Nancy Waterman Belton | Bloomberg Law In re Ness Techs., Inc. S'holders Litig., C.A. No. 6569-VCN, 2011 BL 204411 (Del. Ch. Aug. 3, 2011) Another case involving allegations that financial advisor conflicts of interest tainted a deal has survived preliminary judicial review. This time, the advisors are Jefferies & Co. and Bank of America Merrill Lynch (BofA), which advised the target's special committee and board of directors, respectively. Based on proxy disclosures describing unrelated services the advisors performed for the acquirer and its affiliates, the Delaware Court of Chancery granted the target shareholders' request for expedited discovery on the narrow question of whether the advisors' past, present, or expected future dealings with the acquirer or its affiliates created a conflict of interest. The ruling is particularly noteworthy because it clarifies that disclosure of potential financial advisor conflicts of interest does not necessarily cleanse their deleterious effect—a question that seemingly lingered following the court's ruling in In re Atheros Communications, Inc., Consolidated C.A. No. 6124-VCN., 2011 BL 61366 (Del. Ch. Mar. 04, 2011). For a summary of the Atheros ruling, see Bloomberg Law Reports®, Corporate & M&A Law, Delaware Chancery Court Addresses Need to Disclose Advisor and Officer Compensation that Is Contingent on Deal Closing (March 21, 2011).
Acquirer and Its Affiliates Were Clients of Target Financial Advisors
Financial Advisors' Relationships with Acquirer May Have Tainted Sale Process
Failure to Fully Disclose Relationships Might Constitute Breach of Duty of Disclosure
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