For Derivative Plaintiffs, A Key Stock Options Decision

Law360, New York (June 20, 2007, 12:00 AM EDT) -- On June 7, Vice Chancellor Strine of the Delaware Chancery Court issued a significant 75-page decision in a stockholder’s derivative action alleging stock option manipulation. See Desimone v. Barrows, C.A. No. 2210-VCS (Del. Ct. Ch. June 7, 2007) ("Sycamore Networks"). This decision is important for at least two key reasons: (1) it sets a high bar for plaintiffs to plead a derivative case; and (2) it casts serious doubt on two theories derivative plaintiffs have been asserting in stock option cases.

The court, which dismissed plaintiff’s...
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