What Rejected Renren Settlement Means For Investor SuitsMarch 2, 2022 – Law360
This past December, in In re: Renren Inc. Derivative Litigation, Justice Andrew Borrok of the New York County Commercial Division rejected a proposed $300 million settlement between Renren Inc. and minority shareholders.
The shareholders allege that Renren's board of directors engaged in a series of self-dealing transactions to divest Renren of its most valuable assets for a fraction of their fair market value. The court rejected the proposed settlement because it directed funds exclusively to current minority shareholders of Renren rather than minority shareholders at the time of the alleged injury.
The court reasoned that the recovery must go to the shareholders at the time of the alleged wrongdoing and not to shareholders who have since purchased shares in an efficient marketplace with knowledge of the alleged wrongdoing. The court also rejected the plaintiffs' counsel's request for legal fees totaling $99 million, or 33% of the settlement amount, as unreasonable.
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