UPDATE: Lawsuits Dismissed Over Bear Stearns-JPMorgan Deal
By Chad Bray Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- A New York state judge on Thursday dismissed consolidated lawsuits by Bear Stearns Cos. shareholders over the investment bank's collapse and subsequent merger with JPMorgan Chase & Co. (JPM).
In an order Thursday, New York State Supreme Court Justice Herman Cahn in Manhattan dismissed the lawsuits, which were seeking class-action status, against Bear Stearns, its directors and JPMorgan.
The judge found that Bear Stearns' directors aren't subject to liability for approving the tie-up with JPMorgan because those decisions are protected by the "business judgment rule" and the company's officers and directors are shielded by exculpatory provisions of its certificate of incorporation.
"The board's efforts to preserve some shareholder value while averting the uncertainty of a bankruptcy - an event with potentially cataclysmic consequences for the broader economy as well as shareholders - would survive scrutiny even if some enhanced standard review under Delaware law did apply," the judge found. "For related reasons, JPMorgan's participation in negotiating the merger also does not give rise to penitential liability."
The consolidated lawsuits had sought damages from Bear Stearns's directors for alleged violations of their fiduciary duties in approving the merger and from JPMorgan for alleged tortious conduct in effecting the merger. The shareholders had objected to the deal's implied value of $10 a share, saying it was inadequate.
Bear Stearns was forced to sell itself to JPMorgan after being pushed to the brink of failure because of a liquidity crunch in March. The deal was struck with the blessing of the federal government.
Shareholders approved the sale of the 85-year-old investment house to JPMorgan Chase for just $1 billion in May.
A JPMorgan spokesman declined comment Thursday. A lawyer for the shareholders couldn't immediately be reached for comment.
-By Chad Bray, Dow Jones Newswires; 212-227-2017; chad.bray@dowjones.com
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(END) Dow Jones Newswires
December 04, 2008 17:32 ET (22:32 GMT)
Publié le 04 Décembre 2008 Copyright © 2008 Dowjones
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