Legal Obligations

Humpy

Humpy

Just supposing someone on ET knows a bit about US law, I would like to ask a question.

In the case of an insolvent or even a much run down company, do the shareholders have any legal rights against incompetent or crooked management ?

Can the shareholders claim back money for compensation ? In cases like Lehmans, Bear Stearnes etc. ??
 
It's call a shareholder lawsuit, and it happens from time to time. There were quite a few after the 2000 tech meltdown. As in any lawsuit, it only works when the defendant has something to lose.
 
Quote from rwk:

It's call a shareholder lawsuit, and it happens from time to time. There were quite a few after the 2000 tech meltdown. As in any lawsuit, it only works when the defendant has something to lose.
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Thx

I guess some defendants hide their money in their wife's name or overseas. Are the lawyers the only gainers ?

Not that I had money in Lehman's etc. but I thought it would at least make management more careful and therefore share owning less risky !!

Perhaps politicians should shoulder the financial penalties too. For instance the Clinton admin who deregulated the banks. A few examples would work wonders for the rest imho.
 
Quote from Humpy:

Just supposing someone on ET knows a bit about US law, I would like to ask a question.

In the case of an insolvent or even a much run down company, do the shareholders have any legal rights against incompetent or crooked management ?

Can the shareholders claim back money for compensation ? In cases like Lehmans, Bear Stearnes etc. ??
More...

Incompetent management, NO. Crooked, yes. The corporate veil does not protect officers against intentional violations, such as fraud.

I am involved in a suit which many might some people might be aware of. In my situation, the principal of a company willingly committed fraud. That individual can argue "corporate veil", however the courts / judges will allow that veil to be pierced.

In the case of WorldCom, Bernie would be subject to litigation, outside of the corporate veil. Unfortunately the losses are so huge and he has minimal assets.
 
Much of Fuld's personal wealth was in Lehman stock and he lost nearly $1 billion when the firm collapsed.

So the guy had skin in the game.

If anything was left I'm sure he could find someone to sue in managment other than himself.
:eek:
 
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