When you own stock in a company, you have a voice in the way it is governed. You are entitled to specific information about the company and elect the company’s governing board.
If you feel the company is moving in the wrong direction and endangering its stock value or directors are not acting in the best interest of the company, you can may be able to sue to compel the company’s directors to change course. Contact a stockholder derivatives fraud lawyer at Silver Law Group to learn more about this option. Our securities class action attorneys represent clients nationwide on various types of class actions related to securities fraud.
People and institutions who hold stock in a company have a right to know about corporate decisions. When shareholders believe the company directors are not acting prudently or are endangering the stock value through their actions, shareholders can sue these individuals on behalf of the company. This is called a derivative action.
Sometimes, the intent of a shareholder derivative lawsuit is to protect the value of the stockholders’ ownership interests or force directors to act in the company’s best interest rather than their own best interest. In contrast to investor class action lawsuits that primarily seek financial compensation for the investors, a stockholder derivative action seeks a change in corporate decisions or governance or force officers and directors to act as fiduciary’s for the shareholders.
The attorneys at Silver Law Group represent shareholders nationwide in derivative lawsuits. We work on contingency, meaning that you pay us nothing up-front and our fees come out of the settlement or verdict we win for you.
Shareholder derivative lawsuits are typically based on an alleged breach of a corporate duty or mismanagement that harms the company. Common allegations in stockholder derivative lawsuits include:
Any conduct or failure to act that is likely to harm the company’s reputation or financial position could potentially be the basis of a stockholder derivative lawsuit.
If a stock holder proves the allegations in the derivative action, the remedies accrue to the company. The court could order changes in corporate governance, require stricter oversight of specific issues, or issue an injunction preventing the corporation from taking specific actions. Sometimes the court orders the defendant to cover the plaintiff’s litigation costs and attorneys’ fees.
Stockholder derivative lawsuits are a powerful tool for investors seeking accountability and preservation of their shares’ value. Building a strong derivatives fraud case is challenging, however, so you will need to work with the experienced attorneys at Silver Law Group.
Before you can pursue a shareholder derivative action, you must demonstrate to a court that you have utilized every other option for correcting the problem. Alternatively, you could present evidence showing that the other available options would not accomplish your goal.
You frequently must make a “books and records” demand. This is a letter to the company’s Board of Directors seeking specific internal documents relevant to the issue of concern. After reviewing the information produced from the demand, if you still feel that grounds for a shareholder derivative action exist, you must formally request the Board of Directors to take corrective action.
When these steps fail, or when it is clear that these actions would be futile, you can commence a stockholder derivative lawsuit. The attorneys at Silver Law Group can draft the demand letter, review the documents produced, and help you build a compelling case for a shareholder derivative lawsuit.
As shareholders in a company, you have a voice in how it is run; and how to put it back on track if you believe it is going in the wrong direction. If incompetent or unethical corporate officers and directors are endangering the value of your investment, you can take action. Contact a stockholder derivatives fraud lawyer at Silver Law Group today for a free consultation.
