Demand Futility In A Down Economy

Law360, New York (June 29, 2009, 12:00 AM EDT) -- In the wake of the subprime mortgage and credit crisis, the management abilities and accountability of corporate officers and board members has come under increasing scrutiny.

Recent derivative cases before the Delaware Chancery Court reflect this rising concern, with shareholders alleging breach of fiduciary duties on the basis of poor management or judgment.[1] These cases are distinct from classic self-dealing transactions, in which a shareholder brings a derivative action on the basis of financial or criminal wrongdoing.

A critical threshold issue in these cases is often...
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