Legal niceties color backdating cases; There hasn't been a huge wave of class-action suits triggered by the scores of investigations and allegations of improper stock option backdating. One big reason: legal technicalities that make derivative suits more appropriate.(SHAREHOLDER LITIGATION)

Financial Executive, July, 2007 by Sweeney, Paul

A funny thing has happened on the way to the courthouse in the wake of scores of stock option backdating indictments and investigations: the threat of a tidal wave of class-action lawsuits is breaking apart, even as another type of suit is flourishing.

Much of this hinges on what could be considered a technicality: In order to bring a class-action suit, plaintiffs must not only show that backdating occurred, but that it caused the market to hammer the stock--which does not always happen.

While there were some notable instances in which stock prices plummeted--Computer Sciences experienced a $1.7 billion plunge in market value, Caremark Rx's value sank by $1.5 billion and The Home Depot lost $1.1 billion, according to calculations by Glass Lewis & Co.,...

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