Identify the Incorrect Statement About a Shareholder Derivative Lawsuit

Multiple Choice

Identify the incorrect statement about a shareholder derivative lawsuit.

A) It is a lawsuit brought by a shareholder on behalf of a corporation against a third party.
B) A shareholder alleges in the lawsuit that the people charged with acting in the corporation's best interests are failing to do so.
C) Very few state laws give shareholders a right to sue a third party in a shareholder derivative lawsuit.
D) These lawsuits are very controversial because they are typically litigated by plaintiffs' lawyers working on contingency fees.
E) Executives disfavor these lawsuits because oftentimes,shareholders sue the directors themselves for failing to act in the company's best interest.