Shareholders of a New York corporation and similar entities have the right, in certain situations, to bring claims that belong to the corporation against third parties, frequently corporate insiders such as officers or directors. Such derivative actions can be brought where the corporation itself has failed to pursue those claims. As derivative claims belong to the corporation, any recovery in a shareholder derivative action goes to the corporation.
Shareholders also have the right to bring direct claims that belong to the shareholder for harms done to the shareholder. A classic example is a securities fraud action where the shareholder alleges a direct loss due to a fraudulent act or omission, whether by the corporation itself or by a third party, such as a corporate officer, director or an investment banker. The recovery in such a direct action belongs to the shareholder plaintiff.
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