Officers and Directors

Officers and directors of publicly traded companies are also popular Deep Pocket Defendants. All companies whose shares are publicly traded must file quarterly and annual reports with the Securities and Exchange Commission. These reports are known respectively as the 10–Q and 10–K filings. The purpose of these filings is to make information concerning the business and finances of the company publicly available. The law requires that public companies provide full disclosure of all material information which may influence the price of its stock.

A number of law firms employ young MBAs and attorneys to scrutinize each of the required filings made by these companies. If the stock of a company rises or falls sharply in response to some news item affecting the company, a law firm may attempt to show that the company’s filings failed to adequately disclose certain material information. If any possible claim can be made, a class action lawsuit will be filed on behalf of current or former shareholders. The company, its officers, and its directors will be named in the suit. The defendants will fight the lawsuit or settle it, but in either event, the cost will be substantial and the only likely winners will be the lawyers who filed the action.