Banks on Thin Ice as Shareholders Pursue Aiding-and-Aid Claims

Two of Wall Street's most powerful banks, JPMorgan Chase and Morgan Stanley, are contesting shareholder lawsuits that accuse them of helping private equity firms buy out public companies at low prices. The cases involve allegations of conflicts of interest and breaches of fiduciary duty.

The deals in question include the $1.4 billion acquisition of Snap One Holdings Corp. by Hellman & Friedman, where JPMorgan served as financial adviser to Snap One, despite prior relationships with the buyer. Morgan Stanley faces a similar complaint tied to the $1.5 billion purchase of Couchbase Inc. by Haveli Investments.

Delaware's corporate law changes in early 2025 created an unintended consequence: by shielding directors from liability, it shifted the focus onto financial advisers who helped structure and recommend deals. This has led to increased threats of aiding-and-abetting claims against banks.

Legal experts predict that this will push financial advisers to disclose conflicts of interest earlier in deal processes.