Should we get involved in SEC/ fiduciary duties investigation?

January 2, 2013 3:30 PM

Should we get involved in SEC/ fiduciary duties investigation?

A family member owns a decent ($100k+) position of Zipcar, whose board announced today that they are being acquired by Avis for $500M = ~$12 per share.

While this is significantly higher than closing price on Monday, it's still way off from where the stock price was earlier. A law firm "specializing" in securities issues immediately announced that they are investigating whether the board acted in the best interest of the share holders. Links to the press release and the law firm are easily found though any search engine.

Should the family member contact the law firm to get more information or is this just bottom feeder with a scam?

posted by anonymous to Work & Money (5 answers total)

As someone who held a position that was less than "decent" (take off two zero, sometimes three) in four companies that were acquired (KCG being the most recent that I remember, I got in after the crash thinking they'd either bounce back or get bought out, so far, I'm ahead), this has happened every time. IANAFC, but this seems to be pretty common. If you want advice from a FC, you should ask a FC and not metafilter.
posted by Brian Puccio at 3:50 PM on January 2, 2013 [1 favorite]

it's still way off from where the stock price was earlier

Per this, "earlier" means "May", and its overall trend since the IPO has been "lower". I think the best outcome here is likely to be someone else coming up with a better offer, not some malfeasance claim.

Anyway, there's little harm in contacting the law firm, and I fairly doubt there is much in even joining the lawsuit. I did find it interesting that the firm Brower Piven is not among the 11K US law firms ranked by US News & World Report, which I guess I'd have to consider a red flag. And they also seem to have this as a specialty practice, as in "Law Firm Brower Piven Announces Investigation of..." 3-4 times a month.

But they probably smell a pretty good contingency fee here, so just make sure your relative isn't the one footing it.
posted by dhartung at 5:29 PM on January 2, 2013

FYI, pretty much every time there is a large acquisition of a public company, there are certain law firms who will file shareholder suits. It doesn't mean there's necessarily any substance to it. (Doesn't mean there's not, either.) The law firm is likely to get some money out of it if the company pays them to go away. If your relative is curious, they can contact the law firm, but they should not give the law firm any money.
posted by chickenmagazine at 5:43 PM on January 2, 2013 [2 favorites]

I came in to say what chickenmagazine said.
posted by anthropomorphic at 6:57 AM on January 3, 2013

I'm not an expert in these matters, but Avis did pay a 50% premium on the current price of Zipcar's shares. Yes, the stock's been higher in the past, but Zipcar's stock has been on a steady downward slide in the 2 years since its IPO. 2012 was the first time that the company managed to turn a profit, after 12 years in business.

I guess you might want to talk to a lawyer, but my gut instinct tells me that Avis are the ones who got a rotten deal here.
posted by schmod at 8:18 AM on January 3, 2013