What is a shareholder derivative action?

A shareholder derivative action is a lawsuit brought by a shareholder for the benefit of a corporation, often to remedy breaches of fiduciary duty by officers and directors. Remedies commonly sought in derivative actions include: corporate governance reforms designed to prevent future fiduciary misconduct; removal of officers or directors whose misconduct injured the corporation; monetary payments in the amount the company was damaged; and disgorgement of ill-gotten gains.

What is the difference between a shareholder derivative action and a securities fraud class action?

In a shareholder derivative action, the representative shareholder plaintiff pursues claims on behalf of a corporation, and benefits indirectly as a shareholder from any corporate governance reforms or monetary recovery obtained for the corporation. In a securities class action, the representative shareholder plaintiff pursues claims on behalf of themselves and a class or classes of similarly situated shareholders to obtain monetary and other benefits directly for the members of the class.

What are my responsibilities as a plaintiff in a shareholder derivative action?

In a shareholder derivative action, a representative shareholder plaintiff pursues claims on behalf of the corporation, not on behalf of themselves personally. The plaintiff must act in the best interest of the corporation and its shareholders to ensure corporate accountability and transparent, honest, and effective corporate governance. The plaintiff must also remain informed about significant developments in the case and works with the attorneys to make important strategic decisions regarding the conduct and disposition of the litigation. The shareholder plaintiff usually must continue to own stock in the subject company to pursue this type of litigation.

If I file a shareholder derivative action, can I still recover my share of the proceeds in a related class action settlement?

Yes. If you are a member of the class, you are entitled to file a claim to recover your portion of the class action settlement proceeds.

Does it cost anything to participate in a shareholder derivative action?

No. Representative plaintiffs in actions brought by Robbins Arroyo LLP are not responsible for paying attorneys’ fees or expenses. All costs and expenses of the litigation are advanced by Robbins Arroyo LLP. We only recover our fees and costs if we are successful in obtaining a substantial benefit for the corporation.

How do I retain Robbins Arroyo LLP to represent me in a shareholder derivative action?

Call Leonid Kandinov, Esq. at (800) 350-6003 or email inquiry@robbinsarroyo.com and our support staff will gather pertinent information and put you in touch with one of our attorneys to review your case.


How can we help you?

CONTACT US TODAY | 1-800-350-6003 or info@robbinsarroyo.com

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