JPMorgan, Morgan Stanley face growing scrutiny over PE buyouts

JPMorgan and Morgan Stanley are facing a growing number of shareholder lawsuits over their roles as financial advisers on major take-private transactions, highlighting a potential new source of legal risk for banks closely tied to the private equity industry, according to a report by Bloomberg.

Shareholders in several Delaware cases have accused banks of helping steer public companies towards buyout firms with which they maintain lucrative business relationships, allegedly at valuations that disadvantaged other investors. The lawsuits argue that advisers could be liable if they knowingly assisted directors in breaching their fiduciary duties.

The legal exposure has increased following changes to Delaware corporate law introduced in 2025. The reforms made it more difficult for shareholders to pursue claims against directors and executives involved in conflicted transactions, but did not provide equivalent protection to financial advisers.

That distinction has encouraged some plaintiffs’ lawyers to pursue banks instead, particularly after a Delaware court ruling earlier this year allowed Goldman Sachs to remain a defendant in litigation over a private equity take-private deal.

JPMorgan and Morgan Stanley have each been named in two such cases, although one action against each bank has already been dismissed.

JPMorgan is seeking dismissal of a case alleging that it assisted Hellman & Friedman in the sale of its investment in Snap One Holdings in a transaction that allegedly harmed public shareholders. The bank has argued that the transaction followed a legitimate and properly conducted sale process.

Morgan Stanley, meanwhile, is defending a new lawsuit relating to its advisory role in the $1.5bn acquisition of database software company Couchbase by Austin-based private equity firm Haveli Investments.

Both banks have denied wrongdoing, maintaining in court filings that they helped boards conduct fair sales processes, had no disabling conflicts and appropriately disclosed relevant relationships.