It’s a drive-by this week, but I wanted to call your attention to the recent Delaware Chancery decision in In re Merge Healthcare Inc. Stockholders Litigation.  The plaintiffs challenged IBM’s acquisition of Merge, alleging that a 26% Merge shareholder counted as a controller and was conflicted.  Therefore, the shareholder vote in favor of the merger could not cleanse the deal under Corwin v. KKR Financial Holdings LLC, 125 A.3d 304 (Del. 2015).

Vice Chancellor Glasscock rejected the argument.  Assuming (without deciding) that the 26% shareholder counted as a controller, he concluded that because the shareholder’s interests were aligned with those of the public shareholders – among other things, the alleged controller had no unusual need for liquidity/a fire sale – no heightened scrutiny was required and the stockholder vote in favor of the deal was sufficient to cleanse the transaction.

Of particular interest:  It turns out that the Merge corporation did not have a 102(b)(7) exculpatory clause in its charter, which potentially exposed its board to damages for duty of care violations (though, ultimately, the stockholder vote was sufficient to cleanse any problems).  I didn’t even know that was a thing that could happen.

In other news, the business media is aflutter with reports of Trump’s new executive order, which would roll back the Department of Labor’s new “fiduciary rule,” requiring brokers to adhere to fiduciary standards when giving investment advice to retirement plans.  Quoth Gary Cohn, the White House National Economic Council director, “We think it is a bad rule. It is a bad rule for consumers.  This is like putting only healthy food on the menu, because unhealthy food tastes good but you still shouldn’t eat it because you might die younger.”  Um, there may be legitimate reasons to object to the rule – namely, the argument (however spurious) that one way or another, you pay for investment advice, and the old way is cheaper – but treating investment advice like a consumption good is … not among them.