FRT’s Fast Five: Week ending May 10, 2019

Financial Recovery Technologies Fast Five provides you with the top news in shareholder class actions. Stay up-to-date on the latest developments in settled (U.S./Canada) claims filing opportunities, Antitrust settlements, Global Group Litigation matters and more. For more information, contact your Financial Recovery Technologies representative or email us.

1. Investors Take on Germany Inc.

German group Bayer’s share price has slumped 37 per cent since June, when it closed its $63bn acquisition of US agrochemical giant Monsanto. Investor fury has fuelled a rebellion unique in German corporate history. “It was an earthquake,” says Michael Wolf, professor of management at Göttingen university. “Investors in Germany have traditionally tended towards compromise and avoiding conflict. This is a turning point.” Bayer is in many ways a special case, but it is not the only German company being punished by the stock market. Germany Inc still has its fair share of corporate crises — and they are now increasingly being fought over in public. Shareholders, it seems, are far less willing to put up with bad management than they used to be. “Before, companies got away with making questionable decisions, but now they’re being pilloried for them,” says Jörg Rocholl, head of the ESMT Berlin business school. It is a cultural change that has been building over the past decade or so but is now in full spate. Click here to read the full article (subscription may be needed). 

2. Exxon Faces Another Shareholder Climate Lawsuit

An ExxonMobil shareholder has filed a lawsuit against the oil giant and some of its executives alleging they misled investors by understating how much risk climate change poses to the company’s assets. Sarah Von Colditz filed the suit Thursday in U.S. District Court for the Northern District of Texas. Defendants include current and former Exxon executives and board members, including current chief executive Darren Woods and his predecessor, Rex Tillerson. The complaint accuses the company and executives of violating federal securities law, breaching fiduciary duties and wasting corporate assets. Exxon is already facing two lawsuits over the company’s alleged misrepresentation of asset values to investors. Click here to read the full article.

3. Deloitte in the Cross Hairs, as Dick Smith Case Rambles on

NSW Supreme Court Justice Michael Ball has ordered Deloitte to supply a further laptop containing data of its audits of failed retailer Dick Smith after failing to strike out claims made in two shareholder class actions that allege the firm’s accounting work on the retailer was negligent. The order issued last month is just one of several actions that remain in the NSW Courts relating to the multimillion dollar collapse of the retailer whose former directors stand accused of not disclosing the full facts relating to the collapse of the mass retailer. Currently shareholder action is being taken against former CEO Nick Abboud and ex-CFO Michael Potts; they stand accused that Dick Smith management did not correctly account for its inventory especially house brand products that executives such as former Marketing Director Neil Merola said was “stacking up in their warehouses” when it did not sell through. Click here to read the full article.

4. A Class of Their Own: Merricks V Mastercard Incorporated & Others

Despite the appetite for class actions in the United States and Canada, the UK has often been seen as reluctant to embrace the concept of collective proceedings and criticised in some quarters for making it difficult to pursue such claims. However, a collective action regime was brought in by the Consumer Rights Act 2015 (which amended the Competition Act 1998) in respect of competition law claims. In a recent landmark judgment against the company Mastercard, the Court of Appeal has effectively lowered the previously high bar for obtaining an order that claims may proceed collectively, thus providing a potential fertile jurisdiction for future class actions. Click here to read the full article.

5. The Second Circuit Affirms Denial of Plaintiffs’ Motion for Leave to Amend Securities Class Action on the Ground That Any Such Amendment Would Be Futile

On April 29, 2019, the United States Court of Appeals for the Second Circuit affirmed the denial of plaintiffs’ motion for leave to file an amended complaint alleging securities fraud against an international pharmaceutical corporation and several of its past and present executives. Upon reviewing the district court’s decision de novo, the Second Circuit concluded that an amendment would be futile because the alleged misrepresentations and omissions contained in plaintiffs’ proposed amended complaint failed to allege any plausible violation of Section 10(b) and 20(a) of the Securities and Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5. Click here to read the full article.

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