Venture Capitalists Fall Prey To Fiduciary Suits

Law360, New York (March 22, 2010, 6:26 PM EDT) -- Venture capital firms usually enter a company with an exit plan and a contract to protect themselves from common shareholder lawsuits, but falling valuations in the economic downturn have made venture capitalists targets for breach of fiduciary claims, as two recent cases highlight.

The two cases, filed by shareholders against the directors of Trados Inc. and KOR Electronics Inc., show not only that litigation has resulted from the departure of venture capital investment in companies during the recession, but just what venture capital firms must do...
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