Salvatore Graziano is a managing partner and Robert Trisotto is a former associate with Bernstein Litowitz Berger & Grossmann LLP. This post is based on their BLB&G memorandum.
Over eighty years ago, federal securities laws were enacted to safeguard investments on national securities markets. These securities laws—premised on the notion that investors should receive accurate and thorough information regarding the public companies that they own—have transformed United States stock exchanges into the most prominent and trusted exchanges in the world.
Despite this impressive history, the management of some publicly-traded companies have increasingly sought to evade federal securities laws by altering their charters or bylaws in ways that the drafters of securities laws likely never imagined. For instance, companies have attempted to deter shareholders from filing lawsuits against corporate management by adopting fee-shifting provisions in their charters or bylaws. Such provisions would place a losing shareholder on the hook for the company’s attorney’s fees and expenses in disputes over management’s actions on behalf of investors.
