M&A 'Pure Omission' Claims Test Limits Of Securities Laws

Law360 (November 5, 2019, 3:12 PM EST) -- It has been widely observed that merger litigation plaintiffs fled state courts for federal courts following the Delaware Chancery Court’s 2016 Trulia decision,[1] which precluded them from settling state law claims based on disclosure of immaterial additional information to shareholders.[2]

But plaintiffs gave up quite favorable Delaware procedural and substantive law in the hope of finding a more hospitable environment for quick settlements. Section 14 of the Securities Exchange Act of 1934 — merger plaintiffs’ new standard claim — does not precisely map to Delaware fiduciary duty law regarding disclosure.

Instead of notice pleading and the leverage gained by the potential...

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