A shareholders’ lawsuit filed against Rupert Murdoch and other board members of News Corp. has been settled for $139 million. The suit alleged lax oversight and misdeeds of a most serious nature by the defendants. But because of the type suit, News Corp. and not the shareholders will collect the total amount of the settlement. Insurance companies that represent News Corp.’s board will pay for the settlement on behalf of Murdoch and others on News Corp.’s board. A Delaware judge overseeing the case must still approve the settlement.
The reason News Corp. is receiving the settlement, rather than the shareholders who filed the suit, is because the case is what is known as a derivatives lawsuit. In such cases, a shareholder sues in the name of the corporation in an attempt to remedy a wrong inflicted on the corporation itself. In this case, shareholders sued in 2011, alleging that Murdoch and other board members had abandoned their fiduciary duty to shareholders. There were some very serious allegations in the suit against Murdoch and his “hand-picked board.” Hopefully, News Corp. and its bosses will “straighten up and fly right” from this point forward.
Source: Los Angeles Times
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