In an interview with Yahoo Finance, professor Hal S. Scott explained why it might be a good idea for a shareholder to give up the right to sue.
“It’s costing them money,” he said. “The major shareholders and corporations are holding their shares in index funds, and they sue themselves and the lawyers take 20%.”
Scott said most retail investors don’t get much money back from class action shareholder lawsuits anyway, and his research shows that people don’t even bother collecting the small damages.
“This is damaging the company. The only justification is really deterrence and there’s plenty of deterrence,” Scott said.
‘Enforcement 40’ for 2020
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