After more than 40 years of experience as a shareholders’ rights attorney, and minority shareholder litigation, I can tell you this: a shareholder dispute is almost always about money, pure and simple.  You’ve made a substantial investment, often including your own time and contributions.  We have handled thousands and thousands of shareholder disputes over the past four decades the Watkins Firm has served the San Diego and California business community.  We work to protect your rights and interests, as well as the money you’ve invested and the dividends you deserve.

Follow the Money

Many people think that disagreements happen when there isn’t enough money to go around.  In our experience, disputes often arise when the money is flowing and business is booming.  In the end, in most cases, a San Diego shareholder dispute is almost always about money.  In many of our cases majority interests attempt to cut out investors and minority shareholders or short change them on the returns or dividends they deserve.  What is presented as a “failure” is quietly taken to another location (or country!) under a different name while the majority interests attempt to cut specific partners out of the flow of the money they deserve.

Every state in the nation has strict laws to ensure the protections of investors and shareholders.  California has some of the most complex and powerful laws governing these relationships and the money which is ultimately at stake.  We have a saying at the Watkins Firm: “off by a penny, off by a million.”  Minority shareholders and investors have to keep a close eye on their investment and the activities of a company and its ownership.

Shareholder Disputes Happen For Many Reasons Under the Business Sun

Shareholder disputes can be quite harmful to a company.  They obviously disrupt the working relationships of the owners who are involved.  More importantly, they distract the owners from their primary business focus: the well being and profitable efforts of the company.

When you boil these business disputes down to their essence, a shareholder dispute is almost always about money.  It may be that shareholders disagree about who is doing what work, or the value of that work compared to what is expected.  It might be that dividends were not paid, or that the calculations used to arrive at the dividend are in question.

The issue might surround conflict of interests or violations or business opportunities the officers have taken for themselves (a breach of their fiduciary duty) that should have come through the company.

In other cases, majority interests may be attempting to devalue the interests of majority shareholders through a new merger, or preventing them from gaining access to the corporate books and important documents. In many cases there is an element of deception or outright business fraud.  Shareholder oppression has become much more common recently, and it is important for minority investors and shareholders to stand up to protect their interests.

Pro-Tip: “we’ve had so many shareholder fights where, um, a company group of friends or a group of friends who know friends, maybe 30 people invest in a company and it’ll be doing well, but not great. And they investors, the shareholders won’t be receiving, uh, disclosures, or they will be receiving them, but they sort of don’t add up. And then they do an investigation and they come to some law firm like ours and they say, well, let’s, let’s get in there seeing the books and records and you get some pushback from the company.

And that’s when all the hairs in your neck stand up and you come to the Watkins firm and we file a motion. And we discover through our due diligence that the company’s doing very good and that they also formed an offshore corporation of the same name. And they’ve taken all the assets and they’re all driving Rolls-Royces. So this has happened more times than I can say, because it just does happen. Nobody fights over anything unless there’s money involved. If it’s just doing okay, they would tell the truth and say, it’s all great. But if that big money offer comes in the door and they have a way of, of keeping it for themselves, it’s very tempting for human nature to turn that down.

Well, shareholders just want to be treated just like other shareholders. And so, when you don’t have these safeguards in place, it’s very tempting for management to say, ‘well, technically I going to pay me myself more. Technically I need a new car. And technically I, the company should lease me a big house to stay in. And technically …”  When, if you would had a request that certain things be in place before you invest a substantial amount of money, they may have said, yes, I don’t want executive compensation to exceed so much of the EBITDA, simple things like that could be requested. If they say, no, you keep your money.

Don’t let the term shareholder or investor make you think you don’t have any rights. We like to say, if it’s off a penny, it’s off a million. So we look at the financial disclosures you’ve been given, and if they don’t add up or doesn’t seem straightforward, we help you to assert your rights and demand access to the information you need. And if they don’t give it, that’s sort of like, them pleading the fifth, you know, something’s wrong when they’re not willing to give their investors, their owners full access, full transparency into what’s going on with the company.” – Dan Watkins, Founding Partner

We Know a San Diego Shareholder Dispute is About Your Money

There are a myriad of reasons for investor disputes, but in the end a shareholder dispute is almost always about money.  It’s about protecting your rights and interests and ensuring you have access to information and receive the return on your investment you deserve.

Protect yourself, and your money. We invite you to review our podcast Episode 14 – Shareholder Rights and Disputes as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.  We have the experience and legal skill to assert your rights, protect your interests, get to the bottom of what is going on and  protect your money.  We will work together to identify your objective(s), and the strategy we will employ to get to the bottom of any and every issue and achieve the best possible outcome.