shareholder derivative suit

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.

shareholder derivative suit

A special type of class action lawsuit filed by one shareholder or by a limited number of shareholders on behalf of all of the other shareholders in a firm. An example is such a suit filed against a mutual fund's management in which the litigants claim excessive management and distribution fees.
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The shareholder derivative suit, filed by shareholder John G.
(5.) See, e.g., John Matheson, Restoring the Promise of the Shareholder Derivative Suit, 50 GA.
Garth et al., Empirical Research and the Shareholder Derivative Suit: Toward a Better-Informed Debate, 48 Law & Contemp.
The appointment of the committee --again a common defense strategy in shareholder derivative suit cases--resulted in a lengthy "stay" of the litigation, which remains pending as of this writing.
Goodwin Litigators Secure Second Circuit Win for Mutual Fund Trustees in Shareholder Derivative Suit
Once Wal-Mart's bribery scandal made headlines, the California State Teachers Retirement System (CalSTRS), concerned that Wal-Mart's bribery practices and the corresponding potential for hefty penalties would negatively impact its substantial holdings in Wal-Mart, filed a shareholder derivative suit against Wal-Mart's board in the Delaware Court of Chancery.
767, 783 (1999) [hereinafter West, Information, Institutions, and Extortion] (commenting that investors only recently began using the shareholder derivative suit as a result of the 1993 Commercial Code amendment that reduced filing fees).
Baker once represented a Park City resident in a shareholder derivative suit against a major company.
Garth et al., Empirical Research and the Shareholder Derivative Suit: Toward a Better Informed Debate, 48 LAW & CONTEMP.
Similarly, in Wittenborn v Pauly, the Northern District stated as follows: "[W]here the court faced a disqualification motion in the context of a shareholder derivative suit, the potential for conflict was enough to justify requiring the corporate defendant to retain independent counsel." (15)
To address the analogous problem in the for-profit context, Delaware courts have required a stringent set of conditions to obtain before a shareholder derivative suit may survive the board's motion to dismiss.
This shareholder derivative suit claimed that certain officers and directors of the corporation violated their fiduciary duties by participating in insider trading.