Forensic Accounting Expert Witness On Corporate Securities Lawsuits Part 1

In EFFECTIVE VALUATION & LITIGATION SUPPORT IN CORPORATE SECURITIES LAWSUITS, forensic accounting expert witness Richard M. Squar, CPA, CVA, ABV, CFF, MBA-Taxation, writes:

Okay, let’s face it. There are always important concerns for the board of directors of any company, public or private. Today you, Director, and the board and company are served a lawsuit from dissenting shareholders. The lawsuit asserts the shareholders’ right to appraisal and alleges that the directors did not meet their duties of care and loyalty to the corporation and shareholders you serve. Substantial damages are being claimed due to alleged corporate securities fraud.

Great. And you thought this was going to be a nice, warm, bright Orange County day! Do you lose your appetite, kiss and hug your spouse, and call your therapist? Of course. When the company’s legal counsel tells you not to worry, do you continue to worry? Of course. Do you go to the special board meeting with corporate legal counsel and begin dealing with the matter head-on? Of course you do. You’re a director!

The directors must, generally, perform their duties “with such care as an ordinarily prudent person in a like position would use under similar circumstances.” Violations of these duties will be asserted against the corporation and its directors by the shareholders. What areas might directors be confronted with regarding disputes involving securities that turn into litigation?