Corporate officers and directors are constantly subjected to temptations that put their own interests at odds with those of the shareholders they purport to represent. Whether the temptation arises in the form of back-dated stock options or as preferential treatment in a proposed merger, the shareholders are entitled to expect that the company’s affairs will be managed at all times in their best interests. However, this expectation often is not met.
If you are a shareholder of a corporation that has lost value due to improper management practices or outright fraud, contact a knowledgeable lawyer at the South Florida law firm of Dimond Kaplan & Rothstein. We have the experience and familiarity with complex litigation to provide effective client service in shareholder derivative actions throughout the United States.
Understanding Shareholder Derivative Lawsuits
A shareholder derivative lawsuit is essentially a class action alleging misconduct on the part of corporate officers or directors at the expense of the shareholders themselves. In theory, at least, officers and directors are stewards of corporate assets on behalf of the company’s owners — i.e., the shareholders — and any decision that damages share value for illegitimate reasons can be considered a basis for a shareholder derivative action.
Not every unwise management decision is actionable — corporate leadership generally has wide discretion to make business decisions. But when the cause of the loss is related to fraud, unlawful activity, or blatant self-interest, shareholders have a remedy through derivative litigation.
Examples of the corporate misconduct that can support a shareholder derivative action in a given case include the following:
- Securities fraud, accounting fraud, or tax fraud
- Improprieties with respect to executive compensation
- Material non-disclosure of facts essential to the evaluation of a merger proposal
- A pattern of business decisions that knowingly expose the corporation to losses due to consumer protection violations, antitrust violations, environmental damage, back tax liability, or other unnecessary risks
Consult With a Corporate Litigation Attorney
For additional information about our ability to advise and represent you and your fellow shareholders in a derivative action, contact Dimond Kaplan & Rothstein today at 888-578-6255 or fill out the form below.