What are the implications of a Notice of Pendency of Derivative Action?
May 13, 2013 4:22 AM Subscribe
I received a document today giving me notice of some kind of court action, because I am a News Corporation stockholder. I have no idea what any of it means, or whether there are any implications I need to take into account. Can anyone shed any light?
I have a few thousand dollars' worth of News Corp stock (Class B, in case that's relevant). I live in Australia, I'm an Australian tax payer, and I bought the stock on the Australian stock market through an Australian broker.
I received a document in the post today, and the top third of the first page says:
In the Court of Chancery in the State of Delaware
In re News Corporation Shareholder Derivative Litigation
Notice of Pendency of Derivative Action, Proposed Settlement of Derivative Action, Settlement Hearing, and Right to Appear
Then there's about a dozen pages of dense text. I've tried going through it but my eyes glaze over after about four lines, which is why I never became a lawyer.
None of you are my lawyer, my stockbroker, my financial adviser or my tax accountant, but can anyone give me a summary of what's going on, and whether there are likely to be any implications I should take into account that might impact on things like the value of my stock?
I have a few thousand dollars' worth of News Corp stock (Class B, in case that's relevant). I live in Australia, I'm an Australian tax payer, and I bought the stock on the Australian stock market through an Australian broker.
I received a document in the post today, and the top third of the first page says:
In the Court of Chancery in the State of Delaware
In re News Corporation Shareholder Derivative Litigation
Notice of Pendency of Derivative Action, Proposed Settlement of Derivative Action, Settlement Hearing, and Right to Appear
Then there's about a dozen pages of dense text. I've tried going through it but my eyes glaze over after about four lines, which is why I never became a lawyer.
None of you are my lawyer, my stockbroker, my financial adviser or my tax accountant, but can anyone give me a summary of what's going on, and whether there are likely to be any implications I should take into account that might impact on things like the value of my stock?
Best answer: How much AUD worth of News Corporation stock are talking here?
Generally, large companies are sued all the time, and for certain kinds of cases that make it some way through the American courts, their shareholders are sent documents relevant to the case under the assumption that shareholders are entitled to know something about the case.
But, again, large companies are sued all the time, and it is only extraordinary cases (e.g., fraud at Enron) that decimates the value of the stock.
Have you noticed any unusual volatility in News Corporation's stock on the Australian exchanges as of late? Any unusually heavy trading volume?
If your position is News Corporation is unusually large, or is a very large percentage of your overall net worth it is perhaps worth consulting with an attorney (preferably a US-based one) about what exactly is going on here, but otherwise I would not worry.
posted by dfriedman at 5:22 AM on May 13, 2013
Generally, large companies are sued all the time, and for certain kinds of cases that make it some way through the American courts, their shareholders are sent documents relevant to the case under the assumption that shareholders are entitled to know something about the case.
But, again, large companies are sued all the time, and it is only extraordinary cases (e.g., fraud at Enron) that decimates the value of the stock.
Have you noticed any unusual volatility in News Corporation's stock on the Australian exchanges as of late? Any unusually heavy trading volume?
If your position is News Corporation is unusually large, or is a very large percentage of your overall net worth it is perhaps worth consulting with an attorney (preferably a US-based one) about what exactly is going on here, but otherwise I would not worry.
posted by dfriedman at 5:22 AM on May 13, 2013
Response by poster: Thanks everyone - makes perfect sense - my News Corp stock is only a small percentage of my portfolio and the price seems fairly stable in AUD so hopefully nothing to worry about.
posted by infinitejones at 5:40 AM on May 13, 2013
posted by infinitejones at 5:40 AM on May 13, 2013
I am a lawyer but I am not your lawyer and this is not legal advice. You should seek the advice of a licensed and competent attorney in your jurisdiction.
A derivative suit, in this case, is almost certainly what Mister Bijou is referring to in the link. Someone (very probably a shareholder) is suing the management of News Corp. on behalf of its shareholders who are the owners of the company. So somebody is suing on your behalf (and on behalf the other shareholders). There are any number of reasons why they might do so and I neither know nor intend to suggest that any particular reason is the case in this instance. But for instance a shareholder might bring suit in order to shake out documents which management is not giving them. Or they might bring suit in order to chase out a particular director or officer who they don't like or who they believe has violated their fiduciary duties to the corporation. They might bring suit if they feel that the board or the officers have wasted corporate assets which are, after all, the property of the shareholders. These things are not uncommon and are often sorted out by settlement, which may not even affect the underlying corporation's bottom line (if the settlement is funded by the liability insurance of the Directors and Officers).
A lawyer with whom you have an attorney-client relationship can help you to assess what this suit may do to the value of your investment, although I would not expect more than vague predictions as to what is likely to happen.
posted by gauche at 5:43 AM on May 13, 2013
A derivative suit, in this case, is almost certainly what Mister Bijou is referring to in the link. Someone (very probably a shareholder) is suing the management of News Corp. on behalf of its shareholders who are the owners of the company. So somebody is suing on your behalf (and on behalf the other shareholders). There are any number of reasons why they might do so and I neither know nor intend to suggest that any particular reason is the case in this instance. But for instance a shareholder might bring suit in order to shake out documents which management is not giving them. Or they might bring suit in order to chase out a particular director or officer who they don't like or who they believe has violated their fiduciary duties to the corporation. They might bring suit if they feel that the board or the officers have wasted corporate assets which are, after all, the property of the shareholders. These things are not uncommon and are often sorted out by settlement, which may not even affect the underlying corporation's bottom line (if the settlement is funded by the liability insurance of the Directors and Officers).
A lawyer with whom you have an attorney-client relationship can help you to assess what this suit may do to the value of your investment, although I would not expect more than vague predictions as to what is likely to happen.
posted by gauche at 5:43 AM on May 13, 2013
Probably related to this. Maybe there's a small amount of settlement money coming your way?
"News Corp (NWSA).’s directors agreed to a $139 million settlement of investors’ claims that they turned a blind eye to illegal conduct at the media company, including phone hacking by employees."
"The settlement is the largest ever reached in a so-called derivative lawsuit in Delaware Chancery Court"
posted by iamscott at 7:56 AM on May 13, 2013
"News Corp (NWSA).’s directors agreed to a $139 million settlement of investors’ claims that they turned a blind eye to illegal conduct at the media company, including phone hacking by employees."
"The settlement is the largest ever reached in a so-called derivative lawsuit in Delaware Chancery Court"
posted by iamscott at 7:56 AM on May 13, 2013
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posted by Houstonian at 4:42 AM on May 13, 2013 [1 favorite]