Do Shareholder Suits Make Sense?
This week a federal judge rejected a proposed $33 million settlement between the Securities & Exchange Commission and Bank of America (BAC) involving securities fraud. The judge said the fine would be paid out of corporate funds, which come in large part from the investment of shareholders. In his view, those shareholders who already were the victim of the securities fraud would be penalized twice if he let the settlement stand.
The ruling casts a spotlight on the long-standing practice of senior managers using a company's cash to pay settlements for their own misdeeds. BusinessWeek's legal affairs writer Michael Orey discusses this issue and others related to shareholder rights.
Plus: Retail sales rise, the latest U.S.-China trade dispute, and our look at the economic week ahead.
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