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September 6, 2019

Another Judge Rejects Merger Objection Securities Lawsuit

A Delaware federal judge rejected a merger objection lawsuit because it wouldn’t have created a “substantial benefit” to the shareholders, D&O Diary reports.

This decision comes two months after another judge called these lawsuits a “racket.” In these objection lawsuits, plaintiffs’ lawyers ask for fees for themselves but shareholders only receive extra disclosures about the merger. In the Delaware case, the judge said the the lawyers “have not established that they provided the stockholders with a substantial benefit so as to warrant an award of attorneys’ fees.”

D&O Diary author Kevin LaCroix said these lawsuits only “provide a pretext for the plaintiffs’ lawyers to extract a fee, which the defendants pay just to make the plaintiffs’ lawyers go away.”

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