Neither Stephen Bainbridge nor Larry Ribstein is particularly impressed by it.
The suit was just a political stunt, writes Marc Hodak:
…Last week, the Delaware Chancery Court decided that in the absence of any substantiation whatsoever, and insisting on these things called facts, that they had to dismiss the case.
I only wish that the fiduciaries who brought this fact-challenged suit could be held accountable for the far more provable waste of their investors’ resources…
“Bernstein Leibhard has been chastised by a federal judge for revealing after six years of lawyering that the lead plaintiff in a securities case never bought the funds at issue.” [Mark Hamblett, New York Law Journal]
Following murmurs about pay-to-play, South Carolina has turned down offers from local powerhouse Motley Rice and from Labaton Sucharow, whose attorneys had donated $12,000 to Attorney General Alan Wilson. [The State]
My new op-ed at the New York Post looks at the history of Spitzer-to-Cuomo-to-Eric Schneiderman prosecutorial overreach and asks: how exactly did the New York Attorney General come to have so much power with so little constraint? (& welcome Instapundit, Real Clear Markets, Timothy Carney/Examiner, CEI readers)
More: I and others have written about the act here and at Point of Law.
The endless ramifications of Dodd-Frank: lawsuits following nonbinding shareholder resolutions on executive pay should be interpreted not as expressions of shareholder discontent but as moneymaking ventures by certain sectors of the bar, argues T.K. Kerstetter at Board Member (via Bainbridge
It appears President Obama “will nominate former Ohio Attorney General Richard Cordray to be the first director of the Consumer Financial Protection Bureau (CFPB),” according to my colleague Mark Calabria, who recounts Cordray’s mixed record on topics of business litigation (he withdrew an abusive lawsuit against lead-paint manufacturers, while also campaigning against foreclosures). Earlier coverage here.
P.S. Daniel Fisher at Forbes reports that securities class action lawyers appear to adore Cordray, to judge from his campaign finances. John Berlau finds him inclined toward heavy-handed regulation, while Neil Munro wonders about his data privacy defense record.
Dan Fisher notes a flurry of press releases from law firms following the decision by the board of directors of Lubrizol to accept an offer from Warren Buffett. “Never mind that the $148-a-share offer is a 41% premium to Friday’s closing price and 64% above its 1-year moving average of $90.” [Forbes]
Daniel Fisher at Forbes explains:
…The rise of the “confidential witness” can be traced to the Public Securities Litigation Reform Act and subsequent Supreme Court rulings, under which class-action lawyers are required to do more than just point out the obvious, that a stock price fell. They need to state “particularized facts” giving a strong inference that somebody in management, not just a faceless corporate entity, did something he or she knew was fraudulent.
To get over this hurdle, class-action lawyers frequently call upon nameless “confidential witnesses” who apparently are willing to speak with plaintiff lawyers but live in fear of their identities being revealed to anyone else.
Funny thing is, the testimony of these confidential witnesses on eventually reaching the light of day keeps not backing up the propositions the lawyers said it did. The newest embarrassment afflicts Robbins Geller, a successor law firm to Bill Lerach’s Coughlin Stoia. More: ABA Journal; City of Livonia Employees Retirement System v. Boeing.
Along with its formal report, the commission probing the financial crisis of 2008 has done an online archival dump of internal company documents that some hope, and others fear, will be of great help to litigators — even perhaps a “Wikileaks for the class action bar,” which with its allies was well represented on the commission and staff. [BLT; earlier]
More: David Frum has been doing a series of blog posts on the report’s substance.
The National Law Journal headline puts it this way: “Two firms seek up to $6.5M for work on settlement yielding shareholders no monetary benefit.”
“A new study in the Financial Analysts Journal casts serious doubt on the premise [of litigation social efficiency], at least when it comes to shareholder class actions. In most cases, the authors found, the litigation mainly serves to punish shareholders who have already suffered from a downturn in their stock. Only suits targeting illegal insider trading, and to a lesser extent, accounting fraud were associated with subsequent higher long-term returns.” [Dan Fisher, Forbes; Rob Bauer and Robin Braun, “Misdeeds Matter: Long-Term Stock Performance after the Filing of Class-Action Lawsuits”] More: Coyote.
In New Haven, federal judge Janet Bond Arterton has granted sanctions against two leading plaintiff’s securities firms, Labaton Sucharow and Barroway Topaz Kessler Meltzer & Check, in an unsuccessful class action against Star Gas. “Arterton agreed with Star’s counsel from Skadden, Arps, Slate, Meagher & Flom that the class’ claims were almost entirely without merit, and that Labaton and Barroway knew as much early in the litigation. She ordered the plaintiffs firms to pay all of Star’s attorney fees and costs.” [Frankel, American Lawyer, ruling, PDF, courtesy American Lawyer]