FAQs: Shareholder Derivative Actions

What is a shareholder derivative action?

A shareholder derivative action is a lawsuit brought by a shareholder on behalf and 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; and monetary payments in the form of damages and disgorgement of ill-gotten gains. 

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.  Representative plaintiffs must act in the best interests of the corporation and its shareholders.  A representative plaintiff volunteers to represent the company to ensure corporate accountability and transparent, honest, and effective corporate governance.

Can I sell my stock and still act as a representative plaintiff in a shareholder derivative action?

No.  Generally, a shareholder plaintiff in a derivative action must maintain share ownership throughout the litigation.  There are important exceptions to this rule.  Please contact us for additional information or to discuss your particular circumstances.

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.  Plaintiffs in shareholder derivative actions brought by Robbins Arroyo LLP are not responsible for paying our attorneys’ fees or expenses.   All costs and expenses of the litigation are advanced by Robbins Arroyo LLP. 

If I am interested in retaining Robbins Arroyo LLP to represent me in a shareholder derivative action, who should I contact?

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

 

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