Most Foreign Investors Are Now Banned from Class Actions, Must Act as Lead Plaintiff or Opt Out

The federal court of appeals in Manhattan (the Second Circuit) recently affirmed a district court decision to exclude from the class all foreign investors from countries that are unlikely to recognize the court’s judgment or the court-approved settlement as the final resolution for all class members. The rule, which has already been followed by other courts in the United States, affects investors from around the world, including the Gulf States, Germany, France, Austria, Switzerland, Luxembourg, Japan, South Korea, and Taiwan… Read Article

New York Courts Widen Options for Enforcement of Foreign Arbitral Awards

In a development that could have substantial benefits for international investors, state and federal courts in New York have issued a series of decisions that significantly facilitate the enforcement of foreign arbitration awards in New York. Because many defendants hold assets in the New York banking system or in New York real estate, the developments are highly relevant to investors seeking recovery for harms suffered around the world. The courts’ recent decisions re-affirm New York’s commitment to promoting international arbitration and asset recovery… Read Article

Case Law Settles on Sponsored ADRs as Within US Regulatory Scope

In July of 2016 we wrote of the uncertainty surrounding ADRs and synthetic securities and the lower courts’ expansive readings of the prohibition on applying U.S. securities laws to ADRs traded in the United States in the wake of Morrison v. National Australia Bank, 561 U.S. 247 (2010). Some of that uncertainty is now fading for ADRs, as the courts appear to be settling on a bright-line rule that all ADRs sponsored by the issuer of the underlying foreign stock are within the scope of U.S. laws and regulations—even if the fate of unsponsored ADRs traded over-the-counter remains unclear… Read Article

Morrison’s ‘Clear’ Transactional Test After Toshiba—the Search for the Border between Domestic and Foreign Transactions in Complex Financial Instruments

Few U.S. court decisions have gained such notoriety as the U.S. Supreme Court’s 2010 decision in Morrison v. National Australia Bank, 561 U.S. 247 (2010). In Morrison, the high court famously substituted its ‘transactional test’ for what was known as the ‘conduct and effects’ test—a close cousin to the internationally widely accepted lex loci delicti rule to determine the law governing fraud claims in cross-border situations on the basis of the place where the fraud was committed… Read Article

What Fiduciary Duties?: Delaware Supreme Court Okays One-Way Fee-Shifting Bylaws

The Board of Insulated Corp. has just agreed to a merger by which Insulated Corp.’s controlling stockholder will cash-out all of the corporation’s public stockholders and take the corporation private. Your client owns shares of Insulated Corp. stock and believes the merger price reflects only 50% of the true value of the stock. If your client is right, then she stands to gain $50,000 in increased merger consideration—and the class of public stockholders stands to gain $50,000,000. Sounds like a great case for breach of fiduciary duty, right? Not so fast… Read Article
(first published in AAJ’s Class Action Litigation Groups Newsletter, Summer 2014)

Supreme Court to Revisit the Fraud-on-the-Market Presumption of Reliance in Securities Fraud Case

In November 2013, the United States Supreme Court agreed to hear a corporate defendant’s sweeping challenge to the fraud-on-the-market presumption of reliance in securities fraud cases. Reliance is a necessary element of a securities fraud claim… Read Article
(first published in AAJ’s Class Action Litigation Groups Newsletter, Winter 2014)

Disgorgement Of Compensation Paid To Directors During The Time They Were Grossly Negligent: An Available But Seldom Used Remedy

A bedrock principle of Delaware corporate law is that directors of Delaware corporations are charged with a duty of care, which means that they must consider all material information reasonably available to them and exercise reasonable care and skill in dealing with the affairs of the corporation… Read Article

Shareholder Rights and Corporate Governance in the Dodd-Frank Act

The Dodd-Frank Wall Street Reform and Consumer Protection Act is a massive piece of legislation that is over 2,300 pages long. It authorizes various regulatory bodies to conduct additional studies and to enact rules to implement the Act… Read Article

SEC Adopts Proxy Access Rules Making it Easier for Shareholders to Nominate and Remove Directors

The ability of shareholders to require that the names of shareholder-nominated candidates for the board of directors be placed on the company’s proxy statement has long been considered the “holy grail” for shareholder activists… Read Article

SEC Adopts New Regulations to Deter Fraudulent Conduct and Excessive Risk Taking

On December 16, 2009, the SEC voted 4-to-1 to adopt broader proxy disclosure requirements forcing public companies to reveal more information about how they pay their executives… Read Article

Company Takes Aim at Shareholder, Refusing to Include Proposal in its Proxy Materials

On March 10, 2010, the Hon. Lee. H. Rosenthal, of the United States District Court for the Southern District of Texas issued her decision in a closely watched case relating to the procedural requirements imposed on shareholders who seek to introduce proposals under SEC Rule 14a-8… Read Article

Reforming Executive Compensation

Given the fact that the federal government had to bring the economy back from the brink of utter collapse less than two years ago, the investing public understandably expected to see significant changes to the compensation paid to executives… Read Article

The Stockholder’s Statutory Right to Inspect Corporate Books and Records

Stockholders, as corporate owners, have both a right and a need to receive information relevant to the decisions they need to make in protection of their interests, including decisions about how to vote their shares, whether to sell, and whether legal action is necessary… Read Article

Shareholder Proposals For Reimbursement Of Expenses Incurred In Proxy Contests: Recent Guidance From The Delaware Supreme Court

There has been considerable academic discussion of the struggle for control of public corporations waged between shareholders (as the owners) and boards of directors (who are the managers and agents of the shareholders)… Read Article

Stoneridge: Did it Close the Door to “Scheme Liability”?

As Mark Twain might have said, reports of the death of scheme liability may have been greatly exaggerated…  Read Article

In a Clear Victory for Institutional Investor, Court Finds U.S. Accounting Firm and its International Organization can be Held Liable for Audits Conducted by Foreign Affiliates

In a January 27, 2009 decision in In re Parmalat Securities Litigation, Judge Lewis Kaplan of the U.S. District Court for the Southern District of New York addressed the issue of whether a U.S. accounting firm and the international organization of which it is a member can be held liable for securities violations committed by a member firm practicing in another country… Read Article

The Delaware Court of Chancery Speaks on Option Backdating and Spring-Loading

On February 6, 2007, the Delaware Court of Chancery issued two significant decisions in derivative cases involving allegations of stock option backdating and spring-loading…
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Does Corporate Governance Matter to Investment Returns?

Although Conrad Black will tell you that corporate governance is a form of terrorism, an increasing body of evidence suggests that enhanced governance equals enhanced performance… Read Article