DealLawyers.com Blog

In her blog, Cooley’s Cydney Posner notes how Professors John Coffee and Larry Hamermesh recently testified at the SEC’s recent Investor Advisory Committee meeting about whether the SEC should get involved in the debate over fee-shifting bylaws. Here’s an excerpt from Cydney’s blog (and here’s a blog from John himself about it):

What is Coffee’s prescription for the SEC? Coffee suggests, unless the provision at issue expressly precluded application in cases involving the federal securities laws, that the SEC file amicus briefs in litigation arguing that these provisions are contrary to public policy as expressed in the federal securities laws and therefore any state law permitting them is preempted.

Meanwhile, Keith Bishop weighs in with a blog entitled “Why The SEC Should Stay Out Of The Fee-Shifting Charter Debate.” In addition, MoFo’s Bradley Berman blogs about how the SEC’s Investor Advisory Committee recommended that the definition of “accredited investor” in Rule 501(a) undergo some significant changes…

IPO Trends: “Loser Pays” Fee Shifting?

In this article, Alison Frankel of Reuters identifies this:

You’d better hope that the stock price is as solidly based as it seems, because if Alibaba’s officers and directors are engaged in fraud, shareholders will have a very tough time suing for their losses. That’s certainly what the company intends. On the very last page of its 38-page articles of association, Alibaba includes a provision stating that any shareholder who initiates or assists in a claim against the company must pay the company’s defense fees and costs unless shareholders win a judgment on the merits. This sort of “loser pays” fee-shifting is an exception to the general rule in the United States that each side bears its own costs of litigating – and it effectively precludes shareholder class actions suits because investors and their law firms don’t want to risk paying defendants’ legal fees.