M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

Tuesday, January 31, 2012

Chadborne & Parke on Drafting Trends in Poison Pills

In its most recent Corporate Practice Newswire, attorneys at Chadborne & Parke report on their survey of 27 rights plans (commonly referred to as "poison pills") adopted during the 14 months ending on October 31, 2011 by U.S. companies with market capitalizations above $250 million . The stated purpose of the survey: to review how companies tailor their poison pills using recently developed technology. The authors reviewed the following provisions:

  • Ownership Percentage Triggers
  • Duration
  • Use of "Qualifying Offers"
  • Coverage of Derivatives
  • Use of a Trust to Facilitate an Exchange
  • Window for Redemption or Amendment Post-Trigger
  • Coverage of Persons Acting in Concert

According to the authors,

Companies that have older rights plans in effect or "on the shelf" and ready to be adopted in the event of hostile activity may find that their poison pills lack the diverse array of new provisions increasingly becoming prevalent in modern rights plans. Consequently, companies seeking to adopt a new poison pill or put one "on the shelf" need to consider whether their rights plans should be updated to take advantage of these new provisions.

The authors' goal is to demonstrate how boards can better engineer their poison pills to respond to the realities of today’s hostile acquirers.


January 31, 2012 | Permalink | Comments (0) | TrackBack (0)

Delaware's fragile network

I've blogged about Delaware's new arbitration procedure before.  Now that the parties in the legal challenge to the procedure are preparing for arguments on a summary judgment motion, I thought it might be an appropriate time to chime in again.  Delaware's value and the source of its competitive strength is its vast body of corporate common law. In order for Delaware to maintain this position, it has to ensure that it has a regular supply of cases that it can adjudicate.  Where and when new fact patterns arise, the courts are then challenged to reinterpret the law to adapt to new circumstances.  When there are a lot of cases, the changes tend to be marginal.  No single move means much, but, like glaciers in stop motion, when you observe it from afar there can be big moves over time.  

Anything that threatens to slow down the flow of cases to Delaware becomes a threat to the development and the maintenance of the Delaware's competitive position. That's why the whole multi-forum litigation question is a problem for Delaware. If litigants bring Delaware cases outside of Delaware, Delaware's common law machine will slow down. The same is true of private arbitration.  Now, let me distinguish between what Carlyle is attempting to do with its mandate to arbitrate all shareholder claims and what Delaware is doing with it arbitration system.  Delaware's arbitration system requires two consenting parties. That means that no shareholders bringing fiduciary duty claims against directors will be required to arbitrate against their will. Neither will hostile acquirers challenging director actions to protect the corporation against an unwanted offer. My guess is few (if any) of those kinds of cases will ever end up being submitted to the arbitration system.  

Cases that will end up in arbitration are of a particular type: contract litigation between buyers and sellers in a merger transaction.  That's all litigation about deals gone bad, MAC's, termination and other walk rights. Many of those kinds of cases are candidates for arbitration.  Once parties become comfortable with the system they'll being to insert Delaware arbitration language in their agreements and this kind of litigation will begin to disappear from the courts. When they start to disappear from the courts, transaction planners will begin to see a decline in the positive externalities associated with the Delaware law, including its predictability.  Even though the courts may continue to innovate and adapt to new circumstances in arbitration, the drawback of arbitration is that none of those innovations and adaptations become part of the public record and none of them can be relied on by transaction planners working on other deals. If arbitration becomes the norm for that subset of cases, Delaware's value will declines just a bit.  

What's the alternative?  I don't know yet.  Of course, the US Supreme Court has expressed a decided preference for arbitration, so it's not like one can stand up and say, "No more arbitration!"  That's just not going to happen.  Perhaps, Delaware's policymakers took a look at the changing landscape and figured getting into the game was the least worst of the alternatives.  That may be so, and if it is I sympathize with their position.  It won't change the fact that by jumping onto the arbitration bandwagon, the state is giving away some its own value.

Oh, and Joe Biden was in Delaware yesterday praising its courts for "making us look so good for so long."


January 31, 2012 | Permalink | Comments (0) | TrackBack (0)

Friday, January 27, 2012

Changes in the shareholder litigation landscape

Boris Feldman at Wilson Sonsini points out in a short paper that the bipolar world of shareholder litigation with familiar players and strategies has changed beneth our feet:

Those patterns have been disrupted and perhaps discarded in recent years. The reason should not be surprising: the bipolar world of shareholder litigation is no more. For many years, the dominant plaintiffs’ securities law firm was Milberg Weiss. After it split into East and West coast firms, they nevertheless together remained the 800-pound gorilla of the shareholder litigation jungle. A few other firms earned a seat at the table and became powers in their own right. But the fundamental patterns of behavior continued. A defense lawyer could predict, with some confidence, the likely response to this or that tactical move. Moreover, the dominant plaintiffs’ firms exercised some discipline on their side of the curtain; they had substantial influence over small firms and parvenus

All that?  Gone.  Feldman points out some trends, some of which we have previously noted here at landmarks in this new period.  They include: 1. Venue wars and multi-forum litigation problems. That was the subject of a recent paper of mine; 2. Demand letters in advance of shareholder litigation; 3. Ubiquitous derivative suits; 4. Automatic merger suits - Steven Davidoff's recent paper observes that in recent years in excess of 80% of mergers are accompanied by shareholder litigation; and finally, 5. Section 220 books & records actions are now more common, probably because judges have been pushing litigants to go that route.


January 27, 2012 | Permalink | Comments (0) | TrackBack (0)

Thursday, January 26, 2012

Will M&A Heat Up in 2012?

Practical Law Company held a nicely done webinar today reviewing the major Public M&A trends in 2011. As most M&A experts know, deal activity was down the second half of 2011. Nevertheless, experts appear hopeful that there will be some deal growth in 2012.  Cleary Gottlieb's recently released advisory for board members spends a lot of time focusing on M&A risks and opportunities.  It predicts that "There is reason to expect growth in deal activity in 2012, despite current market and economic challenges. Prospective acquirers have substantial cash resources and reasonable or even strong stock prices, banks are willing to lend for at least some acquisitions, private equity firms have significant unused investor commitments, and hedge funds are actively seeking positive results." Cleary's memo is definitely worth a read and a useful overview of risks that board members may face in the M&A realm. Other sources have also predicted an uptick in deal activity in 2012, see here and here. We will wait and see...

HT: TCB Governance Center Blog

- AA

January 26, 2012 in Current Events, Deals | Permalink | Comments (0) | TrackBack (0)

Wednesday, January 25, 2012

Call for Papers: National Business Law Scholars Conference

From the conference organizers: 

The National Business Law Scholars Conference (NBLSC), formerly known as the Midwest Corporate Legal Scholars Conference, will be held on Wednesday, June 27th and Thursday, June 28th at University of Cincinnati College of Law in Cincinnati, Ohio.  This is the third annual meeting of the NBLSC, which has been renamed this year to reflect its national scope and the widely varied interests of its participants.  We welcome all on-topic submissions and will attempt to provide the opportunity for everyone to actively participate.  We will also attempt to assign a commentator for each paper presented.  Junior scholars are especially encouraged participate, and we will hold a special “how-to” panel for prospective business law scholars discussing the job market and transitioning into the legal academy.

To submit a presentation, email Professor Eric C. Chaffee at echaffee1@udayton.edu with an abstract or paper by April 15, 2012.  Please title the email “NBLSC Submission – {Name}”.  If you would like to attend, but not present, email Professor Chaffee with an email entitled “NBLSC Attendance”.  Please specify in your email whether you are willing to serve as a commentator or moderator.  A conference schedule will be circulated in early June.

Conference Organizers:

Barbara Black (University of Cincinnati)
Eric C. Chaffee (University of Dayton)
Steven M. Davidoff (The Ohio State University)


January 25, 2012 | Permalink | Comments (0) | TrackBack (0)

Tuesday, January 24, 2012

Call for Papers: Section on Law and South Asian Studies

The Section on Law and South Asian Studies has issued the following call for papers on Legal Education and Legal Reform in South Asia for the AALS' 2013 Annual Meeting in New Orleans:

The Section on Law and South Asian Studies of the AALS seeks outstanding proposals relating to the topic of of legal education as a vehicle for legal reform in South Asia. The selected proposals will be the basis for presentations at the AALS Annual Meeting to be held in New Orleans in early January, 2013. Topics relating to any country within South Asia, including Afghanistan, Bangladesh, Bhutan,  Burma, India, Nepal, Pakistan, Sri Lanka, will be appropriate. Possible topics include: curricular reform; regional and comparative legal education reforms; the training of lawyers and judges as actors for social and legal change; the conservative pull of legal education; evolution of clinical legal education; the role of externships in institutional reform; the role of US law school programs in legal change. Please send a 500-1000 word proposal to the chair of the Section, Shubha Ghosh, at ghosh7@wisc.edu by February 24, 2012.

While this is not necessarily a transactional program, there are a number of readers of this blog that are interested in legal reform and transactional law in South Asia.  Some reforms, such as India's recently proposed (and now stalled) Companies Bill 2011, touch upon important issues related to M&A transactions. It would be interesting to have a better understanding of whether legal education and the training of lawyers and regulators has had any impact on these law reform efforts.


January 24, 2012 in Asia, Conference Announcements | Permalink | Comments (0) | TrackBack (0)

Antitrust turnover

I suppose the DOJ's new more active approach is more taxing on its chief.  That might be why, as the division's head according to various news reports, the DOJ's Antitrust Division is looking forward to new leadership as Sharis Pozen prepares to leave her position . 


January 24, 2012 in Antitrust | Permalink | Comments (0) | TrackBack (0)

Thursday, January 19, 2012

Corporate governance overreach by Carlyle?

The Deal Prof looks at The Carlyle Group's proposed IPO and figures it's a corporate governance dud.  I agree. Carlyle's Amended and Restated Limited Partnership Agreement (Appendix A to the S-1A) has a dispute resolution provision that is reprinted in relevant part below (it's lengthy, sorry).  It does two things.  First, it requires that limited partners in Carlyle's soon to be publicly traded firm resolve all their dispute only in private arbitration and not in any court.  Second, it prohibits any arbitration be brought in a representative capacity.

Now, I'm the first one to admit that there is plenty of abuse of shareholder litigation. These days, one can't imagine a merger announcement not being accompanied by shareholder litigation.  But still, the correct answer can't be to eliminate representative shareholder litigation altogether.  The way this arbitration provision is written, it's pretty clear that no one should ever bring any litigation against management at all ... ever.  That can't be the correct result.  For all its warts, in a world where shareholding is increasingly dominated by institutional shareholders who don't have incentives to provide intense monitoring and are not permitted to perform the "Wall Street walk", shareholder litigation is one of the few governance arrows left in the corporate governance quiver.

Sure, there are plenty of suits that aren't worth more than their nuisance value.  (Steven Davidoff highlights the sheer volume of these transaction related lawsuits in his new paper examining the "Great Game" and the rise of transaction-related litigation). But, at the same time, there are other valuable cases like Delmonte or Southern Peru. If Carlyle's approach becomes the norm as firms go public there are real downsides to firms opting out of the formal legal regime.

First, there's a threat to the development and maintainence of the corporate law.  This arbitration provision goes further than Delaware's optional arbitration system that I've blogged about before.  If parties are required to bring all corporate litigation to private arbitrators, then corporate law litigation will quickly disappear from the courts and the law will begin to atrophy.  Rather than having a deep and rich common law, the corporate law will become nothing more than an inside game with only a small number of litigators and professionals being in the "know" as to the current state of the private law.  

Second, even if one accepts that a private law system is acceptable, and I don't think that's correct, then there are still important incentive effects associated with the elimination of representative litigation.  If arbitration may not be pursued in a representative capacity, then the incentives for any plaintiff's counsel to be in this business quickly fall away. The result is, effectively, that shareholder arbitration for a publicly traded issuer would disappear.  

Now, I guess if you are incumbent management eliminating pesky shareholders is a good thing.  On the other hand, if you are an investor, you have less reason to be sanguine about managers taking away one more tool for you to monitor their behavior.

I've previously recommended exclusive forum provisions as a middle ground to reduce incentives to engage in nuisance-like shareholder litigation while leaving open avenues for litigants to bring claims before courts.  That middle-ground strikes me as a better result than the more extreme route taken by Carlyle.  Of course, Carlyle's managers have different incentives and care about different things than do the courts in Delaware or investors. The Deal Prof doesn't think that the SEC will permit Carlyle to go public with this provision intact.  I hope he's right. In that event, Carlyle's Section 16.9(c) provides for an exclusive forum provision to govern disputes should the arbitration provision be voided by a court or otherwise be found to be as uneforceable. 



Carlyle Amended & Restated Limited Partnership Agreement

Section 16.9.  Dispute Resolution.
 (a) The Partnership, each Partner, each Record Holder, each other Person who acquires an interest in a Partnership Security and each other Person who is bound by this Agreement (collectively, the “Consenting Parties” and each a “Consenting Party”) (i) irrevocably agrees that, unless the General Partner shall otherwise agree in writing, any claims, suits, actions or proceedings arising out of or relating in any way to this Agreement or any Partnership Interest (including, without limitation, any claims, suits or actions under or to interpret, apply or enforce (A) the provisions of this Agreement, including without limitation the validity, scope or enforceability of this Section 16.9(a) or the arbitrability of any Dispute (as defined below), (B) the duties, obligations or liabilities of the Partnership to the Limited Partners or the General Partner, or of Limited Partners or the General Partner to the Partnership, or among Partners, (C) the rights or powers of, or restrictions on, the Partnership, the Limited Partners or the General Partner, (D) any provision of the Delaware Limited Partnership Act or other similar applicable statutes, (E) any other instrument, document, agreement or certificate contemplated either by any provision of the Delaware Limited Partnership Act relating to the Partnership or by this Agreement or (F) the federal securities laws of the United States or the securities or antifraud laws of any international, national, state, provincial, territorial, local or other governmental or regulatory authority, including, in each case, the applicable rules and regulations promulgated thereunder (regardless of whether such Disputes (x) sound in contract, tort, fraud or otherwise, (y) are based on common law, statutory, equitable, legal or other grounds, or (z) are derivative or direct claims)) (a “Dispute”), shall be finally settled by arbitration conducted by three arbitrators (or, in the event the amount of quantified claims and/or estimated monetary value of other claims contained in the applicable request for arbitration is less than $3.0 million, by a sole arbitrator) in Wilmington, Delaware in accordance with the Rules of Arbitration of the International Chamber of Commerce (including the rules relating to costs and fees) existing on the date of this Agreement except to the extent those rules are inconsistent with the terms of this Section 16.9, and that such arbitration shall be the exclusive manner pursuant to which any Dispute shall be resolved; (ii) agrees that this Agreement involves commerce and is governed by the Federal Arbitration Act, 9 U.S.C. Section 1, et seq., and any applicable treaties governing the recognition and enforcement of international arbitration agreements and awards; (iii) agrees to take all steps necessary or advisable, including the execution of documents to be filed with the International Court of Arbitration or the International Centre for ADR in order to properly submit any Dispute for arbitration pursuant to this Section 16.9; (iv) irrevocably waives, to the fullest extent permitted by law, any objection it may have or hereafter have to the submission of any Dispute for arbitration pursuant to this Section 16.9 and any right to lay claim to jurisdiction in any venue; (v) agrees that (A) the arbitrator(s) shall be U.S. lawyers. U.S. law professors and/or retired U.S. judges and all arbitrators, including the president of the arbitral tribunal, may be U.S. nationals and (B) the arbitrator(s) shall conduct the proceedings in the English language; (vi) agrees that except as required by law (including any disclosure requirement to which the Partnership may be subject under any securities law, rule or regulation or applicable securities exchange rule or requirement) or as may be reasonably required in connection with ancillary judicial proceedings to compel arbitration, to obtain temporary or preliminary judicial relief in aid of arbitration, or to confirm or challenge an arbitration award, the arbitration proceedings, including any hearings, shall be confidential, and the parties shall not disclose any awards, any materials in the proceedings created for the purpose of the arbitration, or any documents produced by another party in the proceedings not otherwise in the public domain; (vii) irrevocably agrees that, unless the General Partner and the relevant named party or parties shall otherwise mutually agree in writing, (A) the arbitrator(s) may award declaratory or injunctive relief only in favor of the individual party seeking relief and only to the extent necessary to provide relief warranted by that party’s individual claim, (B) SUCH CONSENTING PARTY MAY BRING CLAIMS ONLY IN ITS INDIVIDUAL CAPACITY, AND NOT AS A PLAINTIFF, CLASS REPRESENTATIVE OR CLASS MEMBER, OR AS A PRIVATE ATTORNEY GENERAL, IN ANY PURPORTED CLASS OR REPRESENTATIVE PROCEEDING, and (C) the arbitrator(s) may not consolidate more than one person’s claims, and may not otherwise preside over any form of a representative or class or consolidated proceeding; and (viii) agrees that if a Dispute that would be arbitrable under this Agreement if brought against a Consenting Party is brought against an employee, officer, director or agent of such Consenting Party or its affiliates (other than Disputes brought by the employer or principal of any such employee, officer, director or agent) for alleged actions or omissions of such employee, officer, director or agent undertaken as an employee, officer, director or agent of such Consenting Party or its affiliates, such employee, officer, director or agent shall be entitled to invoke this arbitration agreement. Notwithstanding Section 16.10, each provision of this Section 16.9(a) shall be deemed material, and shall not be severable and this Section 16.9(a) shall be enforced only in its entirety.



January 19, 2012 in Litigation | Permalink | Comments (1) | TrackBack (0)

Wednesday, January 18, 2012

Galleon 2.0: Watch it live

You can watch Preet Bharara's press conference announcing the Galleon 2.0 insider trading arrests here (1:00pm, ET):


"A circle of friends who formed a lucrative club...to make $62 million in profits ..." That's as big as Galleon. That made all that money on trades related to Dell.  Wow.

Three of the seven defendants have already pleaded guilty and are cooperating.

Bharara says that the group's trading in advance of Dell earnings announcements was "the big illegal short". Too cute.


"But cheating on the test and getting away with it are two different things."

Here is the civil complaint filed by the SEC against Level Global, Diambondback Capital, and the seven individual defendants in the criminal case.


January 18, 2012 in Insider Trading | Permalink | Comments (0) | TrackBack (0)

Tuesday, January 17, 2012

Kodak and AMR can breathe easy

For now at least, they won't have to worry about Allen Weintraub trying to engineer an acquisition of their respective companies.  Allen Weintraub?  What? You don't remember him?  He caused a minor stir last year when he faxed in unsolicited offers to the boards of Kodak and AMR.  He even went down to his local bank branch to seek financing for his offers.  In any event, the SEC went after him and late last week the US District Court in Florida entered a final judgment against Mr. Weintraub

On January 10, 2012, the U.S. District Court for the Southern District of Florida in Miami entered final judgments against Allen E. Weintraub and his company, AWMS Acquisitions, Inc., d/b/a Sterling Global Holdings (Sterling Global), in connection with purported tender offers they made for the common stock of Eastman Kodak Company (Kodak) and AMR Corporation (AMR), the parent company of American Airlines. The Court’s order imposes permanent injunctions against Weintraub and Sterling Global and requires them to pay $400,000 in civil money penalties.

So there you have it. If you're going to try to takeover Kodak, follow the proxy rules and know that your local Citi branch isn't going to give you a $1 billion loan to do the deal!


January 17, 2012 | Permalink | Comments (0) | TrackBack (0)

Olympus shareholder suit filed

According to Reuters, an Olympus shareholder has now sued the board for "damaging trust" due to the accounting scandal there.   Of course, the board has already filed suit against itself, so I wonder where this suit stands.  I'm no expert in Japanese corporate law, in fact I know almost nothing about it.  Any readers from Japan - and we have a number - who wish to comment on how this shareholder suit stands next to the board's suit, please feel free.


January 17, 2012 in Asia | Permalink | Comments (0) | TrackBack (0)

Hedge funds, M&A, and private information

In their new paper, Hedge Funds in M&A Deals, Dai, et al find evidence "consistent with informed abnormal short selling" by hedge funds prior to M&A announcements. The authors observe larger stakes where there is evidence of private information.  I'm shocked. ... Actually I'm not really shocked, given what's come out over the past year or two.

Abstract: This paper investigates recent allegations regarding the misuse of private insider information by hedge funds prior to the public announcement of M&A deals. We analyze this issue by using a unique and comprehensive data set which allows us to analyze the trading pattern of hedge funds around corporate mergers and acquisitions in both the equity and derivatives markets. In general, our results are consistent with hedge funds, with short-term investment horizons (henceforth, short-term hedge funds) taking advantage of private information and engaging in trading based on such information. We show that short-term hedge funds holdings of a target’s shares in the quarter prior to the M&A announcement date are positively related to the profitability of the deal as measured by the target premium. In addition, we also find that the target price run-up before the deal announcement date is significantly greater for deals with greater short term hedge fund holdings. We also find evidence consistent with informed abnormal short selling and put buying in the corresponding acquirer’s stock prior to M&A announcements. This is particularly evident when hedge funds take larger stakes in target firms. In addition, we show that such a strategy is potentially very profitable. We consider alternative explanations for such short term hedge fund holdings in target firms; however our results seem inconsistent with these alternative explanations but rather, seem to be consistent with trading based on insider information. Overall, our results have important implications regarding the recent policy debate on hedge fund regulation.


January 17, 2012 in Hedge Funds, Insider Trading, Mergers | Permalink | Comments (0) | TrackBack (0)

Thursday, January 12, 2012

Davidoff on Airgas

Steven Davidoff has just posted a nice case study of the Airgas decision forthcoming in the Columbia Business Law Review.  Steven had a front-row view of the Airgas hostile offer and subsequent litigation. (Google Deal Prof and Airgas if you don't believe me.) In this paper, Steven revisits the class through the prism of Delaware's judges as strategic actors.  The role of Delaware's judiciary is fascinating and this paper - and the Airgas episode - is an important contribution to understanding how and why Delaware's courts decide as they do.  It's well worth a read.

Abstract: When is it appropriate for Delaware judges to act strategically? This case study documents and analyzes Air Products’ $5.8 billion unsuccessful, hostile offer for Airgas, reviewing the decisions made by the Delaware courts in adjudicating the most prominent takeover bid of 2010. The three court opinions in Air Products v. Airgas show how Delaware courts strategically decide cases and the effect of this decision-making on the course of Delaware corporate law and Delaware’s constituencies. The Airgas case ultimately provides a useful lesson for when, if ever, strategic considerations should influence the outcome of individual Delaware corporate law disputes.


January 12, 2012 in Delaware, Hostiles, Takeover Defenses | Permalink | Comments (0) | TrackBack (0)

Wednesday, January 11, 2012

Representative plaintiff sanctioned for improper trading

After Calix, Inc. announced its acquisition of Occam Networks, Inc. in September 2010 the by now usual lawsuit appeared to challenge the transaction. One of the representative plaintiffs in this case was Michael Steinhardt, a hedge fund investor, described as "one of the most successful investors in the history of Wall Street" and an Occam shareholder.  The suit alleged that the directors of Occam violated their fiduciary duties to the corporation when they agreed to sell the corporation to Calix at an "unfair price."  OK, so far, so good.  Well, not good, but expected. You know what I mean.  In any event, the plaintiffs pursued their case and were permitted to take discovery subject to a confidentiality order. That order read, in part:

Confidential Discovery Material, or information derived therefrom, shall be used solely for purposes of this Litigation and in an appraisal proceeding that Plaintiffs in this Litigation may file . . . . Confidential Discovery Material shall not be used for any other purpose, including, without limitation, for any business or commercial purpose or for any other litigation or proceeding. Confidential Discovery Material Parties and non-parties who receive Confidential Discovery Material shall not purchase, sell, or otherwise trade in the securities of any company, including but not limited to Occam and Calix, on the basis of confidential information contained in the Confidential Discovery Material to the extent such information is still confidential at the time of such purchase, sale or trade. 

Of course, with an order like this and with sophisticated investors like Steinhardt, you can only guess what happened next.  That's right, after Steinhardt was in possession of confidential information (via one of his co-plaintiffs) he began to short Calix common stock. When the Calix defendants found out that Steinhardt had shorted their stock they moved in the Delaware Chancery Court for sanctions against him. 

Last Friday, Vice Chancellor Laster sanctioned Steinhardt for trading in violation of the confidentiality order (Steinhardt Sanctions Opinion).  The sanctions Steinhardt and his funds for improper trading include:

 (i) dismissal from the case with prejudice and barred from receiving any recovery from the litigation; 
(ii) requirement to self-report their improper trading to the SEC;
(iii) requirment to disclose their improper trading in any future application to serve as lead plaintiff; and
(iv) an order to disgorge their trading profits (approximately $500,000).

Lesson?  If you are going to be a representative plaintiff in one of these transaction related lawsuits, you can't trade in the stock of the either the acquirer or the target during the pendancy of the litigation.  That seems pretty straightforward.  You'd have thought Steinhardt would have already known that.


January 11, 2012 in Insider Trading, Litigation | Permalink | Comments (0) | TrackBack (0)

Tuesday, January 10, 2012

Challenging the conventional wisdom on hostile offers

The WSJ Deal Journal posts some excellent thoughts on how Martin Marietta's hostile offer for Vulcan Materials challenges the conventional wisdom on hostile offers. Take read.



January 10, 2012 in Hostiles | Permalink | Comments (0) | TrackBack (0)

Olympus goes after its own directors

You'll remember last Fall when the whole Olympus accounting scandal came to light?  Olympus was using merger-related transaction fees to hide its nearly 2 decades of accounting shenigans.  It was only when Olympus' new CEO Michael Woodford started asking questions about the inexplicably large transaction fees that the whole thing fell apart. Now, Olympus has announced that it has filed suit in the Tokyo District Court against 19 current and past Olympus directors seeking more than 3.6 billion Yen (plus interest) in damages. That's about $45 million. That's not much, given the amount of damage caused to Olympus by the accounting scandal.  According to Reuters, the internal investigation panel recommended seeking 90 billion Yen ($1.17 billion) in damages from the directors. Even in Japan I don't think D&O insurance covers accounting fraud.

Olympus expects all the current directors who have been sued to resign at the next shareholder meeting in April 2012. 


January 10, 2012 in Asia | Permalink | Comments (0) | TrackBack (0)

Monday, January 9, 2012

Johnson on transaction related litigation

Jennifer Johnson has a new article, Securities Class Actions in State Court, appearing on the problem of multi-forum transaction-related litigation. This paper is consistent with my paper on the same issue. Johnson suggests that unless action is taken at the state level to manage this issue, we shouldn't be surprised if the result is ultimately that Delaware loses the "carve-out" provided in SLUSA.  

Abstract: Over the past two decades, Congress has gradually usurped the power of state regulators to enforce state securities laws and the power of state courts to adjudicate securities disputes. This Paper evaluates the impact of Congressional preemption and preclusion upon state court securities class actions. Utilizing a proprietary database, the Paper presents and analyzes a comprehensive dataset of 1500 class actions filed in state courts from 1996-2010. The Paper first examines the permissible space for state securities class actions in light of Congressional preclusion and preemption embodied in the 1998 Securities Litigation Uniform Standards Act (SLUSA) and Class Action Fairness Act of 2005 (CAFA). The Paper then presents the state class action filing data detailing the numbers, classifications, and jurisdictions of state class action cases that now occupy the state forums. First, as expected, the data indicates that there are few traditional stock-drop securities class actions litigated in state court today. Second, in spite of the debate over the impact of SLUSA and CAFA on 1933 Act claims, very few plaintiffs attempt to litigate these matters in state court. Finally, the number of state court class actions involving merger and acquisition (M&A) transactions is skyrocketing and now surpasses such claims filed in federal court. Moreover, various class counsel file their M & A complaints in multiple jurisdictions. The increasingly large number of multi-forum M&A class action suits burden the defendants and their counsel, the judiciary and even plaintiffs’ lawyers themselves. The paper concludes that absent effective state co-ordination, further Congressional preemption is possible, if not likely.

Back from the grading hiatus.  Classes starting again, so expect a more normal posting routine.


January 9, 2012 | Permalink | Comments (0) | TrackBack (0)

Tuesday, January 3, 2012

Weil on Arbitration vs. Litigation

Practitioners are often asked by their clients, "Which do you recommend to resolve disputes under a merger agreement: Litigation or Arbitration?"

Here's a Weil client alert by Sara Duran that "addresses the pros and cons of arbitration, situations where litigation may be preferable and drafting considerations for an agreement to arbitrate, in each case, from the viewpoint of US counterparties arbitrating domestically and applying US law."



January 3, 2012 in Contracts, Litigation, Merger Agreements | Permalink | Comments (0) | TrackBack (0)

Texas Tech seeks a visitor

Texas Tech is looking for a visitor to teach business law and M&A courses.  See below: 

Texas Tech University School of Law is seeking applications for one- and two-semester (full time) visitors during the 2012-13 academic year.  Anticipated curricular needs include courses in business entities, business analysis for lawyers, corporate governance, securities regulation, mergers and acquisitions, property, energy law, agricultural law, natural resources law, environmental law, employment law, employment discrimination law, civil procedure, criminal procedure, criminal law, health law, animal law, and law and science.  Applicants with full-time law school teaching experience fitting the curricular needs are especially encouraged to apply, as are women, minorities, and veterans.   Along with a resume (PDF), an applicant should e-mail a single page cover letter (PDF) identifying the two or three courses he or she is best prepared to teach.  Texas Tech University is an Affirmative Action/Equal Opportunity Employer.     Applicants should e-mail Professor Michael Hatfield c/o Michele Thaetig at michele.thaetig@ttu.edu with “2012-13 Faculty Visitor Application” and the two or three specific courses in the subject line.  Review of applications will begin in mid-January.

Still grading, so posting will be light.


January 3, 2012 in Academic Jobs | Permalink | Comments (0) | TrackBack (0)