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Going To Court After Stocks Take A Dive

Publication Date: 
February 15, 2009
The New York Times
Phyllis Korkki

Professor Joseph A. Grundfest is quoted in The New York Times in an article about what effect shareholder suits against failing companies might have on the money from the bailout fund and ultimately the tax-payer:

If these suits follow recent patterns, about 40 percent of them will end up being dismissed, with almost all the rest resulting in a settlement. Settlements tend to be for 2 percent to 5 percent of the total amount of the plaintiffs’ theoretical maximum claim, said Joseph Grundfest, a law professor at Stanford University and co-director of the Rock Center for Corporate Governance. But that may still mean total payouts in the billions of dollars.

And because many firms being sued are receiving government bailout money, taxpayers may one day be on the hook for some of those settlement bills, Professor Grundfest said.