You are here: / / SHAREHOLDERS’ DERIVATIVE ACTION AGAINST MORGAN STANLEY ARISING FROM...

SHAREHOLDERS’ DERIVATIVE ACTION AGAINST MORGAN STANLEY ARISING FROM THE LOSS OF $6.2 BILLION FROM HIGH RISK TRADING DISMISSED; PLAINTIFFS FAILED TO DEMONSTRATE PRE-SUIT DEMAND WOULD BE FUTILE.

The First Department, in this shareholders’ derivative action against Morgan Stanley, determined the plaintiffs did not demonstrate that a pre-suit demand upon the board of directors would have been futile.  Therefore, the action was properly dismissed (without prejudice). The lawsuit involved the so-called “London Whale” debacle where $6.2 billion was lost in high-risk trading despite public representations the group engaged in only low risk hedging. The court explained the relevant criteria for a futility demonstration:

 

Plaintiffs’ claim, based on the Board’s alleged failure to properly exercise its oversight duties, is premised on the theory of liability articulated in In re Caremark Intl. Inc. Derivative Litig. (698 A2d 959…). * * *

In Caremark cases, allegations of demand futility are analyzed under the principles set forth in Rales v Blasband (634 A2d 927, 933-934 [Del 1993]) …). Under Rales, the plaintiff must plead particularized facts raising “a reasonable doubt that, [at] the time the complaint [was] filed, the board of directors could have properly exercised its independent and disinterested business judgment in responding to a demand” … . To rebut the presumption of disinterestedness, the plaintiff must plead particularized facts that, if proved, would establish that a majority of the directors face a “substantial likelihood” of personal liability for the wrongdoing alleged in the complaint … . A “mere threat” of liability is insufficient … .

Here, plaintiffs failed to make the requisite showing that the board could not exercise independent business judgment because a majority of directors faced a substantial likelihood of liability for the challenged conduct. At the time plaintiffs filed their complaint, the board consisted of 11 directors. At most, plaintiffs showed that four of them — inside director Dimon and the three members of the Risk Policy Committee — faced a substantial likelihood of liability … . “Because a majority of the directors are independent, demand is not excused”… . Wandel v Dimon, 2016 NY Slip Op 00252, 1st Dept 1-14-16

 

CRIMINAL LAW (SEXUAL ASSAULT REFORM ACT DOES NOT VIOLATE EX POST FACTO CLAUSE)/SEXUAL ASSAULT REFORM ACT [SARA] (1000-FOOT SCHOOL-GROUNDS NO-GO ZONE IS NOT PUNITIVE IN EFFECT AND DOES NOT VIOLATE EX POST FACTO CLAUSE)/CONSTITUTIONAL LAW (1000-FOOT SCHOOL-GROUNDS NO-GO ZONE IN THE SEXUAL ASSAULT REFORM ACT IS NOT PUNITIVE IN EFFECT AND THEREFORE DOES NOT VIOLATE EX POST FACTO CLAUSE)/EX POST FACTO CLAUSE (1000-FOOT SCHOOL-GROUNDS NO-GO ZONE IN THE SEXUAL ASSAULT REFORM ACT IS NOT PUNITIVE IN EFFECT AND THEREFORE DOES NOT VIOLATE EX POST FACTO CLAUSE)

You might also like
CLOSURE OF COURTROOM BASED UPON WITNESS’S FEAR WAS PROPER (FIRST DEPT).
COURT DID NOT CONDUCT SEARCHING INQUIRY INTO DEFENDANT’S REQUEST TO PROCEED PRO SE, CONVICTION REVERSED (FIRST DEPT).
ADMITTING INTO EVIDENCE A PISTOL ALLEGED TO BE THE SAME TYPE OF WEAPON USED IN THE CRIME WAS NOT ERROR (FIRST DEPT).
New York City Was Unable to Demonstrate Amendments to the Adult Use Zoning Regulations Were Necessary to Reduce the Negative Effects of Such Businesses on the Surrounding Areas–Therefore the Amendments Constituted an Unjustified Restriction on Speech
THE FOUR-YEAR LOOKBACK CAN BE APPLIED TO DETERMINE WHETHER DEFENDANT ENGAGED IN A FRAUDULENT SCHEME TO DEREGULATE NYC APARTMENTS RECEIVING J-51 TAX BENEFITS (FIRST DEPT).
BUILDING OWNERS EXPENDED SUFFICIENT FUNDS FOR THE IMPROVEMENT OF AN APARTMENT TO JUSTIFY AN EXEMPTION FROM RENT STABILIZATION (FIRST DEPT).
DEFENDANT’S INNOCENT TEMPORARY POSSESSION OF A WEAPON WAS THE RESULT OF HIS DISARMING A MAN WHO WAS ASSAULTING THE MAN’S WIFE; THE POSSESSION-OF-A-WEAPON CONVICTION REVERSED (FIRST DEPT).
EGREGIOUS CIRCUMSTANCES JUSTIFIED SUMMARY JUDGMENT IN FAVOR OF DEFENDANT DRIVER PURSUANT TO THE EMERGENCY DOCTRINE (FIRST DEPT).

Categories

Sign Up for the Mailing List to Be Notified When the Site Is Updated.

  • This field is for validation purposes and should be left unchanged.

Copyright © 2026 New York Appellate Digest, Inc.
Site by CurlyHost | Privacy Policy

RENTAL PERMIT REQUIRED BY TOWN CODE WAS A CONDITION PRECEDENT TO THE LEASE;... WHERE THE EVIDENCE OF GUILT WAS NOT OVERWHELMING, COUNTY COURT’S ERROR...