Shareholders allege the banks aided private equity firms in undervaluing public companies during acquisitions, targeting advisors under new legal protections.
JPMorgan Chase (JPM) and Morgan Stanley (MS) are defending lawsuits from shareholders who claim the banks facilitated undervalued buyouts of public companies by private equity firms. Plaintiffs argue the banks breached fiduciary duties by aiding deals that shortchanged shareholders, despite disclosing business relationships with the acquirers.
Recent legal changes shield corporate directors from liability in such cases, shifting focus to financial advisors like JPMorgan and Morgan Stanley. The banks deny wrongdoing, asserting they conducted fair sale processes and were not conflicted. The suits highlight growing scrutiny of banks’ roles in mergers and acquisitions.
No immediate market reaction was reported, but the litigation could pressure advisory fees and deal structures if courts rule against the banks.