Banks Face Liability in Multibillion-Dollar Buyout Deals

A recent overhaul of Delaware corporate law failed to shield banks from potential liability in multibillion-dollar buyout deals, leaving them as targets for shareholder lawsuits.

JPMorgan Chase & Co. and Morgan Stanley are among several major US banks facing such suits, which claim they helped steer sales of public companies to private equity firms with which they have business ties at undervalued prices.

The Delaware law changes, made in March 2025, were intended to protect top executives and directors from lawsuits by limiting shareholder claims. However, banks did not receive the same protection, making them vulnerable to liability claims.

According to the suits filed in Delaware Chancery Court, shareholders have alleged that banks helped private equity firms value deals at lower prices, benefiting their own interests over those of public stockholders.