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That is sort of the joke about all securities litigation. Shareholders will often sue companies that experience price drops due to "misleading investors" and, a
by jjxw 9y ago
That is sort of the joke about all securities litigation. Shareholders will often sue companies that experience price drops due to "misleading investors" and, as you mentioned, the fine or damages end up being paid for by the investors themselves.
- amsilprotag 9y agoThis is a recurring theme in Matt Levine's Money Stuff. One thing that I occasionally mention around here is that every bad thing a public company does is also securities fraud: If you did the bad thing and didn't first disclose it to shareholders, then they can claim to have been defrauded by your failure to disclose it. (If you did the bad thing and did first disclose it to shareholders ... why?) https://www.bloomberg.com/view/articles/2017-08-22/stock-buybacks-and-securities-fraud https://www.bloomberg.com/view/articles/2017-08-22/stock-buy...
- perl4ever 9y agoIt's true that there is some overlap between the shareholders at different times, but there is some difference too. You can think of the shareholders that bought in cheaply after the price drop as compensating the shareholders that bought before the price drop and sold after. It's not clear to me whether this is a benefit to society.