It’s time to confront the third rail of shareholder litigation. It’s time to ask officers and directors to dig into their own pockets to settle shareholders suits.

That’s what I’m hoping Manhattan U.S. district judge Lewis Kaplan decides to do as he reviews a proposed $90 million settlement of shareholder claims against the former officers and directors of Lehman Brothers. As the deal currently stands, the defendants—who include former Lehman CEO Richard Fuld and former president Joseph Gregory—won’t have to pay a penny of their own money to get rid of this litigation, which initially sought billions….

via Kicking the Third Rail of Shareholder Litigation – Susan Beck’s Summary Judgment

In the wake of JP Morgan Chase’s startling news last week of its $2 billion trading loss, and of the equaling startling statements of Jamie Dimon, the bank’s CEO, that the losing trades were, among other things, “flawed, complex, poorly reviewed, poorly executed, and poorly monitored,” there has been speculation whether these disclosures would lead to litigation. In particular, commentators have asked whether Dimon’s candid statements would hurt the company in any litigation that might arise.

Well, it looks like we will be finding out….

via Securities Suit Filed Against JP Morgan Chase Over Massive Trading Losses — The D & O Diary.

In an ideal world, the value of a shareholder securities claim rests entirely on its merits. And now that you’ve stopped snickering, let’s talk about the real world, where two disputed settlements test the de facto assumption that securities claims are worth what a company’s directors and officers insurance carriers are willing to pay to resolve them.

via In securities suits, is D&O coverage pot of gold — or brick wall? — On the Case

Historic $200 million Centro settlement reportedly includes significant contribution from auditor PwC.

via Australia: Centro Securities Class Action Settles for Record $200 Million – Compliance Week

According to a study done by Cornerstone Research and Robert Daines, a professor at Stanford Law School, “almost every acquisition over $100 million” announced last year attracted multiple lawsuits by target shareholders, who rarely received additional compensation as a result….

But what can’t be denied is that shareholder litigators have bellied their way up to the M&A table, where all parties involved in a transaction — financial and legal advisers, accountants and public-relations firms, writers of fairness opinions, experts in due diligence and post-merger integration — gather to divide up the fees. It’s unlikely they’ll be persuaded to leave anytime soon.

via Here comes the shareholder litigation – The Deal Pipeline

Academic study uses statistical analysis to identify the most important predictors of settlement incidence and settlement amount in securities fraud cases.

via Study Identifies Key Factors to Predict Securities Class Action Settlements and Amounts – Compliance Week

There were 65 court-approved securities class action settlements involving $1.4 billion in total settlement funds in 2011—the lowest number of approved settlements and corresponding total settlement dollars in more than 10 years, according to Securities Class Action Settlements—2011 Review and Analysis, an annual report by Cornerstone Research. The number of settlements approved in 2011 decreased by almost 25 percent compared with 2010 and was more than 35 percent below the average for the preceding 10 years. Further, the total dollar value of settlements declined by 58 percent, from $3.2 billion in 2010 to $1.4 billion in 2011. The change in the number of settlements from 2010 to 2011 is one of the two largest year-over-year declines and, combined with a year-over-year decrease in settlements in 2010, the first time there has been a decline in the number of settled cases for two consecutive years.

via Securities Class Action Settlements — The Harvard Law School Forum on Corporate Governance and Financial Regulation.

Lawyers leading a class-action lawsuit in federal court in Manhattan against the directors of Bank of America over its purchase of Merrill Lynch have agreed to settle the matter for $20 million even though damages in the case could reach $5 billion, according to plaintiffs in a parallel suit against the bank’s board in Delaware. Calling the settlement grossly inadequate and the result of collusion, the lawyers in the Delaware case have asked P. Kevin Castel, the judge overseeing the New York matter, to order the parties agreeing to the deal to justify its terms.

via Bank of America Settlement in Lawsuit Is Challenged – NYTimes.com

The Centro class action was briefly adjourned so lawyers for former company auditor PricewaterhouseCoopers could reassess its line of argument following an explosive warning by Judge Michelle Gordon on how the case was being run. PwC’s lawyers, Richard McHugh SC and King & Wood Mallesons, were warned on Monday that they could be found personally liable for arguments that wasted the court’s time.

via PwC lawyers warned on tactics in Centro case — The Australian