Home Depot to face a shareholder derivative lawsuit

Home Depot Data BreachA shareholder derivative lawsuit has been filed against Home Depot due to its data breach in 2014.  The allegation towards Home Depot’s directors and officers is that they breached their fiduciary duties of loyalty, good faith, and due to care by knowingly disregarding their duties failing to ensure they took reasonable measures to protect their customers’ personal and financial information. A derivative action occurs when an individual or institutional shareholder serves as a lead plaintiff on behalf of those affected by the company’s directors and officers, who are suspected of fraudulent activities that cause harm to the corporation. In this case, Home Depot’s D&O’s were allegedly aware that the company’s systems were out of date and vulnerable to a breach and failed to put a protective measure into place.

As talked about in a previous post, cybersecurity breaches are increasing leading to derivative and shareholder litigation. The Home Depot breach resulted in 44 consumer civil actions, as well as several state and federal investigations. It will be interesting to see how data breaches result in shareholder litigation as this trend seems to continually appear.

Read more about the Home Depot derivative action here.

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