Shareholder Class Action Defense

Public companies face the all-too-common specter of shareholder class actions filed after the disclosure of negative information, a decline in share price, a financial restatement, a merger, a leverage buy-out, or going private transaction.

Typical allegations include:

  • Misstatements of fact impacting financial performance
  • Failures to disclose material events or information
  • Market manipulation
  • Trading by insiders

Stradling’s securities litigators have significant experience in defending such claims in state and federal courts, taking a vigorous approach from the very start.

With the passage of the Private Securities Litigation Reform Act (PSLRA) and its progeny, motions to dismiss can be very effective at obtaining early dismissal of these cases, thereby avoiding discovery and trial altogether.

Our attorneys have been very successful in prevailing at the motion to dismiss stage. When cases do survive motions to dismiss, our attorneys are adept at negotiating with the plaintiffs as well as with the directors and officer’s (D&O) insurance companies to secure the favorable terms for settlement.

When it is in the client’s best interests, however, to take the case to trial, Stradling’s securities litigators have the tenacity and the experience to present complex securities issues at trial in compelling and persuasive ways, utilizing advanced courtroom technology.

Certain types of shareholder class actions can come about following the announcement of a significant merger, going private transaction, or buy-out. We pride ourselves in never letting shareholder claims interfere with proposed transactions; we get involved early in our clients’ transactions to build in defenses and create the best record possible to defend our clients’ objectives.

Our litigators also work closely with the firm's corporate and transactional attorneys to ensure clients follow best practices and make the necessary and appropriate filings and disclosures to prevent shareholder suits or to increase the likelihood they will be dismissed in the pretrial stage.