The impact of the options backdating scandal on shareholders

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The Number of Traditional Securities Class Action Lawsuit Filings: Even if the merger objection lawsuit filings are disregarded, the number of securities class action lawsuit filings in the first half was at elevated levels.

There were 132 traditional securities class action lawsuit filings in the first half of the year, which implies 264 traditional securities class action lawsuits by year end.

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The Quarter to Quarter Filing Pace: The filing pace did slow slightly during the second quarter.

There were 125 securities suit filings (inclusive of the merger objection suits) during the first quarter, while there were 100 in the second quarter (again including the merger suits).

The flood of merger objection lawsuit filings seems to be increasing.

This discussion comment focuses on several fundamental issues that confront researchers examining the backdating scandal and other related decisions.

The surge in the number of federal court merger objection lawsuit filings is a direct result of a series of Delaware state court rulings, culminating in the January 2016 ruling in the case, in which a series of Delaware judges evinced their hostility to the type of disclosure only settlements that frequently characterize the resolution of merger objection lawsuits.

As a result of the unfavorable climate in the Delaware courts, the plaintiffs’ lawyers have shifted their filings of many of these suits to federal court.

The first half filings were also far greater than the long-term semiannual filing average.

The average semiannual number of securities suit filings for the period 1996-2015 is 94.

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