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Derivative Suit

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Stockholder Derivative Suit
A lawsuit filed by one or more shareholders of a publicly-traded company in the name of the company. Often, this lawsuit is filed against a member of the company's management who committed an illegal, unethical, or negligent act. Directors' and officers' liability insurance can protect the management from losses as the result of one of these lawsuits. They are also called derivative suits and derivative action.

derivative suit


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of the Branstetter firm said the derivative suit is different from a class-action in that no class of plaintiffs needs to be certified for the case to move forward and the company itself is a defendant in name only.
Abuses of executive compensation-provide no end to work for plaintiffs' lawyers pursuing class-action litigation against, and derivative suits on behalf of, companies that--in issuing options or stock to senior executives--expose themselves to the risk that these grants will be misused though backdating and insider trading.
A shareholder''s derivative suit is another sort of business litigation commonly brought about by one or a group of shareholders as a legal action to prevent or resolve a wrongful act against the corporation.
 
 
 
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