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Court Rules Coequal Stockholders Owe Fiduciary Duties To Each Other

Stockholders in closely held corporations often operate their companies as if they were partnerships.  Does that mean that the stockholders, like partners, owe fiduciary duties to each other? In Jones v. H. F. Ahmanson & Co., 1 Cal. 3d 93 (1969), the California Supreme Court famously held: Majority shareholders may not use their power to…

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9th Circuit Holds Section 10(b) Violations Sufficient For ERISA Breach Of Duty Claims

A decision issued yesterday by the Ninth Circuit Court of Appeals illustrates the peril that can inhere in offering a company stock alternative in a plan governed by the Employee Retirement Income Security Act (ERISA).  Several years ago, Connecticut Retirement Plans and Trust Funds brought a securities fraud action against Amgen Inc. and several of its…

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1 For 3 Million Reverse Split Fraud Claim Survives Motion To Dismiss

Nancy Wojtas at Cooley LLP alerted me to an interesting ruling case decided last week by the U.S. District Court for the Eastern District of New York, Gardner v. Major Auto. Cos., 2012 U.S. Dist. LEXIS 118191 (E.D. N.Y. Aug. 21, 2012). According to a complaint, Bruce Bendell was the Chairman, Chief Executive Officer, and Chief…

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Dissenters’ Rights And The Saddest Plaintiff

Dissenters’ rights statutes are intended to liberate minority stockholders from the tyranny of the majority.  They accomplish this by allowing stockholders who object to specific transactions the opportunity to require the corporation to purchase their shares pursuant to a statutorily prescribed procedure.  In Nevada, this procedure can be found in Chapter 92A of Nevada Revised…

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Court Decides Buy-Out Claims Are Derivative

When a shareholder sues corporate officers and directors, she must decide whether to bring a direct action (which may be a class action) or a derivative suit.  The consequence of making the wrong decision may be dismissal of the shareholder’s suit as was the case recently in Sweeney v. Harbin Electric, Inc., 2011 U.S. Dist.…

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