Securities Litigation
Companies can face significant liability under federal and state securities laws from both governmental enforcement actions and private shareholder disputes. When a company is under investigation for securities law violations or a shareholder has made a complaint to the board of directors, experienced legal guidance is essential on both sides to efficiently resolve disputes. We help companies appropriately respond to reduce the risk of further action. We also represent shareholders in a wide array of lawsuits, including class actions, derivative suits, and other types of claims against the company. When possible, our goal is to avoid going to court. If litigation becomes necessary, our attorneys provide the tactical advice and strong advocacy skills needed to protect a client’s rights and achieve a favorable result.
Private Shareholder Actions
Shareholder actions can take several forms.
In a class action, a group of shareholders sue the company as well as any individual officers and directors who violated securities laws. Typically, the plaintiffs seek monetary damages for any losses they incurred resulting from the defendants’ conduct.
In a shareholder derivative action, the plaintiff-shareholder steps into the shoes of the company to sue individual officers and directors for breaching their fiduciary duty or for other misconduct and damaging the value of the company. Any damages paid by defendants go to the company. An example of this may include a derivative suit against a director guilty of self-dealing where the company fails to act against the director.
Before a derivative action can be brought, the plaintiff must show that the plaintiff made a demand to the company to address the issue or that making a demand would be futile. Companies may avoid a derivative suit, if they can demonstrate that they appropriately handled the complaint. Businesses should consider setting up a special litigation committee to investigate the shareholder’s concern and if the claim is valid, take action to fix the problem. If the company does not effectively resolve the issue, shareholders should be prepared to show why. Plaintiffs must obtain corporate records and other evidence to build a strong case showing it is futile to rely on the board to act.
Individual shareholders may sue the company directly if they are having problems getting the company to issue/transfer shares. While this complaint can often be resolved by sending a demand letter to the board, it may require litigation.
Lawsuits By Companies Against Shareholders
Companies may also have cause to sue a shareholder. Often, these are lawsuits to enforce certain agreements and covenants against the shareholder, such as a standstill agreement limiting the shares an unfriendly bidder can have and a lock-up/leak-out agreement, which restricts the number of shares transferred by a shareholder in a period.
Securities Enforcement Defense
A Securities and Exchange Commission (“SEC”) enforcement action may not only result in corporate liability, but C-Suite executives, senior management, board members, and attorneys may be subject to personal liability and/or other sanctions. The serious consequences of violating securities laws coupled with the complexity of investigative proceedings and litigation make it critical to rely on a knowledgeable and skilled attorney to help mount a strong defense, protect the company’s interests, and mitigate damage to the company.
How We Help
Since we have extensive experience representing both companies and shareholders, we know what arguments the other side is likely to raise and how to counter their position. We use that knowledge to develop a litigation strategy that first tries to resolve the matter through negotiation. If that fails, we prepare a strong case for trial. Our litigators are well-versed in the intricacies of corporate and securities law and effective trial tactics. They have a strong track record of success obtaining favorable results whether through settlement, litigation, or appeal.
If you are facing or considering securities litigation, contact us to discuss how we can assist you.
CONTACT US
*Indicates Required Field
HOW WE CAN HELP
PRACTICE AREAS
Transactional and Corporate Law
Securities and Finance
Tax Planning and Tax Controversies
Commercial Litigation
Mergers and Acquisitions
RELATED POSTS
Securing Funding: 7 Options to Master & Benefit Your Business
Securing funding is fundamental to starting a business. Funding your business is one of the first important financial decisions you will need to make as an entrepreneur. A founder has many ways to secure funding depending on the type of business and your specific...
New York Commercial Litigators
Discourage litigation. Persuade your neighbors to compromise whenever you can. As a peacemaker, the lawyer has superior opportunity of being a good man. There will still be business enough.” — Abraham Lincoln
In business, it’s a given that things won’t always go as planned. No matter how well-drafted a document may be, disputes invariably arise. Those disputes need to be addressed and practically worked out. Our basic philosophy is inspired by Abraham Lincoln – before rushing to court our commercial litigation lawyers look for ways to help our clients compromise, resolve disputes to avoid going to court.
Our tempered approach minimizes the burden on our small-cap clients. Our clients have businesses to run and will often be unprepared for the distraction or expense of litigation. All too often the only winners in a court will be the lawyers who collect their fees, while plaintiffs and defendants both end up dissatisfied with the results.
Sometimes compromise does not work and there is no choice but to litigate.
When that happens, Brinen & Associates is always ready for the fight. Our New York-based commercial litigators regularly represent our clients in State and Federal courts nationwide.
We are staunch advocates and gladiators in suits. Each litigation is approached strategically. We first work with our clients to define their goals and objectives up front, and then develop a tactical plan to best achieve them.
We stay true to our firm philosophy by staffing leanly and avoiding unnecessary expenses so our clients are better positioned to endure the rigors of a long campaign.
Commercial Litigation Experience:
Over the years, our commercial litigation lawyers have successfully litigated many matters for our clients nationally and particularly in and around New York such as:
- Complex commercial litigation, involving disputes relating to corporate ownership and governance including defending against shareholder class actions and derivative actions;
- “Corporate divorces” with a particular emphasis on closely held or family-owned businesses, shareholder agreements, franchisee-franchiser agreements, joint ventures, and trademark and copyright;
- Securities and finance litigation involving federal and state actions and litigation of contested acquisitions and mergers, public offerings, takeovers, and general securities fraud;
- Employment disputes involving the prosecution or defense of wrongful termination, discrimination, and harassment claims, and unfair competition matters, such as the recruitment of a competitor’s employees, the protection of customer lists and trade secrets, the theft of corporate opportunities, and the enforcement of non-disclosure and restrictive covenants; and
- Other complex commercial litigation relating to tax, commercial real estate, and estates. We have regularly represented corporate clients who operated REITs and REOCs in the commercial real estate sector.
