Shareholders of Washington Mutual Inc. are Granted Certification in its Securities Class Action Suit
Investors who bought Washington Mutual Inc. shares in three different offerings between 2005-2008 have been authorized to bring a class action suit against former WMI directors, officers, underwriters and auditors.
A Seattle federal district judge granted certification to the class last week and ordered the shareholders and the defendants to go to mediation. In order for a class action suit to be filed, certain requirements must be met.
Different jurisidictions have different rules but most jurisdictions require that there are several affected plaintiffs, that it would be judicially efficient to litigate one claim instead of several, and the defendant(s) wrongful actions must have been similar in nature.
Currently, WMI is in Chapter 11 bankruptcy and trying to devise a plan to reorganize its business. Directors, officers and other particular entities owe duties to its shareholders and in many instances are considered fiduciaries to the company.
In particular, the duty of care and loyalty are commonly breached and litigated upon. Directors and officers owe a duty of care to shareholders. Basically, they have to make decisions that a reasonable, prudent business person would make in the situation. Corporate officers are normally protected from liability by the "business judgment" rule. Summarily, the business judgment rule states that if a business person makes an informed, due diligent business decision, that director or officer will be immune from liability based on that decision. The logic behind the rule is that business persons know best how the business should be operated, not the courts.
The duty of loyalty arises when directors and officers usurp business opportunities that should have been made available to the business first.
To learn more about the lawsuit, visit WaMu Shareholders Win Class Certification in Case Against Former Directors and Officers, Underwriters and Auditor.
If you have questions about director and officer liability, contact an experienced business attorney.
If you are in the Jacksonville, Florida area and have any questions about corporate compliance, please contact Wood, Atter & Wolf, P.A. to set up a consultation.
