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In This List

D&O litigation digest: Ladenburg Thalmann, MutualFirst, ArQule face M&A suits

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D&O litigation digest: Ladenburg Thalmann, MutualFirst, ArQule face M&A suits

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.

Asset management

Captrust Financial Advisors LLC is facing a lawsuit alleging that the company's investment of their clients' trust account in inappropriate securities and its failure to supervise the account and safeguard the assets under its control violated the Alabama Securities Act.

Automobile manufacturers

Faraday&Future Inc. and Smart King Ltd. are facing a lawsuit over allegations that they lured Hong Liu, a senior equity partner at Mayer Brown LLP in New York, to resign his law partnership and abandon his law practice in New York to serve as a general counsel for Faraday&Future. The defendants then allegedly terminated Liu without any legitimate basis after less than a year.

Bank

A group of 60 international investors sued Danske Bank A/S over the bank's alleged ties to a money-laundering scheme, Reuters reported. The investors are seeking 1.5 billion Danish kroner in damages.

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MutualFirst Financial Inc. and its board of directors are facing a lawsuit alleging violations of the Securities Exchange Act related to its proposed merger with Northwest Bancshares Inc.

The defendants allegedly failed to disclose material information about the companies' financial projections and the financial analyses conducted by MutualFirst's financial adviser.

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Trustmark National Bank, Southern Bancorp Bank and RiverHills Bank are facing a lawsuit related to the companies' alleged role in enabling and sustaining a Ponzi scheme involving Madison Timber Co. Inc. and Madison Timber Properties LLC. The scheme allegedly ran for more than 10 years and defrauded hundreds of investors.

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Westpac Banking Corp. is facing a class action lawsuit related to market disclosure issues about the company's monitoring of alleged financial crime between Dec. 16, 2013, and Nov. 19, 2019.

The company is also facing recent allegations from the Australian Transaction Reports and Analysis Centre related to more than 23 million breaches of anti-money laundering and counterterrorism financing laws.

Banking technology

Synapse Financial Technologies Inc. and CEO Sankaet Pathak are facing a lawsuit over alleged discrimination based on gender, pregnancy and age, Bloomberg News reported.

Biotechnology

ArQule Inc. and its board of directors are facing four individual lawsuits and two class-action lawsuits alleging violations of the Securities Exchange Act related to its merger agreement with Merck Sharp & Dohme Corp. and Argon Merger Sub Inc.

The defendants allegedly failed to disclose material information about the company's financial projections, the financial analysis conducted by its financial adviser and potential conflicts of interest in the board's recommendation statement, which urged shareholders to tender their shares in favor of the proposed merger.

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Audentes Therapeutics Inc. and its board of directors are facing three individual lawsuits and a class action lawsuit alleging violations of the federal securities laws related to its proposed acquisition by Astellas Pharma Inc. and Asilomar Acquisition Corp.

The defendants allegedly failed to disclose material information about the company's financial projections, the financial analyses performed by its financial adviser and potential conflicts of interest in the board's solicitation statement.

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Cloudbreak Therapeutics LLC and certain of its executives are facing a lawsuit related to a cyberattack that led to the fraudulent wire transfer of about $1.1 million to certain bank accounts in Hong Kong due to the company's allegedly inadequate security measures.

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Progenics Pharmaceuticals Inc. and certain of its executives and directors are facing a lawsuit alleging violations of the Securities Exchange Act related to its merger agreement with Lantheus Holdings Inc. and Plato Merger Sub Inc.

The defendants allegedly failed to disclose material information about the valuation analyses conducted by the company's financial adviser related to the proposed merger.

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Proteon Therapeutics Inc. and its board of directors are facing a lawsuit alleging violations of the federal securities laws related to the proposed merger between ArTara Therapeutics Inc. and Proteon's subsidiary, REM 1 Acquisition Inc.

The defendants allegedly failed to disclose material information about ArTara's financial projections, the financial analyses performed by Proteon's financial adviser and the sales process leading to the proposed transaction.

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Synthorx Inc. is facing a class action lawsuit alleging violations of the Securities Exchange Act related to its proposed merger with Sanofi and Thunder Acquisition Corp.

The company allegedly failed to disclose material information about its financial projections and the financial analyses performed by its financial adviser for the proposed merger.

Building products

Continental Building Products Inc. and its board of directors are facing an individual lawsuit and two class action lawsuits alleging violations of the Securities Exchange Act related to its proposed merger with Compagnie de Saint-Gobain AG through CertainTeed Gypsum and Ceilings USA Inc.'s subsidiary, Cupertino Merger Sub Inc.

The defendants allegedly failed to disclose material information about the company's financial projections and the valuation analyses performed by its financial adviser for the merger agreement.

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Resideo Technologies Inc. and certain of its executives are facing a class action lawsuit alleging that the defendants failed to disclose material information about the negative effects of the company's spinoff from Honeywell International Inc. and that it faced serious competition from its former parent after the spinoff.

Commercial printing

Quad/Graphics Inc. and certain of its executives are facing a class action lawsuit related to the defendants' alleged failure to disclose the likeliness that the company will divest its underperforming book business in the U.S. as well as its "unreasonable" vulnerability to decreases in market prices.

Diversified REIT

Liberty Property Trust and its board of trustees are facing two lawsuits alleging violations of the Securities Exchange Act related to its proposed merger with the affiliates of Prologis Inc.

The defendants allegedly failed to disclose material information about the companies' financial projections, the financial analyses conducted by Liberty Property Trust's financial advisers and potential conflicts of interest involving one of the financial advisers related to the merger agreement.

Electronic equipment and instruments

Fitbit Inc. and its board of directors are facing three lawsuits alleging violations of the Securities Exchange Act related to its proposed acquisition by Google LLC and Magnoliophyta Inc.

The defendants allegedly failed to disclose material information about the company's financial projections, the valuation analyses performed by its financial adviser and potential conflicts of interest involving company insiders who participated in the negotiation of the proposed transaction.

Electronic manufacturing services

KEMET Corp. and its board of directors are facing a lawsuit alleging violations of the federal securities laws related to its proposed merger with Yageo Corp. and Sky Merger Sub Inc.

The defendants allegedly failed to disclose material information about the company's financial projections and the financial analyses performed by its financial adviser in connection with the merger agreement.

Farm tech provider

Oishii Farm Corp. and co-founder Hiroki Koga are facing a lawsuit related to Koga's alleged scheme to induce co-founder Yuki Matsuda to sell his shares back to the company at a vastly reduced price by misrepresenting the status of the company's series A venture capital funding.

Internet and direct marketing retail

Overstock.com Inc. and certain of its former and current executives and board members are facing a verified shareholder derivative complaint related to the defendants' alleged misrepresentation that the marginal improvements in the company's online retail business will be able to sustain its cryptocurrency operations, which they also intended to use to squeeze short-sellers out of the company.

Investment banks, brokers and capital markets

Ladenburg Thalmann Financial Services Inc. and its board of directors are facing a lawsuit and a class action lawsuit alleging violations of the Securities Exchange Act related to its proposed acquisition by Advisor Group Holdings Inc. and Harvest Merger Sub Inc.

The defendants allegedly failed to disclose material information about the company's financial projections, the financial analyses of its financial adviser and potential conflicts of interest involving company insiders.

Leisure products producers

Mattel Inc. and CFO Joseph Euteneuer are facing a class action lawsuit related to the company's understatement by more than $109 million of its net loss for the third quarter of 2017 and the resulting conspiracy between company insiders and its outside auditors to conceal the understatement.

Payment processors

Green Dot Corp. and certain of its executives are facing a class action lawsuit alleging that the company's self-sabotaging strategy to attract "high value" long-term customers led to the loss of its "one and done" customers, which were a significant source of revenues in the company's legacy segment.

Pharmaceuticals

Corcept Therapeutics Inc., its board of directors and certain executives are facing a verified shareholder derivative complaint related to a company program that bribed doctors to prescribe its Korlym drug for off-label uses beyond what has been approved by the U.S. Food and Drug Administration. The Korlym drug is intended for the treatment of patients with inoperable, endogenous Cushing's syndrome who have both hypercortisolism and diabetes.

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Foamix Pharmaceuticals Ltd. and its board of directors are facing a lawsuit alleging violations of the Securities Exchange Act related to its proposed merger with the affiliates of Menlo Therapeutics Inc.

The defendants allegedly failed to disclose material information about the combined entity and the companies' financial projections, the sales process leading to the merger agreement, the valuation analyses performed by the company's financial adviser and potential conflicts of interest involving Menlo's financial adviser.

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Johnson & Johnson and certain of its executives and directors are facing a verified shareholder derivative complaint related to the company's role in deceptive marketing campaigns that allegedly fueled the opioid epidemic. The campaigns minimized the risks and exaggerated the benefits associated with the long-term use of opioids for treatment in the mid-1990s. The company also allegedly marketed prescription opioids deceptively through its subsidiary, Janssen Pharmaceuticals Inc.

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Mylan NV and certain of its executives are facing a federal securities class action lawsuit related to its Morgantown facility's significant violations of the U.S. Food and Drug Administration's Current Good Manufacturing Practice regulations, which resulted in a massive restructuring and remediation program.

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Perrigo Company PLC and certain of its executives are facing a lawsuit alleging the defendants' failure to disclose material information about the overvaluation and integration issues related to the company's acquisition of Omega Pharma NV, its involvement in anti-competitive pricing practices at its most profitable division and GAAP violations involving the royal stream for its Tysabri drug.

The lawsuit was filed by seven investment funds managed by York Capital Management Global Advisors LLC.

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Trulieve Cannabis Corp. and certain of its executives are facing a class action lawsuit related to the defendants' failure to disclose material information about the company's overstated mark-up for its biological assets, its inflated reported gross profit and its involvement in undisclosed real estate transactions with insiders.

Renewable electricity

Pattern Energy Group Inc. and its board of directors are facing an individual lawsuit and two class action lawsuits alleging violations of the Securities Exchange Act related to its merger agreement with Pacific U.S. Inc. and Pacific BidCo U.S. Inc., which are affiliates of Canada Pension Plan Investment Board.

The defendants allegedly failed to disclose material information about the company's financial projections, the financial analyses performed by its financial adviser and potential conflicts of interest related to the proposed merger.

Specialty chemicals

Innophos Holdings Inc. and its board of directors are facing a lawsuit alleging violations of the Securities Exchange Act related to its proposed acquisition by Iris Parent LLC and Iris Merger Sub 2019 Inc., which are controlled by the affiliates of One Rock Capital Partners LLC.

The defendants allegedly failed to disclose material information about the company's financial projections, the financial analyses performed by its financial adviser and potential conflicts of interests involving its financial adviser in connection with the proposed transaction.

Specialty stores

Tiffany & Co. and its board of directors are facing a class action lawsuit alleging violations of the Securities Exchange Act related to its proposed acquisition by LVMH Moët Hennessy - Louis Vuitton Société Européenne, Breakfast Holdings Acquisition Corp. and Breakfast Acquisition Corp.

The defendants allegedly failed to disclose material information about the company's financial projections, the analyses performed by its financial advisers and the circumstances relating to up to $16 million in additional discretionary fees payable to the investment bank involved in the proposed transaction.

Systems software

Forescout Technologies Inc. and certain of its executives are facing a class action lawsuit alleging violations of the federal securities laws related to the company's failure to disclose material information about the volatility of large deals and issues with the timing and execution of its deals.

Technology distributors

Anixter International Inc. and its board of directors are facing a class action lawsuit alleging violations of the Securities Exchange Act related to its proposed merger with CD&R Arrow Parent LLC, which is a subsidiary of funds sponsored by Clayton Dubilier & Rice LLC.

The defendants allegedly failed to disclose material information about the financial analyses conducted by the company's financial advisers in connection with the merger agreement.

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Tech Data Corp. and its board of directors are facing a class action lawsuit alleging violations of the Securities Exchange Act related to its proposed merger with Tiger Midco LLC and Tiger Merger Sub Co., which are affiliates of Apollo Global Management Inc.

The defendants allegedly failed to disclose material information about the company's financial projections, the analyses performed by its financial adviser and potential conflicts of interest involving the officers and directors who participated in the negotiation of the proposed transaction.

Trading companies and distributors

Aircastle Ltd. and its board of directors are facing two individual lawsuits and a class action lawsuit alleging violations of the Securities Exchange Act related to its proposed merger with MM Air Ltd., a newly formed entity controlled by the affiliates of Marubeni Corp. and Mizuho Leasing Company Ltd.

The defendants allegedly failed to disclose material information about the financial analyses performed by the company's financial adviser and the process that led to the signing of the merger agreement.

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Generation Next Franchise Brands Inc. and certain of its executives and directors are facing a lawsuit alleging violations of the Securities Exchange Act and the California Securities Law. Generation Next allegedly engaged in a fraudulent scheme to induce FirstFire Global Opportunities Fund LLC to invest in the company while concealing material information, including an undisclosed transaction that effectively diluted FirstFire Global.