What are the ramifications of lawsuits over “breaches of fiduciary duty” for the average shareholder?
"As an investor, I try to interpret the suits as an attempt to in some way influence the actions of the company - and not, usually, as a serious legal threat (or as likely to lead to serious legal consequences). My (shallow) understanding (as a non-lawyer) is that the requirements for a lawsuit to be filed as class-action suit are (relatively speaking) easier to meet when the company is publicly traded - the shareholders are more easily described as a ""class"". So it's more common for lawsuits that involve stock holders for large, publicly traded companies to be registered as class action suits. Class action suits include a requirement for some advertising and notifications (so all members of the class become aware of the suit, and can decide whether to participate). So, these types of suits can be started with various goals in mind, goals which might be achieved without the suit ever going anywhere - including to gain some publicity for a particular point of view, or to put pressure on the company to perform particular actions. In most cases, though, they are the result of misunderstandings between the various parties with an interest in how the company is run - shareholders, directors and/or executive officers. For most cases, the result of the suit is a more in depth sharing of information between the parties involved, and possibly a change in the plans/actions of the company; the legal technicalities differ from case to case, and, often, the legal consequences are minor." Mostly these are results of arguments between shareholders. These suits come when shareholders alleged that directors didn't act in their best interests. Unless its a class action suit, I'd say there's no ramifications for an average shareholder.
I'd be surprised if this ended in a materially-damaging final settlement. It may take more than 5 years to resolve, unless a smoking gun is produced. If PWC and outside counsel really issued written opinions, it could get a lot messier. Especially when we tip over into another recession, the IRS will come under intense Congressional pressure to cut a nominal deal. Yes, what they said. You don't mention where you are on the totem pole. Are you reporting to the top dog, or are you 3 levels down? Not to be a downer, but until you know your cut, I'd not get too excited either way. 1000 shares/options of a LinkedIn turned to nearly $100K. Nothing to sneeze at, to be sure, but not enough to retire, nor bother contacting a lawyer.  The details of the equity should be spelled out clearly, nothing against Lawyers, but it's likely to be wasted money. Definitely will be appealed several times throughout the litigation, but if it gets through a jury trial, the jury gets a lot of deference on what they determine damages are. As long as they aren't too ridiculous, higher courts will uphold big payouts. He's complaining about the post freezing a pension and requiring employees to waive their right to sue when terminated to receive severance. Freezing pensions is becoming standard because it's an outdated and expensive way to fund retirement. Requiring a waiver for severance is standard.   This guy comes off like a whiner that doesn't know the way the world works. There is probably a reason the post was in trouble before Bezos. I appreciate having an attorney’s thoughts.  Clearly, we have different optics.  Mine is as a consumer, who has never actively sought out being a member of a class in a class action suit, but have had it foisted on me. In each case, the settlement was either a very nominal amount (e.g. $1.29) or a coupon or credit for future services from the company that allegedly had wronged me.  In virtually each settlement, the attorneys got handsome fees and the firms were protected from future similar suits from anyone who had not gone through the process of opting out.   In one case, however, I and all other members of the class (except the lead plaintiffs, I presume) were to get nothing, while the attorneys were to get literally a half a billon dollars.  The notion was that members of the class had “eaten the evidence,” the same evidence that somehow justified $500,000,000 compensation to the lawyers.  Of course you recognize that as the Subway/Foot Long Sub case, where Subway was guilty of the monumental crime of selling foot long subs that were not necessarily 12 inches long (oh, the horror). So let me ask you: From your optic, how do we protect consumers’ rights while eliminating the incentives for frivolous suits, or suits in which the consumer gets nothing of value?  (And I include the “coupon setttlements” as consumers getting nothing of value, as they require the consumer to further patronize the perpetrator of the alleged wrong doing.). I have no idea where this lie started and why it is perpetuated. A CEOs only fiduciary duty is to maintain shareholder value. Not increase it maintain it. If the stock price remains at $100 for 20 years congrats it’s been maintained and you’ve fulfilled your fiduciary duty Erisa laws protect your retirement just like something should mandate what minimum ownership should be to classify yourself as exempt from labor laws.    I like this idea a lot....however how does 1 employee present enough value to actually effect the price of their company stock?  This would only work for top brass positions....which is probably the way it should be. In an open corporation scenario a stock holder may well be found liable. It's a very narrow and uncommon bunch of scenarios but it's well worth sharing. See the paragraph on open corporations in the following document: http://nationalparalegal.edu/public_documents/courseware_asp_files/businessLaw/RightsOfShareholders/LiabilityOfShareholders.asp There are not necessarily large shareholders, maybe every other Joe Schmoe owns 3 or 5 shares; and many shares might be inside investment funds. If you are looking for voting rights, typically, the banks/investment companies that host the accounts of the individual shareholders/fund owners have the collective voting rights, so the Fidelity's and Vanguard's of the world will be the main and deciding voters. That is very common. They'll never punish the people actually responsible. Because that would include people like current Treasury Secretary Jack Lew who was the Chief Operating Officer at Citigroup through the financial crisis. As much as I don't like the big banks, the current management, employees, and shareholders have very little to do with the fraud committed 7-10 years ago. If you put the previous generation of management in jail or if you bankrupt them with fines, then the current generation of management and employees will wise up and not do stupid/illegal shit. The settlement just shows the current generation that the next guy will pay for your crimes. From Wikipedia: If a company with limited liability is sued, then the claimants are   suing the company, not its owners or investors. A shareholder in a   limited company is not personally liable for any of the debts of the   company, other than for the value of their investment in that company. Summarized, no, if you buy stock from the regular stock market like NYSE, you're not personally liable for any debt or fraud that happens. "You mean ""I don't understand why someone would sign a contract expecting the employer to observe it""?   Pensions are contractual obligations. It's only the massive mismanagement, lack of fiscal responsibility, and evisceration of employee bargaining power that puts us in a position to think that employers wouldn't observe their contractual obligations.   I mean, if this were the mortgage market, you would be arguing to banks ""What the hell made you think this homeowner would keep paying you 6% interest on this money when you're not providing any kind of value twenty years later?""" "Title touted in the press: ""LCD makers will pay a $538 million penalty.""  Actual terms of settlement: ""LCD makers will pay a $37 million penalty, and set aside $501 million to partially reimburse those consumers who hear about the settlement, can find their receipts, and bother to fill out and send in a form.""  I bet if every single consumer affected filled out the form it would cost the companies $501 million.  Seeing as only a fraction of affected consumers will actually do so, the companies will end up paying a far smaller penalty.  [Source](http://online.wsj.com/article/SB10001424052970203479104577124863769347498.html?mod=googlenews_wsj)" Would you classify the Equifax scandal as a medium sized shock? I am 100% in agreement with your points, which is why when the Equifax news started to break I was very worried that was going to be the trigger. Why do you think that didn't have an impact, or could it still? That's not what is entirely happening. It's two separate situations.   They don't have equal voting and some are able to vote more than once. The two investors want to keep it that way while the rest want to implement an even voting system.   The two investors have been asked to drop their lawsuit against the old CEO since he's no longer with the company but it's implied that they will continue to sue him because he still has influence and the ability to elect new board members which he recently added two.   Also it's disengrnous to say just the two investors. They are being asked to do this by the shareholders.