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Matt Levine

Banks Forgot Who Was Supposed to Own Dell Shares

The financial system is built in layers of abstraction. Which is always fun in court.

Here are three stylized facts about stocks:

So for instance, Merion Capital objected to the 2012 buyout of by Permira Advisors and demanded appraisal. But Merion was not an aggrieved long-term shareholder. It was an "appraisal arbitrage" investor, in the business of seeking appraisal, and it started buying stock four days after the record date for the shareholder vote. (The vote was held on Dec. 27, 2012, but you needed to own the stock as of Nov. 30 to vote. ) Merion met most of the requirements for appraisal: It demanded appraisal before the shareholder vote, didn't vote for the merger (since it couldn't vote), and owned the stock continuously from demand until closing. But it couldn't prove that its shares hadn't been voted in favor of the merger: It had bought the shares in anonymous public transactions, so for all it knew the people who owned those shares as of the record date had voted in favor of the merger.