February 01, 2015

Inside This Issue

Investors Lose Under Anti-Plaintiff, Defendant-Friendly Fee-Shifting Bylaws

In 2014, companies seized on a development in Delaware law that may allow defendants in shareholder-initiated lawsuits to force shareholder-plaintiffs to pay the defendants’ legal fees (but not the other way around) via novel corporate bylaws, regardless of the suit’s merits, and even if the shareholders achieve a favorable result.  These bylaws have the potential to significantly stifle even meritorious litigation, including federal securities litigation.  Given that eliminating securities suits will also eliminate an important incentive for publicly-traded companies to communicate truthfully with the investing public, institutional investors, and, indeed, anyone who cares about the integrity of the securities markets, should be concerned by this troubling trend. The full article can be read here.

Can Silence Keep You Safe? New Debate On 10b-5 Liability

This article by Michael B. Eisenkraft, a partner in our New York office, recently published by Law360, describes the impact of the Second Circuit’s decision in Stratte-McClure v. Morgan Stanley, which eliminates the ability of a company, when facing a known material trend or uncertainty, to escape liability under Rule 10b-5 by not saying anything. Mr. Eisenkraft spells out the dramatic consequences of the resulting split with the Ninth Circuit and opines that it is likely that the U.S. Supreme Court will choose to resolve the issue. The full article can be read here.

The full February 2015 issue can be read here.

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More information about Cohen Milstein’s Securities Fraud/Investor Protection Practice can be found here, or call (202) 408-4600.