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Are your shares losing value? Who is to blame?

Owning shares in a business means you hold a portion of the ownership in that company. In many ways, this is an ideal way to earn money because you can purchase shares in a business and, with little effort, reap profits when the business does well. However, if the business loses money, you may have little control over what happens to your investment unless you own a significant portion of the company.

Shareholders who lose money have a right to know why. In some cases, an unavoidable downturn in the market may result in a temporary loss of funds. However, you and your fellow shareholders may suspect the company itself is the cause of the drop in stock value. If this is the case, you may want to seek restitution for the losses you suffered.

Common shareholder disputes

As an investor in the company, your money is on the line. As long as the company does well, you profit, so it benefits you to invest in a company that has a solid business plan and savvy administration. When stocks fall, you trust the company to take steps to get back on course. If this doesn't happen, what you may be dealing with is securities violations, such as fraud or poor management of funds. Some of the factors that contribute to shareholder disputes with a company include the following:

  • The company, its CEO or other leaders intentionally mislead you and other shareholders about problems within the business.
  • The company intentionally withholds information from you and the public that may affect your decisions about your continued investment.
  • The company withholds information about major changes in the business structure, such as merging with another company.
  • Public perception of the company or its product turns negative because of scandal within the company administration or dangerous defects in the product the company manufactures.

You and your fellow shareholders may join in taking action against a company that mismanages your investment, for example through a class action lawsuit. This type of claim is much more complex than a lawsuit in small claims court. Your success will be based on how well you prove to the court that the company's reckless or illegal actions resulted in your financial loss. This is not an easy goal, and shareholders are not always the winners in these cases.

An additional complication is that regulations, laws and opinions about shareholder disputes change rapidly with each new judgment and ruling. Because of this, it is important to have legal representation that is well familiar with the laws, both in California and at the federal level.

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Chodos & Associates
1880 Century Park East
Suite 615
Los Angeles, CA 90067

Toll Free: 866-986-7255
Phone: 310-598-3405
Fax: 310-203-3866
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