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Jefferies Shareholder Gets Derivative Suit Over Jet Use Revived

Dec. 7, 2021, 6:57 PM

A Jefferies Financial Group Inc. shareholder succeeded in reviving his federal derivative claim over executives’ alleged misuse of corporate jets, but his state-law claims were rightly dismissed, under a Second Circuit ruling Tuesday.

The shareholder sued after the financial services holding company’s board decided not to litigate some executives’ allegedly extensive personal use of three corporate jets. The district court correctly threw out the shareholder’s state law claims, but didn’t properly consider precedent when looking at the federal portion, the U.S. Court of Appeals for the Second Circuit’s summary order said.

Courts typically don’t second-guess a board’s decision not to ...