When directors or officers of a company commit a wrongdoing such as mismanagement or fraud, the value of the company’s shares decreases.  Often, the only means that shareholders can rebuild the value of the company is taking action against the directors or officers for their wrongdoing in a derivative action.  A derivative action is an action brought by a shareholder on behalf of the corporation to benefit the corporation. Bringing such an action allows the shareholders and the corporation as a whole to recover for losses the directors and officers have caused.  The most common derivative actions are brought against directors and officers of the corporation for conduct which breaches their fiduciary duty to the shareholders and company.

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