A new report released by the Chubb insurance company found that 61 percent of the costs of merger and acquisition securities litigation went to lawyers, rather than shareholders.
In “From Nuisance to Menace: The Rising Tide of Securities Class Action Litigation,” the company also found shareholders received nothing in 85 percent of settled merger objection claims in the past five years. These types of suits have been blamed for the rise of securities class action filings in recent years. The number of securities class actions filed in 2018 was almost three times the average from 1997-2017 and set a new one–year record.
“There is a growing cohort of lawyers filing meritless lawsuits in federal and state courts across the United States every time a merger or acquisition is announced or a corporate misfortune impacts a company’s share price,” said John Keogh, executive vice chairman and chief operating officer of Chubb. “The financial rewards from these lawsuits are accruing not to harmed investors but to lawyers who are bringing cases of dubious merit in order to reap a windfall in legal fees and a disproportionate share of settlement dollars.”