Securities Fraud

Federal and state securities laws allow defrauded investors to sue for damages caused by fraud in the marketing or sale of securities. These laws were designed to promote a level playing field for investors by requiring full and fair disclosure of all material facts about public companies. Securities fraud claims may lie when a company seeks to inflate the price of its shares by making false or misleading statements to analysts, brokers or investors, or when a company hides bad results through improper accounting practices. Typical defendants in securities cases include the company's officers and directors, along with any accountants, bankers or brokers who knew about the alleged misconduct but failed to report or correct it. Securities laws have been particularly relevant to Taft-Hartley pension and retirement funds since passage of the Private Securities Litigation Reform Act of 1995, which specifically encourages institutional investors to protect the assets held for their beneficiaries and other investors by serving as lead plaintiffs in securities class actions.

Shareholder Derivative Actions

Derivative actions are lawsuits in which shareholders allege a breach of fiduciary duties against a company's officers or directors. These claims can be appropriate where, for example, a company's officers or directors have engaged in self-dealing or where a company has sold assets to an officer or director for less than fair market value. These are often cases that companies should bring, but do not - usually because its officers or directors exercise improper influence over the company's affairs. If a derivative action is favorably resolved, the individuals found to have harmed the company may be required to make monetary payments to the company. Successful derivative actions may also lead to corporate governance changes, so that the conduct complained of will not happen again. Derivative suits will generally benefit shareholders through improved corporate governance and gains in share price.