Olshan client Engaged Capital entered into a second cooperation agreement with Quotient Technology, under which two new directors will join the company’s board of directors and five incumbent directors will depart the board at the upcoming 2023 annual meeting.
Following a successful withhold campaign by Olshan client MKT Capital, two directors of Aurinia Pharmaceuticals – the Chairman of the Board and the Chairman of the Compensation Committee – tendered their resignations after failing to receive the requisite majority vote. Shareholders also overwhelmingly voted down Aurinia’s say-on-pay proposal and an amendment to its equity incentive plan. MKT Capital launched its withhold campaign in an effort to combat egregious executive compensation practices and instill a sense of accountability in Aurinia’s boardroom.
- Shareholder Activism Practice Negotiates Two More Board Seats and Governance Improvements for Engaged Capital at Shake Shack
Olshan client Engaged Capital reached an agreement with Shake Shack for two new independent directors to join Shake Shack’s board. Shake Shack also agreed to retain a consulting firm to support operational initiatives to improve restaurant execution, cost structure and profitability. As part of the agreement, Chairman Danny Meyer also agreed to an immediate reduction and subsequent elimination of his director designation rights.
- Raging Capital Obtains Victory in EDNY Establishing New Standard for Section 16 Short Swing Profit Claims
The U.S. District Court, Eastern District of New York, ruled in favor of Olshan client Raging Capital in Packer v. Raging Capital Management. The Court dismissed the case to recover “short swing profits” under the Securities Exchange Act Section 16(b), on the ground that the plaintiff failed to show concrete injury and therefore lacked standing under Article III of the Constitution. The decision may change the landscape across the board for 16(b) litigation by requiring plaintiffs to plead and prove more than the elements of the statute, which plaintiffs in many cases may be unable to do. The Decision is the first to hold that the Supreme Court’s 2021 ruling in TransUnion LLC v. Ramirez applies to Section 16(b) claims. Plaintiff filed an appeal the next day. If upheld, the opinion will change the landscape of 16(b) claims against investors who are not officers, directors or otherwise privy to inside information.
On February 3, 2022, Olshan, on behalf of clients Bond Dealers of America and Brean Capital, LLC, has petitioned the SEC for review of its January 20, 2022 order (the “Order”) approving the amendments to FINRA Rule 4210 (the “Margin Rule”) that modify prior amendments approved in 2016 (the “2016 Rule”). Absent this challenge, the 2016 Rule, inclusive of the amendments, will become effective in nine to ten months.
Olshan’s litigation group prevailed before the Second Circuit in a significant case involving the application of Section 16’s short swing profit rule to hedge funds. The District Court ruled that the hedge fund was liable under Section 16 for $5 million in short swing profits on the theory that its delegation of investment authority over its portfolio to its registered investment advisor was ineffective.
Olshan's litigation group obtained a complete victory at trial on behalf of a long standing real estate client. The plaintiffs had invested with the client in a project that went into foreclosure after the makets crashed in 2008. The plaintiffs alleged a series of oral side deals, and also claimed that due to their lack of sophistication, the client owed them a fiduciary duty. They sought over $9 million after a three day bench trial, the court found for defendant, ruling that the plaintiffs' testimony was not credible.