Defensive Responses to Tender Offers and the Williams Act\u27s Prohibition Against Manipulation

This Article discusses whether arrangements designed to ensure the success of a favored bidder or simply to defeat an unwanted tender offer are manipulative acts or practices barred by section 14(e).\u27 It argues that the critical issue is whether an arrangement significantly obstructs the operation of a fair auction market for a target company\u27s shares. The Article maintains that recent Supreme Court decisions interpreting section 14(e) and other antifraud provisions of the federal securities laws provide substantial support for this approach to interpreting section 14(e). The Article first discusses the definition of section 14(e) manipulation. The recent Marathon decision provides the basis for this discussion. The Article then explores the implications of this proposed definition in takeover situations in which bidders or targets are employing tactics such as lock-ups, two-tier bids, asset or stock sales, defensive acquisitions, and indemnification agreements. The Article emphasizes Marathon because it is the first case subsequent to Santa Fe Industries, Inc. v. Green to raise squarely the question of whether section 14(e) bars only what might best be termed classic market manipulation, such as simultaneous purchases and sales of securities at different prices, or whether it prohibits certain other arrangements as well. Prior to Santa Fe,two federal district courts had enjoined as manipulative defensive arrangements employed in connection with tender offers, but both courts based their conclusions on the notion that section 14(e) embodies a federal fiduciary standard --a rationale that would not appear to survive Sante Fe

The Lead Plaintiff Provisions of the PSLRA After a Decade, or Look What\u27s Happened to My Baby

In 1995, my colleague John Beckerman and I had an experience shared by very few legal academics. We mailed the galley proofs of an article that we had written to the staff of a Senate Committee and then saw the Committee, the Senate, and the full Congress enact into law a bill that included all of the recommendations in our article. The article was Let the Money Do the Monitoring: How Institutional Investors Can Reduce Agency Costs in Securities Class Actions; the law was the Private Securities Litigation Reform Act of 1995 ( PSLRA ). The relevant provisions of the PSLRA, now generally known as the lead plaintiff provisions, prescribe procedures for the selection of lead plaintiffs and lead counsel in securities class actions. For years, I have thought about writing something that sets forth the unique history of the lead plaintiff provisions, describes how closely developments pursuant to those provisions have met our expectations and what surprises have occurred, and assesses how well those provisions have worked in a real world setting. The invitation to participate in this Symposium, held little more than a decade after the lead plaintiff provisions went into effect, provides me with the opportunity to do just that. This Essay has six parts. Part I describes the questions that led Professor Beckerman and me to undertake research concerning the dynamics of securities class actions and summarizes our findings and recommendations. Part II sets forth the story of how our recommendations came to be enacted into law. Part III describes post- enactment developments that have been consistent with our expectations, while Part IV describes post-enactment developments that we did not anticipate. Part V contains some thoughts about whether, had Congress followed a more deliberative process before enacting our recommendations into law, it could have come up with a better approach for organizing the process by which lead plaintiffs and lead counsel are appointed in securities class actions. Part VI sets forth a few recommendations for change

File Early, Then Free Ride: How Delaware Law (Mis)Shapes Shareholder Class Actions

Delaware courts have largely privatized enforcement of fiduciary duties in public corporations. In In re Fuqua Industries, Inc. Shareholder Litigation, Chancellor Chandler expressly acknowledged this judicial policy. He noted that Delaware courts implement it partly by allowing private attorneys, working on a contingent fee basis, to initiate and maintain derivative and class actions in the names of nominal shareholder plaintiffs. Attorneys are subject only to the relatively weak constraints that they must inform their clients and receive their consent before they file shareholder suits. Further, Delaware courts use cost and fee shifting mechanisms to economically incentivize those attorneys to initiate such suits. Chancellor Chandler also explained that Delaware courts have adopted this policy because they believe that the plaintiffs\u27 bar is capable of performing a valuable service on behalf of shareholders. Plaintiffs\u27 attorneys understand abstruse issues of corporate governance and fiduciary duties far better than do most shareholders. Consequently, they are uniquely qualified to identify situations in which principles of corporate governance have been violated or fiduciary duties have been breached and then to initiate lawsuits seeking corrective action

Enter Yossarian: How to Resolve the Procedural Catch-22 That the Private Securities Litigation Reform Act Creates

Section II of this Article sets forth our understanding of what the Reform Act requires a plaintiff to set forth in a complaint to state a valid claim that a corporation has made false or misleading public statements in violation of section 10(b) and Rule 10(b)(5). Section III describes our case study of GTF. Section IV analyzes the options a court would face in a case similar to the quasi-hypothetical we studied and suggests the option we believe a court should choose