. This number was 18 percent below the historical semiannual average of 95 filings observed between 1997 and 2013.
  • The total Disclosure Dollar Loss (DDL) of filings remained at low levels. Total DDL was $30 billion in the first half of 2014, 52 percent below the historical semiannual average of $62 billion.

…continue reading: Securities Class Action Filings—2014 Midyear Assessment

Accounting Class Action Filings and Settlements—2013 Review

Posted by John Gould, Cornerstone Research, on Saturday May 24, 2014 at 9:00 am
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Editor’s Note: John Gould is senior vice president at Cornerstone Research. This post discusses a Cornerstone Research report, titled “Accounting Class Action Filings and Settlements—2013 Review and Analysis,” available here.

The number of accounting case settlements in 2013 increased for the second year in a row, but remained low compared with the previous 10 years, according to Cornerstone Research’s latest report, Accounting Class Action Filings and Settlements—2013 Review and Analysis. While the number of securities class action filings that included accounting allegations (47) remained relatively constant in 2013 compared with 2012, the market capitalization losses associated with these filings more than doubled.

…continue reading: Accounting Class Action Filings and Settlements—2013 Review

Settlements of Shareholder Litigation Involving M&A

Posted by John Gould, Cornerstone Research, on Wednesday May 21, 2014 at 9:02 am
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Editor’s Note: John Gould is senior vice president at Cornerstone Research. This post discusses a Cornerstone Research report by Olga Koumrian, titled “Settlements of Shareholder Litigation Involving Mergers and Acquisitions,” available here.

Only 2 percent of lawsuits filed in response to M&A deals that settled in 2013 produced monetary returns for shareholders. These findings are published in Settlements of Shareholder Litigation Involving Mergers and Acquisitions, which follows an earlier report on M&A filings and litigation outcomes issued this year by Cornerstone Research. Legal challenges to M&A deals resulted in only two monetary settlements in 2013, down from four in 2012 and seven in 2011.

The report also finds that plaintiff attorney fees awarded in disclosure-only settlements of M&A cases continued to drop in 2013. In addition, over the last four years, the Delaware Court of Chancery approved 80 percent of the fee amounts requested in such cases, compared with 90 percent in other courts.

…continue reading: Settlements of Shareholder Litigation Involving M&A

FDIC Lawsuits against Directors and Officers of Failed Financial Institutions

Editor’s Note: John Gould is senior vice president at Cornerstone Research. The following post discusses a Cornerstone Research report by Abe Chernin, Katie Galley, Yesim C. Richardson, and Joseph T. Schertler, titled “Characteristics of FDIC Lawsuits against Directors and Officers of Failed Financial Institutions—February 2014,” available here.

Federal Deposit Insurance Corporation (FDIC) litigation activity associated with failed financial institutions increased significantly in 2013, according to Characteristics of FDIC Lawsuits against Directors and Officers of Failed Financial Institutions—February 2014, a new report by Cornerstone Research. The FDIC filed 40 director and officer (D&O) lawsuits in 2013, compared with 26 in 2012, a 54 percent increase.

The surge in FDIC D&O lawsuits stems from the high number of financial institution failures in 2009 and 2010. Of the 140 financial institutions that failed in 2009, the directors and officers of 64 (or 46 percent) either have been the subject of an FDIC lawsuit or settled claims with the FDIC prior to the filing of a lawsuit. Of the 157 institutions that failed in 2010, 53 (or 34 percent) have either been the subject of a lawsuit or have settled with the FDIC.

…continue reading: FDIC Lawsuits against Directors and Officers of Failed Financial Institutions

Securities Class Action Filings—2013 Year in Review

Posted by John Gould, Cornerstone Research, on Saturday February 22, 2014 at 9:00 am
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Editor’s Note: John Gould is senior vice president at Cornerstone Research. This post discusses a Cornerstone Research report by Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse, titled “Securities Class Action Filings—2013 Year in Review,” available here.

Plaintiffs filed 166 new federal securities class actions in 2013, a 9 percent increase over 2012, according to Securities Class Action Filings—2013 Year in Review, an annual report prepared by Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse. The 2013 filings, although boosted by a second-half surge, are still 13 percent below the historical average from 1997 to 2012.

One possible explanation for filings remaining below the historical average in recent years is the decline in the number of unique companies listed on the NYSE and NASDAQ. A new analysis in the report shows that the number of companies on these exchanges has decreased 46 percent since 1998, providing fewer companies for plaintiffs to target as the subject of federal securities class actions.

…continue reading: Securities Class Action Filings—2013 Year in Review

Securities Class Action Settlement Amounts Increase from 2011

Posted by John Gould, Cornerstone Research, on Sunday April 7, 2013 at 9:10 am
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Editor’s Note: John Gould is senior vice president at Cornerstone Research. This post discusses a Cornerstone Research report by Ellen M. Ryan and Laura E. Simmons, titled “Securities Class Action Settlements—2012 Review and Analysis,” available here.

The 53 court-approved securities class action settlements reported in 2012 represent a 14-year low, according to Securities Class Action Settlements—2012 Review and Analysis by Cornerstone Research. This represents an 18 percent decrease from the number of approved settlements in 2011, and a decline of more than 45 percent from the 10-year average from 2002 through 2011.

As securities class actions historically take a number of years to settle, the decrease in settlements may be due in part to the relatively low number of securities class actions filed in 2009 and 2010. Despite the decrease in the number of cases settled, total settlement amounts increased by more than 100 percent in 2012 compared with 2011, with the number of mega-settlements (settlements in excess of $100 million) accounting for nearly 75 percent of all 2012 settlement dollars. One-third of the settlements in 2012 were for issuers in the financial services industry, with the technology and pharmaceutical industries being the next most prevalent sectors.

The average reported settlement amount dramatically increased from 2011 levels—in excess of 150 percent (from the inflation-adjusted amount of $21.6 million in 2011 to $54.7 million in 2012). The average settlement amount in 2012, however, is closer to the average for all prior post–Reform Act cases.

…continue reading: Securities Class Action Settlement Amounts Increase from 2011

Shareholder Litigation Involving Mergers and Acquisitions: February 2013 Update

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Friday March 22, 2013 at 9:22 am
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Editor’s Note: The following post comes to us from Cornerstone Research, and is based on a Cornerstone report by Olga Koumrian, principal researcher at Cornerstone Research, and Robert M. Daines, Pritzker Professor of Law and Business at Standford Law School. The publication is available for download here.

This report looks at litigation challenging M&A transactions, filed by shareholders of large U.S. public target companies. These lawsuits usually take the form of class actions. Plaintiff attorneys typically allege that the target’s board of directors violated its fiduciary duties by conducting a flawed sales process that failed to maximize shareholder value. Common allegations include the failure to conduct a sufficiently competitive sale, the existence of restrictive deal protections that discouraged additional bids, and conflicts of interests, such as executive retention or change-of-control payments to executives. Another typical allegation is that the target board failed to disclose enough information about the sale process and the financial advisor’s valuation.

We used Thomson Reuters’ SDC database to obtain a list of all acquisitions of U.S. public targets valued at or over $100 million, announced in each year. We searched the SEC filings of the targets and acquirers for discussion of shareholder litigation. After the deals were closed, we used court dockets to trace litigation outcomes.

…continue reading: Shareholder Litigation Involving Mergers and Acquisitions: February 2013 Update

Securities Class Action Filings in 2012

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Thursday February 21, 2013 at 9:13 am
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Editor’s Note: The following post comes to us from Alexander Aganin, vice president at Cornerstone Research. This post is based on the introduction of a Cornerstone Research report, titled “Securities Class Action Filings: 2012 Year in Review.” For more information, contact Mr. Aganin. The full report is available here.

Federal securities fraud class action filing activity slowed sharply in 2012. There were 152 filings in 2012 compared with 188 in 2011. The number of federal securities fraud class actions (also referred to in this report as filings, class actions, or cases) filed was 21 percent below the annual average of 193 filings observed between 1997 and 2011 (Figure 1).


Click image to enlarge

The following trends are noteworthy for 2012:

…continue reading: Securities Class Action Filings in 2012

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