Key Takeaways
- • JPMorgan and Morgan Stanley are each defendants in two shareholder lawsuits alleging they steered public companies toward private equity buyout firms with which they maintain business relationships, potentially at disadvantageous valuations for public shareholders.
- • Delaware corporate law reforms enacted in 2025 narrowed shareholder remedies against directors and executives in conflicted transactions but provided no equivalent protections to financial advisers, creating a litigation pathway that plaintiffs' attorneys are actively exploiting.
- • JPMorgan faces dismissal motions in a case involving its advisory role in Hellman & Friedman's sale of its Snap One Holdings investment; Morgan Stanley is defending a new lawsuit regarding its $1.5 billion advisory role in Haveli Investments' acquisition of Couchbase.
- • A 2026 Delaware court ruling that allowed Goldman Sachs to remain a defendant in private equity take-private litigation has emboldened plaintiffs' lawyers to pursue banks as co-defendants rather than focusing solely on company directors.
- • One lawsuit against each bank has already been dismissed, indicating mixed early outcomes for defendants, though the litigation remains a material emerging risk for investment banking divisions closely aligned with the private equity industry.
Summary
JPMorgan Chase and Morgan Stanley are navigating a growing wave of shareholder litigation stemming from their advisory roles in take-private transactions, marking a potential new source of legal exposure for major investment banks deeply embedded in the private equity ecosystem. According to Bloomberg, shareholders have initiated Delaware lawsuits accusing both banks of facilitating conflicts of interest by steering public companies toward buyout firms with which the banks maintain profitable ongoing relationships—potentially compromising the independence and objectivity of their financial advisory roles.
The core allegation centers on valuation dynamics. Plaintiffs argue that advisers knowingly assisted company boards in breaching fiduciary duties by recommending buyout transactions at prices that disadvantaged public shareholders in favor of private equity sponsors with whom the advisory banks maintain lucrative business pipelines. The legal theory holds that financial advisers can face direct liability if they knowingly facilitated such conflicted processes.
A pivotal shift in the litigation landscape occurred following Delaware corporate law reforms introduced in 2025. While these reforms constrained shareholder ability to pursue claims directly against directors and executives involved in conflicted transactions, they provided no parallel protections for financial advisers. This asymmetry has created a strategic opening for plaintiffs' counsel, who are increasingly naming banks as primary defendants. A Delaware court ruling earlier in 2026 that permitted Goldman Sachs to remain a defendant in a separate private equity take-private case further catalyzed this shift in litigation strategy.
JPMorgan is contending with a case alleging it advised on Hellman & Friedman's disposition of its Snap One Holdings stake; the bank has filed for dismissal, contending the transaction followed a properly conducted sale process. Morgan Stanley faces newly filed litigation over its $1.5 billion advisory engagement on Haveli Investments' acquisition of Couchbase, a database software company. While one lawsuit against each bank has already been dismissed, the accumulating caseload signals institutional investors are targeting investment banking advisory businesses as a new litigation frontier in private equity-related controversies.
The core allegation centers on valuation dynamics. Plaintiffs argue that advisers knowingly assisted company boards in breaching fiduciary duties by recommending buyout transactions at prices that disadvantaged public shareholders in favor of private equity sponsors with whom the advisory banks maintain lucrative business pipelines. The legal theory holds that financial advisers can face direct liability if they knowingly facilitated such conflicted processes.
A pivotal shift in the litigation landscape occurred following Delaware corporate law reforms introduced in 2025. While these reforms constrained shareholder ability to pursue claims directly against directors and executives involved in conflicted transactions, they provided no parallel protections for financial advisers. This asymmetry has created a strategic opening for plaintiffs' counsel, who are increasingly naming banks as primary defendants. A Delaware court ruling earlier in 2026 that permitted Goldman Sachs to remain a defendant in a separate private equity take-private case further catalyzed this shift in litigation strategy.
JPMorgan is contending with a case alleging it advised on Hellman & Friedman's disposition of its Snap One Holdings stake; the bank has filed for dismissal, contending the transaction followed a properly conducted sale process. Morgan Stanley faces newly filed litigation over its $1.5 billion advisory engagement on Haveli Investments' acquisition of Couchbase, a database software company. While one lawsuit against each bank has already been dismissed, the accumulating caseload signals institutional investors are targeting investment banking advisory businesses as a new litigation frontier in private equity-related controversies.
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