WHAT IS A SHAREHOLDER DERIVATIVE LAWSUIT?

A shareholder derivative lawsuit is a lawsuit that a shareholder will bring to recover money that is owed to the corporation where that shareholder is an investor in. For example, if one of the officers of the corporation is stealing from the corporation a shareholder may recognize that and then bring a lawsuit on behalf of the corporate entity to recover money from that corporate officer. In the lawsuit, when the money is recovered it goes back to the corporation which helps protect the investment of the shareholder who brought the lawsuit.