Three Words: Stockholer Derivative Suits

Okay, I am attorney but I am not in any way, shape or form intending to hereby give advice (sounds like an attorney -right?). Nor do I work in the field of shareholder's derivative suits, though I do a lot of civil litigation. Still, one thing that has amazed me in all this is that stockholders of these financial behemoths have not been filing suit. The assertions out there of executives making highly risky moves to pump up there bonuses are rampant. This would, one would think, violate their duties to their shareholders. Sure, they are entitled to reasonable compensation, but when their primary objective appears to be to line their own pockets with tens of millions in bonuses at the detriment of stockholders, customers and the like, things seem to have gone a bit awry, morally and legally.

So why then are there no stockholder derivative suits? These are suits a stockholder can launch against the officers and directors of their corporation on behalf of the corporation to accuse these officers and directors of wrongdoing. It was created as the wrong doing directors and officers who control the corporation are not likely to cause the corporation to sue them. Here, where corporations made phony profits on unrealized gains from risky financial instruments and paid themselves a significant portion of those fantasy profits in bonuses, one has to wonder, why aren't the shareholders suing them? Their actions are not exactly a secret, as reported here:

http://www.nakedcapitalism.com/2009/12/former-barclays-chief-points-out-bonuses-were-paid-fruadulently.html

So why aren't the usual suspect law firms bringing suit? I have no idea myself as there could be tens or hundreds of millions in contingent fees to be had, but perhaps it is cost prohibitive as you know these "fat cats" will litigate you to death. Still, it seems like someone should be looking at this. Indeed, you would think some industrious U.S. Attorney looking to make a name for himself or herself would look into it. After all, the U.S. - as in us taxpayers - are now the largest shareholders of many of these institutions. Why can't we file suit? (I would be happy to discuss this with any U.S. Attorney with the guts to go there and do some research on it for free).

Such suits would do a world of good, I believe, in correcting some of the compensation/bonus problems that have infected financial corporations over the past decade. No one is worth the money these guys made, especially looking at the crap they created on the taxpayer backs. One successful suit would give those deciding on compensation and bonuses the leverage to say "Mr. or Mrs. CEO cannot make over X as reasonable compensation or we will be sued." I hope someone takes up this charge. If the government won't make these idiots (I have worse words for them, but this is a family blog) do what is right, it must be up to the rest of us to do so.

If you have some information that would help to support such a suit, let me hear it. As a movie character once said "I am mad as hell and not going to take it any more!!!" (And no, I am not soliciting business as I am in house and cannot take on any private litigation.)

Disclosures: None.