Sueing a listed company for poor business decisions?

[LionFlyer]

Recently, I met a chap who was had worked in HP for more than 15 years (being through the two different M&As) and we discussed on HP's business strategy through the different CEOs (Carly, Hurd, Apotheker).

I was doing some googling and found that HP have recently settled a shareholder suit over the disastrous purchase of Autonomy.

Here's the thing, baring outright fraud, poor business decisions are part and parcel of the inherent risks in any investment. How then are shareholders justified to sue the company on the basis of drop in the share price as a result of poor strategy? Seriously, I can't see this happening in an Asian context.

http://www.reuters.com/article/2014/04/0...8H20140401

[Art or Science]

Interesting.

Can sue company for poor business strategy..

Wonder how many companies have been sued before..

Ignorant ah me.. never heard of this

Recently, I met a chap who was had worked in HP for more than 15 years (being through the two different M&As) and we discussed on HP's business strategy through the different CEOs (Carly, Hurd, Apotheker).

I was doing some googling and found that HP have recently settled a shareholder suit over the disastrous purchase of Autonomy.

Here's the thing, baring outright fraud, poor business decisions are part and parcel of the inherent risks in any investment. How then are shareholders justified to sue the company on the basis of drop in the share price as a result of poor strategy? Seriously, I can't see this happening in an Asian context.

http://www.reuters.com/article/2014/04/0...8H20140401

[kazukirai]

Also, for Asian retail investors, won't the Costs outweigh the benefits?

[pianist]

i guess here we retail investors would need some body/entity e.g. SGX/MAS to act/provide a platform for retail investors' interest..afterall shareholders are part of the key stakeholders in a listed company

[header]

If the Board of Directors is negligent in their duty as directors, shareholders can sue them.

[scottleey]

You likely wont see this happening in Asia.
They have a more deeply developed corporate governance laws that apply to their companies.
They have a different legal system where it kind of encourages class action lawsuits.
The lawsuit was on gross negligence on not identifying account improprieties, not exactly bad decision per se. Though I have to agree its a fine line but that is what the basis of the suit is about anyway. (Its the difference between whether proper due diligence done or not, so negligence is key.)
If you can prove the CEO did not discharge his duties properly and you can find lawyers to fight it. You can try. Very little legal precedence in this way I believe.

[LionFlyer]

Also, for Asian retail investors, won't the Costs outweigh the benefits?

USA is a place where you can sue restaurant if your coffee is too hot and you got scaled, never mind you were the one who put it in our own mouth.

On hindsight, in such a litigious environment, it shouldn't have been surprising development.

[specuvestor]

You likely wont see this happening in Asia.
They have a more deeply developed corporate governance laws that apply to their companies.
They have a different legal system where it kind of encourages class action lawsuits.
The lawsuit was on gross negligence on not identifying account improprieties, not exactly bad decision per se. Though I have to agree its a fine line but that is what the basis of the suit is about anyway. (Its the difference between whether proper due diligence done or not, so negligence is key.)
If you can prove the CEO did not discharge his duties properly and you can find lawyers to fight it. You can try. Very little legal precedence in this way I believe.

Agree with Scott. In fact i think the only way <10% minorities can get recourse in the companies act is to claim minorities suppression.

Class action is a big swing in the balance of power between corporate and individuals. We don't have it here. That explains a lot.