Corporations that sell stock shares to the public market are regulated by various securities laws. These laws are designed to keep companies responsible for the interests of the shareholders who are part owners of the companies they invest in through purchasing stocks. However, if a company ends up breaking some of these rules, it could find itself facing a securities litigation in Michigan or in any other state.
Hewlett-Packard had experienced this in August 2011 when stockholders sued the corporation shortly after the current CEO had made a surprising announcement regarding major changes in the company's business plans. The plans proposed that the company sell the PC portion of the corporation as a spin-off business. The corporation was also looking to sell WebOS, an operating system for mobile devices, while at the same time acquiring software company Autonomy.
Shortly after the lawsuit was filed, the company replaced the CEO in September 2011. The new CEO proposed a different restructuring plan, which proposed to increase focus on the equipment market. Recently, the new CEO was able to settle the lawsuit filed against the company by shareholders. The terms of the settlement were reached through mediation with the company agreeing to pay $57 million.
It is fortunate that both sides in this case were able to reach a compromise in the securities litigation dispute. On the other hand, if the two parties to the lawsuit were not able to come to an agreement, many in Michigan would be watching the two parties battle it out in court. When this happens, the side with the strongest legal argument will have the best chance of winning the case.
Source: Fox Business, "H-P Settles Shareholder Lawsuit for $57M", Matthew Rocco, April 1, 2014