Plaintiff Lawyers Focus on Derivative Actions Rather than Class Action Lawsuits to Attack Stock Option Backdating Programs
Defense attorneys have expressed surprise at the relatively limited number of class action lawsuits filed in the wake of options-backdating disclosures; Julie Creswell of the New York Times has noticed this, too. In today’s edition of the New York Times, Creswell provides a possible explanation for the dearth of class action filings: “Even when it is clear that options grant dates were manipulated, it is less clear how to calculate damage to specific shareholders. And in many cases, the statute of limitations has expired.”
As a result, plaintiff lawyers have turned to derivative actions to challenge options-backdating programs. Creswell reports that while only 15 securities class action lawsuits challenge stock-option plans, at least 57 derivative actions attacking options-backdating have been filed.
Julie Creswell’s article, entitled “One Route Seems Closed, So Lawyers Try Different Lawsuit in Stock-Option Scandal,” may be round in Section C. of the September 5, 2006, edition of the New York Times.