Blackstone, Goldman, KKR, TPG Global Beat Insider Trading Appeal

Affiliates of Blackstone LP Group, Goldman Sachs Group Inc., KKR & Co.and TPG Global LLC on Thursday persuaded Delaware’s highest court to dismiss insider trading allegations regarding their massive sales of Zimmer Biomet Holdings Inc. shares shortly before regulatory issues sent its stock price plummeting.

State judges upheld a decision dismissing the Delaware Chancery Pension Fund lawsuit, saying in a one-page order that the decision “should be affirmed on the basis and for the reasons attributed by” the vice -Chancellor Lori W. Will, who initiated the case last year.

Will discovered in August that the pension fund had failed to demand an internal investigation before prosecuting or showing that Zimmer’s board members – also named as defendants – were too compromised by their own legal exposure to carry on. a fair investigation.

Because pre-trial demand or demonstration of futility of demand is a threshold requirement in shareholder derivatives cases, the failure to establish probable liability on the part of the board has also doomed claims against shareholders. four private equity giants, the judge said at the time.

The Delaware lawsuit, filed in 2019 by the Detectives Endowment Association Annuity Fund, accused Zimmer’s board of orchestrating three bids in 2016 to help private equity firms exit investment positions worth billion before problems at an Indiana factory sent shares of the medical device maker down 14%.

The allegations echoed a parallel securities class action lawsuit against the company’s officers and directors that settled in 2020 for $50 million.

Zimmer and most of its board of directors are represented by Morgan, Lewis & Bockius LLP. KKR is represented by Morris, Nichols, Arsht & Tunnell LLP and Simpson Thacher & Bartlett LLP. TPG is represented by Ropes & Gray LLP. Blackstone is represented by Paul, Weiss, Rifkind, Wharton & Garrison LLP. Goldman is represented by Abrams & Bayliss LLP and Wachtell, Lipton, Rosen & Katz.

The pension fund is represented by deLeeuw Law LLC; Schubert Jonckheer & Kolbe LLP; Cohen Milstein Sellers & Toll PLLC; and Shuman, Glenn & Stecker.

The case is In re Zimmer Biomet Holdings Inc. Deriv. Litig., Del., No. 304, 2021, 6/16/22.

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