JPMorgan, Morgan Stanley Face Shareholder Suits Over Buyout Advisory Roles
This digest was compiled by AI from multiple sources — links to the originals are below.
JPMorgan Chase & Co. and Morgan Stanley are among banks being sued by shareholders over their roles on multibillion-dollar buyout deals in Delaware Chancery Court. The suits allege the banks helped steer sales of public companies to private equity firms at prices that undervalued shares, breaching fiduciary duties. The litigation follows a Delaware corporate-law overhaul that protected directors but not financial advisers.
Key Facts
- JPMorgan and Morgan Stanley have each faced two shareholder suits over buyout advisory roles, with one case against each bank dropped.
- Morgan Stanley faces a fresh lawsuit over its work on the $1.5 billion buyout of database software provider Couchbase Inc. by Austin-based private equity firm Haveli Investments.
- A 2025 revision of Delaware corporate law made it harder to sue top executives and directors in insider deals but did not extend the same protection to banks.
- JPMorgan asked a judge to dismiss a case alleging it helped private equity firm Hellman & Friedman sell out of its investment in Snap One Holdings Corp. to the detriment of public stockholders.
Shareholder Lawsuits
Shareholders have filed suits in Delaware Chancery Court claiming banks helped steer sales of public companies to private equity firms with which they do business at prices that undervalued their shares. The suits allege the banks knew they were helping directors breach their fiduciary duty. JPMorgan and Morgan Stanley have each faced two such suits, though both have managed to have one dropped. Morgan Stanley is now facing a fresh lawsuit for its work on the $1.5 billion buyout of database software provider Couchbase Inc. by Austin-based private equity firm Haveli Investments.
Delaware Law Revision
A controversial revision of Delaware law last year, fueled in part by Elon Musk's decision to leave the state and reincorporate Tesla Inc. in Texas, made it harder to sue top executives and directors in insider deals. Banks did not get the same protection, making them a target for plaintiffs looking for new pathways to pursue such cases. That, coupled with a court setback for Goldman Sachs Group Inc. earlier this year, has for some plaintiffs made bringing cases against financial advisers more attractive.
Adviser Liability
The threat of litigation gives banks "an extra impetus for carefulness," Gail Weinstein, a corporate attorney at Fried, Frank, Harris Shriver & Jacobson, said in an interview. The result should be "more focus on disclosing conflicts to a board early on and throughout the process," Weinstein said. Judges have increasingly demanded that advisers detail relationships with bidders and provide context for the fees they receive.
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JPMorgan, Morgan Stanley Face Shareholder Suits Over Buyout Advisory Roles
