After the announcement of a proposed buyout of LaBranche & Co., Inc. an investigation on behalf of investors in LaBranche & Co (NYSE:LAB) shares questioning a potential unfairness of the takeover and possible breaches of fiduciary duties by certain LaBranche & Co officers and directors was announced.

The investigation by a law firm concerns possible breaches of fiduciary duties by certain officers and directors at LaBranche & Co., Inc. arising out of their attempt to sell LaBranche & Co. to Cowen Group, Inc.

On Thursday, February 17, 2011, LaBranche & Co Inc. (NYSE: LAB) and Cowen Group, Inc. (NASDAQ: COWN) announced before the market opened a merger agreement under which Cowen Group, Inc will acquire LaBranche & Co Inc. in a stock-for-stock merger transaction valued at approximately $192.8 million. Under the terms of the agreement LaBranche & Co Inc shareholders (LAB) will receive upon closing a fixed ratio of 0.9980 of a share of Cowen Group, Inc Class A common stock for each outstanding share of LaBranche common stock. LaBranche & Co Inc said the offer represents a 16 percent premium to LaBranche & Co Incs closing price on February 16, 2011.

Indeed shares of LaBranche & Co., Inc. (NYSE:LAB) traded the day before the takeover news as high as $4.09 per share and rose in response to buyout proposal to $4.28 per share.
But certain executive officers of LaBranche & Co Inc, holding approximately 12.5% of the outstanding shares of LaBranche & Co Inc, have entered into a voting agreement with Cowen Group to vote their shares in favor of the transaction, subject to the terms of the voting agreement. RCG Holding LLC, which currently holds approximately 44.5% of the outstanding shares of Cowen Group, entered into a voting agreement with LaBranche & Co. to vote its shares in favor of the transaction, subject to the terms of that voting agreement.
Therefore the investigation concerns whether LaBranche & Co., Inc. Board of Directors undertook an adequate and fair sales process to obtain fair consideration for all shareholders of LaBranche & Co., Inc. (NYSE:LAB) and specifically whether the LaBranche board of directors breached their fiduciary duties to LaBranche & Co. (LAB) shareholder by failing to adequately shop the Company before entering into this transaction. The investigation concerns also whether Cowen Group, Inc is underpaying for NYSE LAB shares, thus unlawfully harming LAB stockholders. LaBranche & Co. shares NYSE LAB traded in May 2010 at $5.11 and in April at almost $6 per share, leaving investors who purchased during those dates or earlier at prices over $4.75 with no premium but asking them to hand their shares over to Cowen Group, Inc at a discount.

A potential class action lawsuit would seek to maximize the amount of money and information NYSE:LAB shareholders would receive in a buyout, so the law firm.