The Irrationality of Shareholder Class Action Lawsuits PDF Download
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Author: Patrick M. Garry
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
This article examines shareholder class actions and offers a proposal for reforming this area of litigation. After describing the nature and dynamics of these lawsuits (see Part II), the article in Part III outlines the criticisms of shareholder class actions. These criticisms take two basic forms, one of which mirrors those made against class action lawsuits in general, and another which is unique to shareholder lawsuits. As to the former, shareholder class actions often result in relatively trivial payments to the class members, while plaintiffs' lawyers receive millions of dollars in fees; and the class members have virtually no say in the conduct of the lawsuit or the terms of any settlement. As to the latter type of criticism made against shareholder class actions, the lawsuits often contain an inherent irrationality, at least from the standpoint of the plaintiffs themselves. The lawsuits are brought by stockholders against their own corporation. Since any settlement basically comes out of the shareholders' own assets, accompanied by an extremely high transaction price in the form of lawyers' fees, the lawsuit can actually yield a net negative return to the class members. Evidence suggests that shareholder class action litigation results more from a company's stock price movements than from the actual commission of fraud by the corporation. The connection between stock market movements and shareholder class action filings is discussed in Part IV, as are various studies analyzing the underlying merits of such lawsuits. In Part VI, a reform proposal is offered, which aims to take advantage of the unique role that shareholders occupy vis-à-vis the corporation. Most other class actions involve plaintiffs who have no legal or economic connection to defendants. Most, for instance, involve lawsuits brought by consumers against the manufacturers of allegedly defective products. In shareholder litigation, however, the plaintiffs are the owners of the defendant corporation, and hence in a unique position to remedy past misdeeds of the corporation and to deter future wrongdoing. Recognizing that shareholder class actions have failed to produce any real compensatory relief to injured investors and that such actions can actually have negative effects on shareholders, the reform proposal offered in Part VI concentrates exclusively on the goal of deterring future securities fraud.
Author: Patrick M. Garry
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
This article examines shareholder class actions and offers a proposal for reforming this area of litigation. After describing the nature and dynamics of these lawsuits (see Part II), the article in Part III outlines the criticisms of shareholder class actions. These criticisms take two basic forms, one of which mirrors those made against class action lawsuits in general, and another which is unique to shareholder lawsuits. As to the former, shareholder class actions often result in relatively trivial payments to the class members, while plaintiffs' lawyers receive millions of dollars in fees; and the class members have virtually no say in the conduct of the lawsuit or the terms of any settlement. As to the latter type of criticism made against shareholder class actions, the lawsuits often contain an inherent irrationality, at least from the standpoint of the plaintiffs themselves. The lawsuits are brought by stockholders against their own corporation. Since any settlement basically comes out of the shareholders' own assets, accompanied by an extremely high transaction price in the form of lawyers' fees, the lawsuit can actually yield a net negative return to the class members. Evidence suggests that shareholder class action litigation results more from a company's stock price movements than from the actual commission of fraud by the corporation. The connection between stock market movements and shareholder class action filings is discussed in Part IV, as are various studies analyzing the underlying merits of such lawsuits. In Part VI, a reform proposal is offered, which aims to take advantage of the unique role that shareholders occupy vis-à-vis the corporation. Most other class actions involve plaintiffs who have no legal or economic connection to defendants. Most, for instance, involve lawsuits brought by consumers against the manufacturers of allegedly defective products. In shareholder litigation, however, the plaintiffs are the owners of the defendant corporation, and hence in a unique position to remedy past misdeeds of the corporation and to deter future wrongdoing. Recognizing that shareholder class actions have failed to produce any real compensatory relief to injured investors and that such actions can actually have negative effects on shareholders, the reform proposal offered in Part VI concentrates exclusively on the goal of deterring future securities fraud.
Author: Wenjing Chen
Publisher: Springer
ISBN: 9811036233
Category : Law
Languages : en
Pages : 275
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Book Description
This book studies the funding problems with shareholder litigation through a functionally comparative way. In fact, funding problems with shareholder lawsuits may largely discourage potential shareholder litigants who bear high financial risk in pursuing such a claim, but on the other hand they may not have much to gain. Considering the lack of incentives for potential shareholder claimants, effective funding techniques should be in place to make shareholder actions function as a corporate governance tool and discipline corporate management. The book analyzes, among others, the practice of funding shareholder litigation in the Australia, Canada, the UK, the US and Israel, and covers all of the typical approaches being used in financing shareholder litigation in the current world. For instance, Israel and Canada (Quebec and Ontario) are probably unique in having a public funding mechanism for derivative actions and class actions, while Australia is the country where third party litigation funding is originated and is growing rapidly. Based on this comparative research, the last part of this book discusses how to fund shareholder litigation in China in context of its social and legal background and what kind of problems need to be solved if certain funding techniques are used.
Author: Dan W. Puchniak
Publisher: Cambridge University Press
ISBN: 1107012279
Category : Business & Economics
Languages : en
Pages : 477
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Book Description
In-depth analysis of the derivative action in Asia - a critical part of Asian corporate law and governance.
Author: Alessio Pacces
Publisher: Routledge
ISBN: 1135099413
Category : Law
Languages : en
Pages : 492
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Book Description
The standard approach to the legal foundations of corporate governance is based on the view that corporate law promotes separation of ownership and control by protecting non-controlling shareholders from expropriation. This book takes a broader perspective by showing that investor protection is a necessary, but not sufficient, legal condition for the efficient separation of ownership and control. Supporting the control powers of managers or controlling shareholders is as important as protecting investors from the abuse of these powers. Rethinking Corporate Governance reappraises the existing framework for the economic analysis of corporate law based on three categories of private benefits of control. Some of these benefits are not necessarily bad for corporate governance. The areas of law mainly affecting private benefits of control – including the distribution of corporate powers, self-dealing, and takeover regulation – are analyzed in five jurisdictions, namely the US, the UK, Italy, Sweden, and the Netherlands. Not only does this approach to corporate law explain separation of ownership and control better than just investor protection; it also suggests that the law can improve the efficiency of corporate governance by allowing non-controlling shareholders to be less powerful.
Author: Sean Griffith
Publisher: Edward Elgar Publishing
ISBN: 1786435349
Category : LAW
Languages : en
Pages : 576
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Book Description
Written by leading scholars and judges in the field, the Research Handbook on Representative Shareholder Litigation is a modern-day survey of the state of shareholder litigation. Its chapters cover securities class actions, merger litigation, derivative suits, and appraisal litigation, as well as other forms of shareholder litigation. Through in-depth analysis of these different forms of litigation, the book explores the agency costs inherent in representative litigation, the challenges of multijurisdictional litigation and disclosure-only settlements, and the rise of institutional investors. It explores how related issues are addressed across the globe, with examinations of shareholder litigation in the United States, Canada, the United Kingdom, the European Union, Israel, and China. This Research Handbook will be an invaluable resource on this important topic for scholars, practitioners, judges and legislators.
Author: Steven P. Croley
Publisher: NYU Press
ISBN: 1479855006
Category : Law
Languages : en
Pages : 297
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Book Description
"In Civil Justice Reconsidered, Steven Croley demonstrates that civil litigation is, for the most part, socially beneficial. An effective civil litigation system is accessible to parties who have suffered legal wrongs, and it is reliable in the sense that those with stronger claims tend to prevail over those with weaker claims. However, while most of the system's failures are overstated, they are not wholly off base; civil litigation often imposes excessive costs that, among other unfortunate consequences, impede access to the courts, and Croley offers ways to reform civil litigation in the interest of justice for potential plaintiffs and defendants, and for the rule of law itself"--Publisher's web site, viewed February 10, 2017.
Author: Stephen B. Burbank
Publisher: Cambridge University Press
ISBN: 110818409X
Category : Law
Languages : en
Pages : 299
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Book Description
This groundbreaking book contributes to an emerging literature that examines responses to the rights revolution that unfolded in the United States during the 1960s and 1970s. Using original archival evidence and data, Stephen B. Burbank and Sean Farhang identify the origins of the counterrevolution against private enforcement of federal law in the first Reagan Administration. They then measure the counterrevolution's trajectory in the elected branches, court rulemaking, and the Supreme Court, evaluate its success in those different lawmaking sites, and test key elements of their argument. Finally, the authors leverage an institutional perspective to explain a striking variation in their results: although the counterrevolution largely failed in more democratic lawmaking sites, in a long series of cases little noticed by the public, an increasingly conservative and ideologically polarized Supreme Court has transformed federal law, making it less friendly, if not hostile, to the enforcement of rights through lawsuits.
Author: Brian T. Fitzpatrick
Publisher: University of Chicago Press
ISBN: 0226816737
Category : Law
Languages : en
Pages : 282
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Book Description
Since the 1960s, the class action lawsuit has been a powerful tool for holding businesses accountable. Yet years of attacks by corporate America and unfavorable rulings by the Supreme Court have left its future uncertain. In this book, Brian T. Fitzpatrick makes the case for the importance of class action litigation from a surprising political perspective: an unabashedly conservative point of view. Conservatives have opposed class actions in recent years, but Fitzpatrick argues that they should see such litigation not as a danger to the economy, but as a form of private enforcement of the law. He starts from the premise that all of us, conservatives and libertarians included, believe that markets need at least some rules to thrive, from laws that enforce contracts to laws that prevent companies from committing fraud. He also reminds us that conservatives consider the private sector to be superior to the government in most areas. And the relatively little-discussed intersection of those two beliefs is where the benefits of class action lawsuits become clear: when corporations commit misdeeds, class action lawsuits enlist the private sector to intervene, resulting in a smaller role for the government, lower taxes, and, ultimately, more effective solutions. Offering a novel argument that will surprise partisans on all sides, The Conservative Case for Class Actions is sure to breathe new life into this long-running debate.
Author: Georgios Zouridakis
Publisher: Routledge
ISBN: 1000757501
Category : Business & Economics
Languages : en
Pages : 204
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Book Description
This book examines the role and potential of derivative actions in shareholder protection in public limited companies. Derivative actions have been a focal point of legislators’ agendas on shareholder protection, in the past few decades, throughout Europe and beyond. Nevertheless, there remain jurisdictions, such as Greece, which are still devoid of this remedy. Against this backdrop, this book examines whether and how the derivative action may improve shareholder protection, constituting thus a mechanism that justifies legislative attention. It does so in three parts. First, it analyses the desirable role derivative actions assume in protecting shareholder property, monitoring corporate management and mitigating agency costs, alongside their economic implications, introducing the reader to the contemporary international debate on the topic. Having set the desiderata, the second part proceeds with the comparative analysis of Greek, German and UK law – jurisdictions that have recently reformed their provisions on shareholder protection – examining not only the law on derivative actions and their Greek counterpart remedy but also mechanisms of shareholder protection that do, or could, assume functions similar to those of the derivative action. By critically assessing the merits and failures of the respective UK, German and Greek shareholder protection laws, the book then proceeds to offer (in Part III) a model framework of shareholders’ derivative litigation for jurisdictions considering reform. Written in an accessible format, it will be an invaluable resource for anyone interested in this important aspect of company law and corporate governance.
Author: Dionysia Katelouzou
Publisher:
ISBN: 1108843107
Category : Law
Languages : en
Pages : 723
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Book Description
The first in-depth comparative analysis of shareholder stewardship, which reveals the complexities of this global movement that were previously unknown.
