Delaware Chancery Court Dismisses Derivative Plaintiff's Section 220 Books And Records Action

In King v. VeriFone Holdings, Inc., C.A. No. 5045-VCS (Del. Ch. May 12, 2010), the Delaware Court of Chancery dismissed a derivative plaintiff’s Section 220 books and records action on the ground that the purpose for the request — to bolster demand futility allegations in the prematurely filed derivative complaint — was improper. The court criticized plaintiff for filing a derivative complaint before counsel was able to complete his investigation, solely to “win the race to the courthouse.” This decision reflects the Chancery Court’s willingness to impose consequences on plaintiffs who do not follow appropriate procedures in their haste to obtain lead plaintiff status.

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Published In: Civil Procedure Updates, Securities Updates

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