|  | | 2012 News and Press Releases | | |
HEADLINE NEWS:
U.S.-Listed Chinese Companies: Bump-Up Claims Up Next?
Kevin LaCroix
The D & O Diary. July 18, 2012
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EXCERPT: One of the most distinctive recent securities litigation trends has been the surge of litigation involving U.S.-listed Chinese companies. As a result of the litigation threat, as well as beaten-down market valuations, many Chinese companies are now taking steps to de-list from the U.S. exchanges. However, this step could entail its own set of litigation risks. Indeed, litigation relating to the de-listing could, according to a recent commentary, “become the next big trend in U.S. securities litigation.” According to a July 11, 2012 memorandum from the Reynolds Porter Chamberlain law firm entitled “U.S.-Listed Chinese Companies: Bump-Up Claims” […] there have been a total of 57 securities class action lawsuits involving U.S.-listed Chinese companies, 39 of which were filed in 2011. […] Though these companies are de-listing as a risk mitigation step, the process, according to the memo, could “expose the companies, their directors and D&O insurers to bump-up claims by shareholders if it is not managed carefully.” In the bump-up claim, the shareholders allege “that the consideration they received for their shares was inadequate.” The possibility of these types of claims is exacerbated by the fact that share prices for U.S.-listed companies have fallen sharply. Although some of the going private transactions have involved well-known private equity firms, others have involved management buyouts, which may encourage claims that the consideration paid was inadequate. |
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