The number of securities-related lawsuits filed in the U.S. has been rising rapidly in recent years, particularly after M&A transactions and other significant corporate developments are announced.
S&P Global Market Intelligence is now keeping track of such cases filed against companies in our covered industries. The following information is compiled on a best-efforts basis twice monthly.
Application software
A verified shareholder derivative complaint was filed against certain officers and directors of MGT Capital Investments Inc. for presiding over a scheme for the purpose of artificially inflating the company's stock price and allowing certain shareholders to exit their positions with millions of dollars in quick profits in exchange for their "relatively small" upfront investment. The defendants allegedly hid some of its shareholders' pump-and-dump scheme in the company and misled investors about the company's business performance.
Asset management
Golub Capital BDC Inc. and members of its board are facing a putative shareholder class action lawsuit over an alleged breach of fiduciary duty related to its pending acquisition of Golub Capital Investment Corp. The lawsuit claims that the company omitted certain material information from the definitive proxy statement included in its July 15 prospectus filing. The lawsuit seeks to stop the deal unless Golub Capital BDC's board causes the company to make additional disclosures.
Bank
LegacyTexas Financial Group Inc. and members of its board of directors are facing a shareholder lawsuit related to its proposed merger with Prosperity Bancshares Inc. The defendants allegedly gave LegacyTexas shareholders a materially incomplete and misleading registration statement on Form S-4 related to the deal. The plaintiff wants to stop the deal unless the defendants disclose the material information related to the deal, including the financial projections of both companies' managements as well as the financial metrics observed by LegacyTexas' financial adviser in its analysis of the deal.
Electric utilities
Public Service Co. of New Mexico and the New Mexico Public Regulation Commission were sued by a few environmental and other interest groups claiming that the Energy Transition Act that allows the company to issue securitized bonds without regulatory oversight is unconstitutional.
Fertilizers and agricultural chemicals
Itronics Inc. and President John Whitney are facing a shareholder lawsuit alleging that the company failed to pay in full the principal and all accrued interest promised by its callable convertible promissory notes. The defendants also allegedly failed to issue the underlying common shares pursuant to the notes' contract, which gives noteholders a conversion right. The defendants then carried out a reverse split of Itronic shares, which allegedly led to a "catastrophic" drop to the value of the underlying shares and more than $75,000 of damages to the plaintiffs.
Insurance
Chilean consumer protection agency Sernac filed a class action lawsuit against Zurich Santander Seguros Generales Chile SA for the withdrawal of a health insurance product that left some clients without coverage, La Tercera reported. Sernac is asking the insurer to compensate 18,837 consumers who bought the insurance product.
Investment banks, brokers and capital markets
Merrill Lynch Pierce Fenner & Smith Inc. is facing a putative class action lawsuit for hiding disclosures about sweep options in retirement accounts and shifting cash from brokerage accounts without the "prior written affirmative consent." The lawsuit comes after a woman who opened three Merrill Edge brokerage accounts and a Bank of America Corp. checking account with about $1 million combined earned "paltry" yields.
Multi-utilities
Engie SA could face millions of dollars in penalties after the Australian Energy Regulator filed a lawsuit against its Pelican Point Power Ltd. business for allegedly breaching national electricity rules in 2017. The company reportedly failed to inform the regulator about the available capacity at its natural gas-fired power plant, which could have avoided a blackout during a heat wave in South Australia in 2017.
Payment processors
Diebold Nixdorf Inc. is facing a class action lawsuit over its executives' alleged misleading statements related to the acquisition process of Wincor Nixdorf in August 2016 and the company's financial statements thereafter. Executives allegedly claimed that the integration process was going on smoothly and that the acquisition would result in cost savings and higher revenues, but plaintiffs claims that Diebold Nixdorf had difficulties in the integration process and was actually posting losses and missing targets.
Pharmaceuticals
A verified shareholder derivative complaint was filed against certain controlling shareholders, directors and officers of Cocrystal Pharma Inc. over a pump-and-dump scheme involving BioZone Pharmaceuticals Inc., which executed a reverse merger with Cocrystal Discovery Inc. in 2014. The resulting entity was renamed Cocrystal Pharma. The lawsuit alleges that the individual defendants along with other investors engaged in manipulative trading that artificially raised the price of BioZone shares and then sold their shares in a coordinated fashion before the reverse merger, allegedly enriching themselves at the expense of other investors.
Semiconductors
Santa Clara, Calif.-based GlobalFoundries Inc. sued Taiwan Semiconductor Manufacturing Co. Ltd. for patent infringement. GlobalFoundries claims that chip manufacturing technologies used by TSMC infringed 16 of its patents. The company is pursuing an order to stop the import of products containing chips produced with the infringing technologies into the U.S. and Germany.
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A shareholder derivative complaint was filed against certain board members and executive officers of Micron Technology Inc. over breaches of fiduciary duties and unjust enrichment. The defendants reportedly failed to disclose to investors that they caused the company to engage in a price-fixing conspiracy with competitors Samsung Electronics Co. Ltd. and SK Hynix Inc. to perpetuate an undersupply of dynamic random access memory, whichcaused the product's prices to consistently rise from mid-2016 through 2017.
