Fibertower Corp fka FBBT

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Fibertower: Direct or Derivative ?????????????????????????????????????????



Stockholders of Straight Path Communications Inc. can press on with self-dealing claims against the company’s CEO and controlling stockholder that stem from its $3.1 billion sale to Verizon Communications Inc., a Delaware court decided.

Chancery Court Judge Sam Glasscock III, in a June 25 opinion, refused to dismiss allegations that former Straight Path controlling stockholder Howard Jonas and Straight Path CEO Davidi Jonas breached their fiduciary duties and siphoned potential benefits away from other shareholders.

Glasscock held that the claims of fiduciary duty breaches are direct, and not derivative as the defense argued. This allowed the lawsuit to survive. Stockholders lose their right to sue derivatively — against a third party on behalf of a company — once they cease to hold shares following a merger.