stockholder 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.

stockholder derivative suit

A lawsuit filed by one or more of a company's stockholders in the name of the company. A derivative suit is filed when the firm's management will not or cannot sue in the name of the company. For example, a stockholder may enter a derivative suit against the firm's chief executive officer to recover funds from a questionable or an improper act by that officer. Also called derivative suit.
References in periodicals archive ?
One such area may be shareholder derivative suits brought against directors and officers of companies that experience a data security breach.
Shareholder derivative suits arising out of data breaches have opened a whole new front for suing corporate officers focusing on cybersecurity.
13) In fact, multiple shareholder derivative suits against Wal-Mart make similar allegations and are still in pretrial stages at the time of publication: seven in Delaware and five in Arkansas state and federal court.
DRRT helps its clients generate “legal alpha” through shareholder litigation in the form of securities (class or private) actions, shareholder derivative suits, appraisal disputes in merger or take-over situations, and other loss recovery methods throughout the world.
214) Several prominent scholars opined that the tightening of security for expense awards "set an important precedent for further expanding the use of shareholder derivative suits.
Consequently, failure to conduct pre-closing FCPA due diligence introduces significant risk that could deplete the value of the deal; open the surviving entity to large penalties, fines and disgorgement of any ill-gotten gains; and expose the officers and directors to unwanted shareholder derivative suits.
Conventional wisdom is that shareholder derivative suits are dead.
Shareholder derivative suits developed as a mechanism by which principals (shareholders) could force their agents (the board members) to act in their best interests when the agents otherwise might not.
In addition to shareholder derivative suits and class action suits for board breaches of duty, exclusions from federal plans are exposures faced by health care boards.
64) This ruling not only allowed the case to proceed on the merits, but also served to check a growing tendency by courts to grant liberally defendants' motions for security for expenses and set an important precedent for further expanding the use of shareholder derivative suits.
class actions, as well as shareholder derivative suits on behalf of certain of the Settling Funds.