Ann: Update on Galderma Contracts, page-74

An interesting read from The Australian Institute of Company Directors about short sellers....

extract.............

Legg says hedge funds have bankrolled litigation in the US and are showing greater interest in litigation funding, a unique asset class. “The activist fund effectively gets two bites of the cherry: a potential high return from funding the class action and another return from short-selling the company’s securities,” he says.

“Intuitively, one can see the link between activist funds, short-selling and litigation funding. The activist adopts a short-selling position because they believe the share price is overvalued, presumably because the market is not fully aware of information. This is fertile ground for class actions if it is proved that the company should have disclosed the information.”

Legg says the potential for large activist funds to bankroll class actions is another reason for boards to ensure their organisation has and uses best-practice disclosure policies and procedures, analyses their share register and ensures they know who is funding the class action (which must be disclosed pursuant to court practice notes.)

https://aicd.companydirectors.com.a...chanism-short-selling-implications-for-boards