Follow-On Shareholder Suits After CFPB Settlements - From the Experts


Originally published in Corporate Counsel on March 4, 2013.

Federal regulators landed the first blow: Several major credit card companies paid more than half a billion dollars in customer restitution and fines as part of settlements reached with the Consumer Financial Protection Bureau in the summer and fall of 2012. But while these companies were still reeling from the first punch, shareholders took the next swing, filing class action shareholder derivative suits against the directors and senior officers of these financial services companies, alleging the CFPB’s findings and the settlements demonstrated mismanagement, breach of fiduciary duty, and unjust enrichment at the companies’ expense.

The three shareholder derivative suits target senior officers and directors, whose actions are presumably covered by D&O policies, and suggest a pattern: Plaintiffs invoke the companies’ compliance policies and related representations, cite at length to governmental investigations or settlements, and then allege that the divergence between the companies’ representations and the investigations or settlements evidence a breach of fiduciary duty, mismanagement, or unjust enrichment. The companies’ refusals to admit wrongdoing, including in the settlement, is not acknowledged.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Published In: Antitrust & Trade Regulation Updates, Consumer Protection Updates, Finance & Banking Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Loeb & Loeb LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »