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Stockholder Derivative Suit

   Also found in: Legal, Encyclopedia, Wikipedia 0.03 sec.
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.


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During fiscal 2001, $431,445 of expenses related to the termination of the stockholder derivative suit and a $125,000 one time fee for termination of a previous line of credit were included in operating expenses.
 
 
 
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