SEC mulls big gift to companies: Blocking investor suits In its determination to reverse a two-decade slump in U.S. stock listings, a regulator might offer companies an extreme incentive to go public: the ability to bar aggrieved shareholders from suing. The Securities and Exchange Commission in its long history has never allowed companies to sell shares in initial public offerings while also letting them ban investors from seeking big financial damages through class-action lawsuits. That's because the agency has considered the right to sue a crucial shareholder protection. (Pensions & Investments)
I'll raise a glass to the demise of these slimy attorneys. While I typically frown on limiting access to class actions (having first-hand knowledge of how powerful they are on the receiving end of them in my insurance job), I think a limitation of buyers remorse as class-certifiable complaint is both fair and down right logical.
In my experience, these "shareholder lawsuits" are initiated by attorneys who can legally force investors to sue themselves, since the money is typically paid out of the coffers of the company in which the shareholders still typically hold ownership. Shareholders are paid pennies on the dollar while the attorneys reap millions in fees. I'd say good riddance to shareholder lawsuits. Even after these lawsuits are won, most of the time it's not worth the onerous process of filling out the forms (for the shareholders) to recoup a few dollars. I've done this before, and the returns are pitiable, for the shareholders. https://hbr.org/2014/02/ending-the-shareholder-lawsuit-gravy-train "It’s worth dwelling for a moment on who gets that money and who pays it out. In most cases it’s the current shareholders of a company paying current and former shareholders. The corporate executives who made the misleading statements generally don’t pay anything at all because they’re covered by directors & officers liability insurance." ... "In short, then, shareholder lawsuits amount to a weirdly circular process in which presumably blameless outside investors hand over money to other outside investors (and sometimes to themselves), with the executives accused of wrongdoing left untouched and the lawyers for both sides taking a big cut."
So true. So, I write D&O insurance incidentally to my primary career, and I think this coverage should be outright illegal with respects to fiduciary duty to shareholders. There's some of it's that's above the table and legit (i.e. paying damages for mismanagement of benefits, or leveraging your power position for sexual gain), but the liability to shareholders is the crux (and risk) of the risk / reward equation. It's absolutely unreasonable that other shareholder should take on this risk. It's commerce for the sake of commerce. Basically an insurer agrees to indemnify the company's shareholders against claims that they didn't exercise a fiduciary duty to the shareholder whose risk is the fiduciary duty. And underwriters (of which I am one) take premium from companies, usually at an underwriting profit (they collect more than paid out--a net loss to the entities / person not collecting interest on these paid premiums), AND collect the proceeds from the float. As an investor, you pay for this in addition to the spread and commission.
When that news hit the wires tonight about Met Life... look what followed about two hours later: https://www.prnewswire.com/news-rel...-investors-of-metlife-inc--met-300589880.html They were quick. ___________________________________________________________ NEW YORK, Jan. 29, 2018 /PRNewswire/ -- Pomerantz LLP is investigating claims on behalf of investors of MetLife, Inc. ("MetLife" or the "Company") (NYSE: MET). Such investors are advised to contact Robert S. Willoughby at rswilloughby@pomlaw.com or 888-476-6529, ext. 9980. The investigation concerns whether MetLife and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices. [Click here to join a class action] On January 29, 2018, post-market, MetLife announced that it would postpone its fourth-quarter earnings announcement, citing a "material weakness" in its financial reporting. In addition, MetLife advised investors that it expected to increase total reserves between $525 million and $575 million on a pre-tax basis to cover certain annuity recipients "who have been unresponsive or missing over time." On this news, MetLife's share price has fallen sharply in after-hours trading on January 29, 2018. The Pomerantz Firm, with offices in New York, Chicago, Los Angeles, and Paris, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 80 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com. CONTACT: Robert S. Willoughby Pomerantz LLP
Securities class actions continued grew in 2017: NERA The number of securities class actions filed in 2017 reached a record rate of growth for the third year in a row, according to a report released Monday by NERA Economic Consulting. Aggregate investor losses of $334 billion in those filings were 50 percent higher in 2017 than the five-year average. Since 2015, filings with investor losses between $1 billion and $5 billion have tripled, according to the report, "Recent Trends in Securities Class Action Litigation: 2017 Full-Year Review." (Pensions & Investments)
Securities class-action lawsuits set record in 2017 The number of federal securities class-action lawsuits filed in 2017 reached a record high for the second straight year, due to a sharp increase in suits targeting mergers and acquisitions, according to a report from Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse. There were 412 securities class actions filed in 2017, up from 271 filings in 2016, according to the report. (Investment News)