Backdating derivative

On the other hand, the financial reporting to the shareholders was fraudulent, since compensation expense was understated, resulting in overall expenses being understated, and net income and earnings per share being overstated.

Faruqi & Faruqi, LLP has extensive experience litigating shareholder derivative actions on behalf of corporate entities.

This litigation is often necessary when the corporation has been injured by the wrongdoing of its officers and directors.

Corporate Governance Study: The Correlation between Corporate Governance and Company Performance, Lawrence D. D., Distinguished Professor of Accountancy, Georgia State University and Marcus L. The firm regularly obtains significant corporate governance changes in connection with the successful resolution of derivative actions, in addition to monetary recoveries that inure directly to the benefit of the company.

In each case, the company’s shareholders indirectly benefit through an improved market price and market perception.

In this study, Securities Class Actions Compared to Derivative Lawsuits: Evidence from the Stock Option Backdating Litigation on their Relative Disciplining of Fraudster Executives, 35% of the 151 stock option backdating litigation observations included private securities class actions (in addition to derivative lawsuits).

In other words, 35% of the litigation observations were parallel.

The purpose of the derivative action is threefold: (1) to make the company whole by holding those responsible for the wrongdoing accountable; (2) the establishment of procedures at the company to ensure the damaging acts can never again occur at the company; and (3) make the company more responsive to its shareholders.

Improved corporate governance and shareholder responsiveness are particularly valuable because they make the company a stronger one going forward, which benefits its shareholders.

The reason the stock option backdating litigation was comprised of both derivative lawsuits and private securities class actions is that the stock option backdating litigation could be viewed as appropriate for either genre of litigation.

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