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Continued: Schafer: Shareholder suits benefit no one but the lawyers

  • Article by: LEE SCHAFER , Star Tribune
  • Last update: November 9, 2013 - 4:33 PM

Neither side’s counsel returned calls to discuss it, but the person familiar with the settlement said it gave both plaintiffs $1,000, with $40,000 to their lawyers. That’s a pittance as such things go, and almost certainly made suing FSI a money-loser.

What FSI and Tokyo Electron spent defending themselves isn’t known, but $500,000 seems like a reasonable guess. That’s a lot, but it’s about what Rochester Medical agreed to pay in its tentative settlement.

“You can’t entirely inoculate yourself from these post-deal lawsuits, which seem to be the American way,” said Peter Lombard, an investment banker and leader of Piper Jaffray & Co.’s merger and acquisition practice for technology, telecommunications and media companies.

But directors can, he said, reduce the risk of a genuine claim. One idea is to routinely review what their company may fetch in a sale and who likely buyers may be. That makes them better prepared if a deal opportunity does arise.

Lombard also would like to see, in the courts or by legislation, a higher threshold before a legal claim can be made.

“Maybe the first order of business is to get the name of the company right” in a complaint, Lombard said. “I’ve seen it where the name of the target is wrong.”

That would seem to be a reasonable place to start.

 

lee.schafer@startribune.com • 612-673-4302

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