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How sell side advisors can reduce litigation risk in light of Delaware’s Rural/Metro decision

Gregory Gooding (Partner based at Co-Head of Mergers & Acquisitions Group, Corporate Department, Debevoise & Plimpton LLP, New York, New York, USA)
William Regner (Partner based at Co-Head of Mergers & Acquisitions Group, Corporate Department, Debevoise & Plimpton LLP, New York, New York, USA)
Maeve O'Connor (Partner based at Securities and Corporate Governance Group, Litigation Department, Debevoise & Plimpton LLP, New York, New York, USA)
Gary Kubek (Partner based at Securities and Corporate Governance Group, Litigation Department, Debevoise & Plimpton LLP, New York, New York, USA)

Journal of Investment Compliance

ISSN: 1528-5812

Article publication date: 3 June 2014

79

Abstract

Purpose

To explain the implications of a March 2014 Delaware Court of Chancery decision that found RBC Capital Markets liable for damages for aiding and abetting breaches of fiduciary duty by the directors of Rural/Metro Corporation in connection with the company’s 2011 sale to an affiliate of Warburg PIncus.

Design/methodology/approach

Explains the court’s findings and decision, offers procedural lessons for sell-side financial advisors, and recommends what sell-side advisors can do to limit exposure to aiding and abetting claims.

Findings

The Rural/Metro decision opens the door to additional litigation risk for sell-side advisors. However, Vice Chancellor Laster’s opinion also provides a roadmap for how an advisor can limit that risk.

Practical implications

Director and financial advisor liability most often results from process failures.

Originality/value

Practical guidance from experienced mergers and acquisitions and securities and corporate governance lawyers.

Keywords

Acknowledgements

© 2014 Debevoise & Plimpton LLP.

Gregory V. Gooding and William D. Regner are partners in the Corporate Department and Co-Heads of the Mergers & Acquisitions Group at Debevoise & Plimpton LLP. Gary W. Kubek and Maeve O’Connor are partners in the Securities and Corporate Governance Group of the firm’s Litigation Department. Full contacts details for each author can be found at www.debevoise.com

Citation

Gooding, G., Regner, W., O'Connor, M. and Kubek, G. (2014), "How sell side advisors can reduce litigation risk in light of Delaware’s Rural/Metro decision", Journal of Investment Compliance, Vol. 15 No. 2, pp. 39-42. https://doi.org/10.1108/JOIC-05-2014-0021

Publisher

:

Emerald Group Publishing Limited

Copyright © 2014, Authors

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