Keith Paul Bishop has the text of the bylaw amendment adopted by Echo Therapeutics, Inc. And so it begins?
Update: WSJ Law Blog has news that a second company has adopted a fee-shifting bylaw:
Yet Echo Therapeutics Inc.ECTE +1.79%, a Philadelphia-based maker of medical devices, and LGL Group Inc.LGL 0.00%, an electrical-components maker, appear to be the first companies to adopt them, doing so last month, regulatory filings show.
LGL did not respond to requests for comment. A spokeswoman for Echo said “Echo’s Board and management team believe that it is in our shareholders’ best interests to focus our limited resources on our ongoing product development efforts rather than responding to frivolous litigation.”
The new bylaws are the latest sign that some companies are eager to discourage shareholder litigation, which has become more common over the past few years. Lawsuits followed 94% of corporate merger announcements last year, for example, and rarely resulted in substantial gains for shareholders.