Individual Merger Suits Replacing Class Action in Strategy Shift

Investors who sue merging companies for insufficient disclosures are reinventing their approach, increasingly forgoing class actions in favor of individual lawsuits that tend to invite less scrutiny.

A class action settlement requires a judge’s approval, while a settlement or voluntary dismissal in individual lawsuits doesn’t. Plaintiffs likely are also increasingly wary of a 1995 law that, among other things, limits the number of times an individual can serve as lead plaintiff in securities class actions.

About 75% of the companies sued in federal court in 2017 by investors objecting to their merger or acquisition were sued solely in a would-be ...