M&A-Related Lawsuit Filings Now Outnumber Federal Securities Class Action Filings

M&A-Related Lawsuit Filings Now Outnumber Federal Securities Class Action Filings

In a prior post (here), I examined the mounting problems associated with the increasing levels of M&A-related litigation. A recent academic paper takes a closer look at these issues and concluded, among other things, that M&A-related lawsuit filings now outnumber federal securities class action lawsuit filings, and M&A-related litigation has "replaced traditional stock drop cases as the lawsuit of choice for plaintiffs' securities lawyers."

In her article entitled "Securities Class Action Lawsuits in State Court" (here), Lewis & Clark Law School Professor Jennifer Johnson examines a database of class actions filed in state court between 1996 and 2010. Her analysis shows that as a result of several Congressional enactments in recent years - particularly SLUSA and CAFA - the prevalence of many types of state court securities class action filings has declined. However, the number of state court class action lawsuit filings involving M&A transactions has been "skyrocketing" and now even outnumber federal securities class action lawsuit filings.

Indeed given that the database of state court filings on which Professor Johnson relied almost certainly understates the number of state court filings, it is probable that the number by which the state court M&A-filings exceeds the number of federal court filings is even greater than her analysis shows.

Please click here to read the entire post.

Read other items of interest from the world of directors & officers liability, with occasional commentary, at the D&O Diary, a blog by Kevin LaCroix.

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