Advanced Micro Devices (AMD) Shareholder Derivative Lawsuit

This shareholder derivative lawsuit alleges that Advanced Micro Devices (AMD) and its Board of Directors breached fiduciary duties by failing to implement internal and corporate controls necessary to ensure dissemination of accurate information to shareholders and the investment community, particularly in connection with the release of the company's Llano product.

Plaintiff and AMD shareholder Jake Ha has brought this derivative legal action on behalf of AMD against the members of its Board of Directors, seeking to remedy their breaches of fiduciary duties as well as other violations of law that he claims occurred from the early part of 2011, through to the present day. AMD is a corporation in the business of designing and distributing technology for high tech appliances such as personal computers, tablets and game consoles and one which is heavily involved in the global semi-conductor industry. 

The allegations included in the complaint pertain to the Board's conduct in systematically failing to implement internal corporate controls essential to the dissemination of accurate information to shareholders as well as the investment community as a whole. The facts central to the plaintiff's arguments revolve around AMD's failure to provide material information regarding its Llano product. Specifically, plaintiff Ha asserts that:

  • AMD Board members repeatedly touted Llano's superior microprocessing capabilities, which ultimately proved false
  • Directors promoted the impression that sales of Llano would be in high demand upon its release
  • The company filed required disclosures with the SEC which included false and/or misleading information about market demand for Llano
  • The Board only belatedly began to admit problems with Llano's development, rollout and actual customer demand

Ha argues that the Board's misrepresentations and omissions of material facts in this regard constituted breaches of fiduciary duties to shareholders and the company, were violations of U.S. Generally Accepted Accounting Provisions (GAAP), ran afoul of AMD's own corporate governance documents and ultimately exposed the company to a federal securities fraud lawsuit that remains pending in federal court. 

As a result of these alleged acts, the plaintiff is requesting restitution from individual directors, disgorgement of profits, benefits and compensation received by virtue of their membership on the Board, an order requiring the company to implement enhanced corporate governance policies and tighter internal controls, that the election of the named directors be voided and new proxy materials with corrected disclosures be issued prior to a new election and that all fees and costs of the action be paid by defendants.

A shareholder derivative lawsuit is one that is brought by a corporation's shareholder when a corporation in fact has a valid cause of action against a third-party (often a company insider or officer), but declines to pursue it. Such lawsuits are an unusual twist on conventional corporate law principles, under which management is typically charged with bringing legal action on behalf of the corporate entity. When management does not proceed in such a manner, a shareholder may be able to assume that role on behalf of the company and prosecute the litigation, provided that certain procedural hurdles are cleared. Should a shareholder prevail in type of suit, the resulting proceeds are paid to the corporation itself, not the individual who initiated the action.

 

Article Type: Lawsuit
Topic: Investments

Most Recent Case Event

Advanced Micro Devices (AMD) Shareholder Derivative Lawsuit Complaint

September 29, 2015

The complaint for this shareholder derivative lawsuit alleges that Advanced Micro Devices (AMD) and its Board of Directors breached fiduciary duties by failing to implement internal and corporate controls necessary to ensure dissemination of accurate information to shareholders and the investment community, particularly in connection with the release of the company's Llano product.

amd_shareholder_derivative_lawsuit.pdf

Case Event History

Advanced Micro Devices (AMD) Shareholder Derivative Lawsuit Complaint

September 29, 2015

The complaint for this shareholder derivative lawsuit alleges that Advanced Micro Devices (AMD) and its Board of Directors breached fiduciary duties by failing to implement internal and corporate controls necessary to ensure dissemination of accurate information to shareholders and the investment community, particularly in connection with the release of the company's Llano product.

amd_shareholder_derivative_lawsuit.pdf
Tags: Corporate Governance, Inadequate internal system/oversight, Overstating Expectations of Events