By: Jeffrey M. Haber It is well-settled that a plaintiff asserting a derivative claim seeks to recover for injury to the business entity, regardless of whether the entity is a corporation, limited liability company, or partnership. A plaintiff asserting a direct claim seeks redress for injury to himself/herself individually. “The distinction between derivative and direct claims is grounded upon the principle that does not have an individual cause of action that derives from

By: Jeffrey M. Haber Family business disputes tend to be ugly, destructive, and protracted. For a case in point, we examine Max v. ALP, Inc. , 2022 N.Y. Slip Op. 01969 (1st Dept. Mar 22, 2022) ( here ), a heated and contentious dispute among members of the Max family regarding control of ALP, Inc., a corporation formed by the iconic artist Peter Max to, among other things, market, license and commercialize his artwork. ALP was formed in 2000. Adam and Libra, Peter’s children,

As this Blog has noted previously, the courts (in New York and Delaware) have refused to approve the settlement of shareholder litigation where class members receive no financial benefit and are asked to give broad releases to the defendants that are inimical to their rights. The latest court to follow this path is the Supreme Court, New York County, Commercial Division. In Matter of Xerox Corp. Consol. Shareholder Litig. , 2019 N.Y. Slip Op. 51467(U) (Sept. 10, 2019), Justic

Derivative actions are brought by current shareholders of a company to redress the harm (monetary or equitable) incurred by the company as the result of officer/director self-dealing, breaches of fiduciary duty, and/or other wrongdoing; to restore shareholder value caused by mismanagement and the waste of corporate assets; and to enhance and strengthen internal controls and the company’s governance policies and procedures. Very often, shareholder derivative actions are filed

On March 11, 2019, the Securities and Exchange Commission (“SEC” or “Commission”) announced ( here ) that it had settled charges against 79 investment advisers who agreed to return more than $125 million to their clients (the “Actions”). A a substantial majority of the funds to be returned are earmarked for retail investors. The Actions arose from the SEC’s Share Class Selection Disclosure Initiative (“SCSDI” or the “Initiative”) ( here ), which the Division of Enforcement (

This Blog has previously examined the different aspects of a shareholder’s derivative action, such as the standing requirements and the distinction between direct and derivative claims. ( Here , here and here .) Today’s article revisits these issues. The Demand Futility Requirement Under Delaware law, to have standing to bring a derivative claim on behalf of a corporation, a plaintiff “must make a pre-suit demand that the board pursue the contemplated action.” Asbestos Wor