The basic rule is that when there is a devastating plane crash, the shareholders of the company that makes the plane will sue the company for securities fraud. “You built planes that would crash, but you lied and told everyone that you built planes that wouldn’t crash, and we bought your stock thinking your planes wouldn’t crash, and then they did so the stock went down.” I don’t make the rules, and I realize that this is both bizarre and ghoulish, but it is the rule. “Everything is securities fraud,” I call it. And in fact Boeing Co. makes planes, including the 737 Max, and in 2019 and 2020 two 737 Max planes crashed, and Boeing’s stock went down, and shareholders brought securities fraud lawsuits against it. Standard stuff.
But there are other, related but slightly different theories. For instance instead of suing the company for failing to disclose that its planes would crash, you could sue the executives and directors for failing to stop the planes from crashing. “The directors and officers had a fiduciary duty to build safe planes, not planes that crashed, and they failed in their fiduciary duties so they should pay damages.” This sort of lawsuit is called a “shareholder derivative claim,” and it is in many ways more complicated than the everything-is-securities-fraud theory. It is hard, generally, to get a court to second-guess directors’ and officers’ business decisions; it is hard to hold them personally liable for business failures.
"pay" - Google News
September 13, 2021 at 11:38PM
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Boards Have to Pay Attention - Bloomberg
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