The upstart business of appraisal arbitrage – a distant relation of M&A shareholder litigation – has attracted hundreds of millions of dollars of smart hedge-fund money in the past few years. As I described in more detail in a post last month, appraisal arbitrageurs acquire shares after a company has announced its acquisition, refuse to cash out their stake when the deal goes through and then bring claims in court that the sale price was too low. Essentially, they are betting that judges will set a higher value on shares of an acquired company than the company’s own board and the shareholders who voted to accept the offer.
A year ago, when the U.S. Supreme Court was considering whether to all but erase shareholder fraud class actions brought under the Securities Exchange Act of 1934, pension funds were strong voices in the chorus defending shareholder fraud litigation. The Council of Institutional Investors and an ad hoc group of nearly three dozen public pension funds submitted amicus briefs in Halliburton v. Erica P. John Fund, arguing that private shareholder suits deter corporate wrongdoing, recoup investors’ losses and are a critical supplement to Securities and Exchange Commission enforcement actions. That was a familiar refrain: Since Congress amended the securities laws in 1995, empowering institutional investors to lead shareholder fraud class actions, pension funds have become outspoken advocates of their right to sue the corporations they invest in.
The 2nd U.S. Circuit Court of Appeals has set a briefing schedule for its consideration of the dismissal of antitrust claims against more than a dozen global banks that allegedly conspired to fix the benchmark London Interbank Offered Rate. The opening brief from a class of bond purchasers whose appeal was reinstated last week by the U.S. Supreme Court is due on March 9. The banks’ response is supposed to be filed a month later.
If you ask the state of Connecticut, Lorraine Martin was never arrested in August 2010 on narcotics charges. Yes, the arrest took place – Martin was charged along with her two adult sons after police searched her home in Greenwich and found marijuana, scales and plastic bags – but in January 2012 the state dropped its case and scrubbed Martin’s record. Under Connecticut’s erasure statute, which is similar to those in other states, Martin is permitted to swear under oath that she has never been arrested.
On Friday evening, the Justice Department filed its brief asking the entire 2nd U.S. Circuit Court of Appeals to review U.S. v. Newman, the biggest insider trading appellate decision in recent memory. It’s a long shot, considering how infrequently the 2nd Circuit agrees to hear cases en banc. But even in the unlikely event that the government ultimately prevails in the appeal, the Justice Department will still have lost ground in insider trading prosecution because the new brief abandons a position the government defended in earlier stages of the case.
It is a tragedy to be diagnosed with mesothelioma, a lung and chest cancer closely associated with exposure to asbestos. Mesothelioma is a particularly lethal disease, typically undetected until tumors have spread to vital organs. Most of the 3,000 or so people a year who are diagnosed with mesothelioma don’t even receive treatment other than palliative care for the fearsome symptoms of their cancer.
Last fall, directors of the life insurance settlement company Imperial Holdings adopted an apparently unique tactic to rein in suits by shareholders. As I reported at the time, the board amended Imperial’s bylaws to require shareholders to deliver written consent from the owners of at least 3 percent of the company’s outstanding shares in order to bring a class action or derivative suit.
Stuart Grant of Grant & Eisenhofer has broken out the exclamation points – three of them in a row – in a new motion asserting that Wal-Mart should be fined more than $1 million for failing to turn over documents related to its internal investigation of bribes allegedly paid by its Mexican operation. According to the filing, Wal-Mart’s lawyers at Gibson Dunn & Crutcher and Potter Anderson & Corroon signed misleading certifications in October, attesting that they had decided what documents Wal-Mart would produce in order to comply with an order from Delaware Chancery Court.
On Thursday, the mining and metals company Freeport-McMoRan filed the long-awaited settlement of shareholder claims in Delaware Chancery Court that it overpaid for two affiliates whose 2013 acquisition was tainted by directors’ conflict of interest. Freeport agreed to pay $137.5 million, $115 million of which will come from its insurers. That’s the third-biggest-ever cash payout in a derivative settlement, behind the record-setting $275 million Activision Blizzard deal last November and the $139 million News Corp settlement in 2013.
I felt downright nostalgic when I saw that Apple and Ericsson have sued each other over licensing fees for Ericsson’s standard-essential patents for wireless technology. It feels so long since the days when smart device patent filings were a daily occurrence!