JPMorgan and Morgan Stanley contest shareholder lawsuits over buyout deals

Two of Wall Street’s most powerful banks are fighting to dismiss shareholder lawsuits that accuse them of helping private equity firms snap up public companies on the cheap. JPMorgan Chase and Morgan Stanley are each contesting remaining claims in Delaware Chancery Court, where shareholders allege the banks orchestrated multibillion-dollar buyouts at prices that shortchanged the very investors they were supposed to protect.

The cases center on a legal theory that has quietly gained traction in Delaware: that financial advisers can be held liable for aiding and abetting breaches of fiduciary duty by company directors. And thanks to a recent overhaul of Delaware corporate law, these banks may have become easier to sue than the directors who actually approved the deals.

The deals in question

JPMorgan’s legal headache stems from its role in the $1.4 billion acquisition of Snap One Holdings Corp. by private equity firm Hellman & Friedman. Shareholders claim JPMorgan had conflicts of interest rooted in prior relationships with the buyer, yet still served as financial adviser to Snap One during the sale.

Morgan Stanley faces a parallel complaint tied to the $1.5 billion purchase of Couchbase Inc. by Haveli Investments. Shareholders say Morgan Stanley’s pre-existing ties to the acquirer compromised its ability to negotiate the best possible price for the company being sold.

Both banks have faced two lawsuits apiece. Each has successfully gotten one case dismissed. Now they’re working to knock out the survivors.

Delaware’s accidental loophole

In early 2025, Delaware enacted amendments to its corporate law that introduced safe-harbor procedures for transactions involving directors and major stockholders. The changes were partly a response to high-profile corporate reincorporations, most notably Tesla’s move to Texas. The safe-harbor provisions were designed to make it harder for shareholders to challenge conflicts of interest in deals approved by company boards, placing a higher burden of proof on claims made against boards of directors and executive management.

But the law created an unintended consequence. By shielding directors, it shifted the legal crosshairs onto the financial advisers who helped structure and recommend those deals. Aiding-and-abetting claims against banks weren’t addressed by the safe-harbor amendments, leaving a gap that plaintiff attorneys have been more than happy to exploit.

For JPMorgan and Morgan Stanley, this means that even if the directors who greenlit the Snap One and Couchbase deals are insulated from liability, the banks that advised them may not be.

What this changes for dealmaking

Legal experts tracking these proceedings predict that the increased threat of aiding-and-abetting claims will push financial advisers to disclose conflicts of interest earlier and more comprehensively in deal processes.

The Delaware Chancery Court’s handling of the remaining JPMorgan and Morgan Stanley cases will likely set the tone for how aggressively shareholders can pursue banks in future buyout disputes. A dismissal would signal that the safe-harbor gap is narrower than plaintiff attorneys hope. A ruling that lets the cases proceed would confirm that Wall Street’s advisory desks now sit in a legal no-man’s-land that Delaware’s legislators never intended to create.

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