Shareholder Derivative Litigation

Faruqi & Faruqi, LLP has extensive experience litigating shareholder derivative actions on behalf of the corporate entity.  These actions are filed by a shareholder of a public company, but on behalf of the injured corporation, with any ultimate recovery flowing to the corporate entity, not its shareholders.  This litigation is often necessary when the corporation has been injured, such as the wrongdoing by certain corporate officers in connection with stock-option backdating programs.  A shareholder has the right to commence a derivative action when the company’s directors are unwilling, or unable, to pursue claims against the wrongdoers. 

Derivative litigation, like shareholder merger litigation, usually asserts that corporate officers and/or directors breached fiduciary duties owed to the company.  Because such wrongdoing is often the result of poor internal guidelines and procedures, Faruqi & Faruqi, LLP attempts to structure comprehensive corporate governance changes in connection with the successful resolution of derivative litigation, in addition to any monetary recovery that may inure directly to the benefit of the company, and indirectly to its shareholders through an improved market price and market perception. 

Faruqi & Faruqi, LLP prosecutes these derivative actions on a contingent fee basis.