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Legal Giants Wage War Over Role Of Activist Investors (A.K.A. Hedge Funds)

Forbes – In one corner there is the brilliant octogenarian Martin Lipton, founder of one of the nation’s most powerful and influential law firms, Wachtell, Lipton, which made it’s name in the giant merger and acquisition battles of the past 4 decades. I guess Lipton has few hedge fund clients because he recently charged the activist hedge funds with “preying on American companies to create short term increases in the market price of their stock at the expense of long term value.”

In another corner is Harvard Law Professor Lucian Bebchuk, a prominent expert on corporate governance issues, who has been extolling a recent academic study of 2000 separate interventions by hedge funds into the process of creating “long-term value.” Bebchuk believes that “activist hedge funds benefit and do not have an adverse effect on the targets over the five-year period following the attack.” Bebchuk also has led the charge against the obscene compensation earned by American CEOs even when their companies do not perform in spectacular growth and profits.

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