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"Assessing Securities Class Action Risk With Event Analysis" Law360

Law360 (January 22, 2020, 5:58 PM EST) --

Nessim Mezrahi

According to a recent article in the Harvard Law School Forum on Corporate Governance, the board of directors of a U.S. publicly traded corporation "has a fiduciary duty to promote the best interests of the corporation, and in fulfilling that duty, directors must exercise their business judgment in considering and reconciling the interests of various stake holders and their impact on the business of the corporation."[1]

Another says that this new era of corporate governance prompts "greater director engagement in risk oversight and monitoring activity, renewed emphasis on management-to-board reporting and increased director sensitivity to recognizing possible 'red flags.'"[2]

Adverse events that have materialized during the preceding two years constitute possible red flags that may in fact trigger a securities class action that alleges violations of Section 10(b) of the Securities Exchange Act of 1934 and U.S. Securities and Exchange Commission Rule 10b-5 promulgated thereunder.

Read more here.

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