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AMD Misled Investors on Diversity Efforts, Pension Suit Says

Sept. 30, 2020, 7:03 PM

Advanced Micro Devices Inc.‘s leadership misled investors about its commitment to diversity while having no Black board members or senior executives, according to a shareholder derivative suit in federal district court in California.

The company’s CEO and board breached their fiduciary duty by “making false assertions about the Company’s commitment to diversity and acted inconsistent with their obligation to increase shareholder returns, which research confirms is attained through more diverse leadership teams,” a pension fund for the city of Pontiac, Mich., said in the suit filed Tuesday.

The Santa Clara, Calif.-based chipmaker was listed among the 20 largest U.S. companies without a single Black person on its board in 2017, and little has changed in the company’s leadership ranks since then, according to the complaint filed in the U.S. District Court for the Northern District of California.

The case is one of a growing number of shareholder derivative suits filed in recent months against tech companies that lack Black board members, among them Oracle Corp., NortonLifeLock Inc., and Qualcomm Inc.

The AMD complaint brought by the City of Pontiac Police and Fire Retirement System is the third from the municipality, a Detroit suburb with a majority-Black population. Suits against Danaher Corp. and Cisco Systems Inc. were brought by the General Employees Retirement System for Pontiac.

The AMD suit seeks a court-ordered requirement that three Black people be nominated to the company board, to replace three existing board members.

Shareholders are typically required to give corporations a chance to remedy alleged wrongdoing through a pre-suit demand before they can bring a derivative suit against a board.

That requirement should be waived because of the company’s repeated failure to act on “widespread public statements in support of diversity,” the complaint against AMD said.

Causes of Action: Breach of fiduciary duty, unjust enrichment, violation of federal securities laws.

Relief: Compensatory and punitive damages; court-ordered actions to nominate black board members; diversity hiring requirements.

Response: AMD didn’t immediately respond to a request for comment.

Attorneys: Robbins Geller Rudman & Dowd LLP and AsherKelly represent the plaintiffs.

The case is City of Pontiac Police & Fire Ret. Sys. v. Caldwell, N.D. Cal., No. 5:20-cv-06794, complaint filed 9/29/20.

To contact the reporter on this story: Lydia Beyoud in Washington at lbeyoud@bloomberglaw.com

To contact the editors responsible for this story: Michael Ferullo at mferullo@bloomberglaw.com; Laura D. Francis at lfrancis@bloomberglaw.com

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