In recent years, corporations have operated under the assumption that almost every announcement of a forthcoming merger or acquisition will be met with a slew of shareholder lawsuits alleging that the corporation’s directors breached their fiduciary duties. These lawsuits rarely end with trial, however. Instead, for over a decade, disclosure-only settlements—in which the corporation makes additional disclosures and pays a fee to plaintiffs’ counsel in exchange for a broad shareholder release—have been the order of the day. However, the free ride for disclosure-only settlements seems to be nearing an end.
December 13, 2016 Articles
Free Ride Ending for Disclosure-Only Settlements in Delaware
With the Delaware Chancery Court’s recent opinion in In re Trulia, Delaware courts continue to express skepticism and even hostility toward disclosure-only settlements that provide little benefit to shareholders.
Dylan C. Black and T. Brooks Proctor
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