In Vega v. Jones, Day, Reavis & Pogue, a California Appellate court reversed the dismissal of fraud claims arising out of an M&A deal.

The details: Frank Vega, a shareholder in Monsterbook.com (the acquired company), sued Jones Day, which represented Transmedia Asia Pacific, Inc. (the acquiring company) for fraud and negligent misrepresentation in connection with a merger transaction. Vega alleged the law firm concealed so-called "toxic" terms of a third-party financing transaction, and thus defrauded him into exchanging his valuable stock in the acquired company for "toxic" stock in the acquiring company.

Jones Day's demurrer was granted by the trial court on grounds that plaintiff failed to plead his causes of action with the requisite specificity. However, the Appellate Court held that plaintiff's complaint did, in fact, state a fraud claim based on nondisclosure. Remanded for further proceedings.