Investors sue Adidas for not dumping Kanye West years ago

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Originally published at: Investors sue Adidas for not dumping Kanye West years ago | Boing Boing

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Saw this earlier and the headline had me worried that the investors were perhaps pissed that they did end the relationship and have to destroy ca. $1 bb in inventory. You never know with those folks.

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Everything is securities fraud, and this is just business as usual. Investors would also have sued if they hadn’t dumped the guy, or if they dumped him earlier. From what I can see, these lawsuits happen constantly.

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Yeah. I think a lawsuit like this would have an extremely low likelihood of succeeding if it goes to court. Basically the deal when you are a stockholder is that you let management run the company. You can’t really sue management for being bad at their jobs, and having a racist, anti-semetic spokesperson is ill advised but not actually illegal, and “concealing or not acting on private information” is… legally dubious at best. Even though they are often without legal merit these sorts of shareholder lawsuits are usually settled for a small fraction of the claimed loss paid out of litigation insurance, and enrich a few class action lawyers and the lead plaintiffs (which often are closely related to the class action lawyers). The argument is that even when 100% of the settlement goes to the lawyers (which is common) it discourages bad behavior, but I am not convinced of that at all.

To be clear, I am not against class action lawsuits in general, or even lawyers getting paid for them. I think that consumer and public class action lawsuits against companies for product liability, environmental damage, and so on can be valuable even if the injured parties get negligible compensation. I just don’t think the majority of shareholder lawsuits have any merit.

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Common Joe on the street was watching this unfold for ages wondering “When they gonna fire that jackass?” … so, they continued to make money and visibly foot dragged. There’s merit to the claims.

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I generally think that shareholder lawsuits are super bogus but in this case they’ve got a point. EVERYONE could see this coming a lightyear away.

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