Understanding Shareholder Derivative Actions

Breach of Fiduciary Duty

Claims that directors or officers failed to act in the best interests of the company and its shareholders by engaging in self-dealing or bad-faith transactions.

Corporate Mismanagement

Allegations of waste or reckless oversight that harms the company, which rise above simple poor decision making.

Fraud or Misrepresentation

Executives providing false or misleading information about the company’s financial condition, business practices, or prospects.

Conflicts of Interest

Insiders engaging in self-dealing or related-party transactions that benefit themselves at the expense of the corporation.

Failure to Address Misconduct

Boards failing to investigate or act on red flags related to employee misconduct, regulatory violations, or compliance failures.

• Directors approving executive compensation packages that are excessive and not aligned with shareholder value.
• A board failing to prevent or disclose widespread regulatory violations.
• Corporate officers engaging in insider transactions that harm the company’s bottom line.
• Shareholders bringing claims after a company’s reputation and stock price fall due to undisclosed misconduct.

• Corporate Reforms – Court orders requiring governance improvements or oversight mechanisms.
• Monetary Recovery – Funds recovered for the benefit of the company, not individual shareholders.
• Injunctive Relief – Preventing future misconduct or enforcing fiduciary obligations.
• Fee Awards – In some cases, plaintiffs may recover attorneys’ fees for securing corporate benefits.

To succeed in a derivative lawsuit, plaintiffs generally must show:

• They are shareholders of the company.
• The alleged misconduct harmed the corporation as a whole.
• The directors or officers breached their duties, acted improperly, or failed to act when required.
• A demand was made on the board to take corrective action, or such a demand would have been futile.

Evidence can include internal corporate documents, financial disclosures, communications between directors and officers, and testimony from insiders.

Miller Shah LLP has extensive experience prosecuting shareholder derivative claims nationwide. The firm represents investors in holding directors and officers accountable for misconduct that harms the corporation and diminishes shareholder value. Through careful investigation and strategic litigation, Miller Shah helps enforce fiduciary duties, recover losses, and implement reforms that protect corporate integrity.