What are the ramifications of lawsuits over “breaches of fiduciary duty” for the average shareholder?
"As an investor, I try to interpret the suits as an attempt to in some way influence the actions of the company - and not, usually, as a serious legal threat (or as likely to lead to serious legal consequences). My (shallow) understanding (as a non-lawyer) is that the requirements for a lawsuit to be filed as class-action suit are (relatively speaking) easier to meet when the company is publicly traded - the shareholders are more easily described as a ""class"". So it's more common for lawsuits that involve stock holders for large, publicly traded companies to be registered as class action suits. Class action suits include a requirement for some advertising and notifications (so all members of the class become aware of the suit, and can decide whether to participate). So, these types of suits can be started with various goals in mind, goals which might be achieved without the suit ever going anywhere - including to gain some publicity for a particular point of view, or to put pressure on the company to perform particular actions. In most cases, though, they are the result of misunderstandings between the various parties with an interest in how the company is run - shareholders, directors and/or executive officers. For most cases, the result of the suit is a more in depth sharing of information between the parties involved, and possibly a change in the plans/actions of the company; the legal technicalities differ from case to case, and, often, the legal consequences are minor." Mostly these are results of arguments between shareholders. These suits come when shareholders alleged that directors didn't act in their best interests. Unless its a class action suit, I'd say there's no ramifications for an average shareholder.
They are using a tax arbitrage, a variation of Hollywood Accounting. This is a common tactic adopted by all big companies, including GE, Apple, Microsoft, Google and hedge funds like Bain. The company's management has only one legal duty, to maximize the shareholder value and this is one way of doing it.  Depending on your perspectives, it may be unethical but it definitely is not illegal.   Blame the politicians and people electing them, not the businessmen. &gt; Board members that have fiduciary responsibilities to investors (this includes the potential for personal liability).  How often do lawsuits surrounding this even happen? How can shareholders prove in court that the CEO or whomever they are suing wasn't acting in the best interest of the company and actually have a meaningful case? There are countless badly run public companies out there and they don't get sued. What drives the stock of bankrupt companies? The company's potential residual assets. When a company goes bankrupt it is required to sell its assets to pay off its debts. The funds raised from selling assets go to the following entities:  The usual order of debt repayment, in terms of the lender, will be the government, financial institutions, other creditors (i.e. suppliers and utility companies), bondholders, preferred shareholders and, finally, common shareholders. Depending on the amount of debt and the value of a company's assets, the common shareholders may receive some left over from liquidated assets. This would drive the stock price of a bankrupt company. A company's Return on Equity (ROE) is its net income divided by its shareholder's equity.  The shareholder's equity is the difference between total assets and total liabilities, and is not dependent on the stock price. What it takes to have a ROE over 100% is to have the income be greater than the equity.  This might happen for a variety of reasons, but one way a high ROE happens is if the shareholder's equity (the divisor) is small, which can occur if past losses have eroded the company's capital (the original invested cash and retained earnings).  If the equity has become a small value, the income for some period might exceed it, and so the ROE would be over 100%. Operating margin is not closely related to ROE.  Although operating income is related to net income, to calculate the margin you divide by sales, which is completely unrelated to shareholder's equity.  So there is no relationship with ROE to be expected.  Operating margin is primarily dependent on market conditions, and can be substantially different in different industries. "I am assuming that there is some arbitrary law preventing ordinary people from investing... because I have never seen a guaranteed 6% ROI YOY in my entire life.  Talk about the 1% of the 1%... lucky bastards!  Banks are puplicly traded corporations... what's stopping an investment company from creating a ""fake"" bank that takes investments from regular people and invests those into the federal reserve?  Returning 5.99% per year to their shareholders?" This shifting is costs is made even worse by the fact that the worst breaches are coming from companies that most consumers don't have a choice about dealing with. Therefore, there isn't even a market incentive to encourage companies to behave better. If a bank or credit card had no fraud protection, or showed the level of incompetence Equifax has shown, people would move their accounts. However most of Equifax's victims didn't really have a say about whether Equifax had their data. I feel the change should not be to remove the stigma from personal default. It should be to add it, in very large amounts, to corporate default. Every member of a defaulting corporation should be ashamed to be seen in public. The have let their culture down and should be mortified.  So if you defaulted on your mortgage, yeah, that's not great. If you're Donald Trump, that filed 11 a couple times, he can go fuck himself. Its less about retail investors and more about the large institutions. Harvard's endowment for example, is held in trust. So is the endowment for every university, charity, and foundation.   In terms of retail investors its probably much less than 50%. Its just that the massive amount of wealth in the wealthiest people tips the balance drastically.   The top 20 wealthiest people in the world have ALL of their assets in trust. They probably dont have much personal ownership in anything and they hold more money than almost everyone else combined.