Foreign Influence

On Friday, the Wall Street Journal had a front-page story (subscrip. req’d) on the increase in foreign investors acting as lead plaintiffs in U.S. securities class actions. (A related trend is the rise in suits filed against foreign companies listed on U.S. exchanges.)

Quote of note: “The tort bar’s newfound interest in overseas clients — in particular, those involved in securities litigation — is driven by a broader phenomenon: the globalization of business and investing. In U.S. securities cases, judges are required to tap shareholders with the largest losses as the lead plaintiffs. Increasingly, these shareholders are based overseas, from pension funds to hedge funds and private-equity players.”

Quote of note II: “One [foreign investor bringing a suit in the U.S.] is retired tire-company executive Markus Blechner. Last year, when DaimlerChrysler AG paid $300 million to settle allegations it mislead U.S. investors, the Swiss national received nothing because he had purchased his shares in the auto maker on a Swiss exchange. . . . ‘I thought, ‘That’s not fair. Don’t I deserve to get paid, too?’ recalls Mr. Blechner. He and two Austrian investment funds are now suing the auto maker in U.S. federal court in Delaware. ‘Why not? It doesn’t cost me anything,’ Mr. Blechner says.”

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