Tuesday, February 19, 2008

Shareholder Lawsuit Forces Company to Reregister Its Stock

In response to a shareholder lawsuit, off-price retail clothing company Syms Corp announced that it has decided to reverse its recent decision to move its stock from the major exchanges to the pink sheets.

Syms original decision was driven by a desire to reduce costs related to Sarbanes Oxley compliance. In reversing its decision, Syms' management also cited a desire to reduce costs – this time from litigation related to the delisting decision. The company is now seeking a listing on the Nasdaq exchange.

While management likely had the shareholders' best interests at heart in deciding to delist, and it was likely protected from a legal standpoint by the Business Judgment Rule, the decision turned out to be a strategic mistake.

Related Post: Retail Clothing Company Sued for Decision to Delist from NYSE.

 

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