Comments on: Shareholder Suits Reach New High

By: J.T. Wenting

J.T. Wenting — Thu, 16 Feb 2006 09:32:24 +0000

If one or a small group of shareholders file against a company they have shares in they may well come out on top.
Say total outstanding shares are worth $1 million, of which they claimants hold 1%. That’s $10.000.
Total loss due to the suit is 50% (extreme), or $5.000 for the claimant.
But they get a quarter million or so, minus maybe $50.000 lawyer fees, for a total of $200.000.
In the end they’ve won $190.000 tax free, something they’d need decades to earn from the shares themselves (and that taxed).

By: Dave

Dave — Thu, 16 Feb 2006 00:11:52 +0000

Yes, but what about where the shareholders are suing the directors. I think directors at the moment get a ridiculous free ride, they get fully insured and their interests are not aligned with the shareholders. Directors should be held accountable

By: Dave Dufour

Dave Dufour — Wed, 15 Feb 2006 21:52:43 +0000

Of course these lawsuits are nutty. So are class action lawsuits. The common thread, besides nuttiness, is that the only ones who are enriched are the attorneys. How ’bout that?