RTB: Thank you for your response. I have given sca
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Posted On: 06/14/2021 2:44:59 PM
RTB: Thank you for your response. I have given scant personal attention to this and the other threatened and filed class action lawsuits even though I subjectively view my CYDY position as large. My reasoning is that these lawsuits obviously don't affect the MOA of LL and I don't believe their ultimate resolution will have a substantial impact on future revenues. As you point out, a judge (or magistrate) is tasked with approving this settlement because it is a class action, and he (she) will be obliged to cite reasons justifying the approval.
The overwhelming majority of class action lawsuits, in my experience, are filed in order to attempt to leverage a settlement based on the cost of defense. However, some obviously have merit. At the time management awarded shares to themselves based on supposedly achieving important milestones, I recall thinking that the pursuit of the milestones seemed more like simply performing the customary duties of their positions. However, even when a class action suit was filed, I paid no attention because I knew I would have no ability to follow the case internally and the outcome wouldn't be a major event for me. That said, however, this suit may have been beneficial to shareholder not only for the return of the gifted shares, but as a shot across the bow should management contemplate similar conduct in the future. While we will never know management's true motive for settling, the return of a substantial number of shares suggests to me a concern for a finding of liability that likely went beyond the cost of defense.
Bear in mind also that while the great majority of shareholder class action suits are based on claims of misrepresentation (you painted a rosy picture that never materialized), this one, I surmise, was based on a claim of self serving actions without sufficient basis. Self dealing wouldn't require proof of reliance by the plaintiff, as misrepresentation would, and self dealing would have been more straightforward to prove.
The overwhelming majority of class action lawsuits, in my experience, are filed in order to attempt to leverage a settlement based on the cost of defense. However, some obviously have merit. At the time management awarded shares to themselves based on supposedly achieving important milestones, I recall thinking that the pursuit of the milestones seemed more like simply performing the customary duties of their positions. However, even when a class action suit was filed, I paid no attention because I knew I would have no ability to follow the case internally and the outcome wouldn't be a major event for me. That said, however, this suit may have been beneficial to shareholder not only for the return of the gifted shares, but as a shot across the bow should management contemplate similar conduct in the future. While we will never know management's true motive for settling, the return of a substantial number of shares suggests to me a concern for a finding of liability that likely went beyond the cost of defense.
Bear in mind also that while the great majority of shareholder class action suits are based on claims of misrepresentation (you painted a rosy picture that never materialized), this one, I surmise, was based on a claim of self serving actions without sufficient basis. Self dealing wouldn't require proof of reliance by the plaintiff, as misrepresentation would, and self dealing would have been more straightforward to prove.
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