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Rupert Murdoch's News Corp Settles Shareholder Class Action for $139M

This is a settlement for the Securities/Stock Fraud lawsuit.

New York, NY: A $139 million settlement has been reached in the securities class action lawsuit brought by shareholders of Rupert Murdoch' News Corp over allegations the board failed to do due diligence in investigating the News Corp phone hacking scandal.

The plaintiffs that filed the original lawsuit, which include the labor union-owned Amalgamated Bank and the New Orleans Employees' Retirement System, accused the News Corp board of refusing to investigate alleged phone hacking because the directors were more interested in protecting the interests of the Murdoch family. Rupert Murdoch is chairman and CEO of News Corp and controls the company, while his sons, Lachlan and James, sit on the News Corp board, Reuters reports.

The lawsuit also claims Murdoch made political donations using News Corp funds, and that he did this to advance his conservative political agenda. The plaintiffs claim these actions showed the board lacked independence and may have been in violation of election laws.

The settlement fund will be paid by liability insurance for the board members. It is reported to be the largest cash settlement in this type of a derivative case. A derivative lawsuit, such as this one, involves shareholders holding board members and company officers responsible for harm caused to the corporation. These types of cases usually settle for changes to corporate governance with payment going to the company, and shareholders benefiting indirectly.

As part of the deal, News Corp said it would adopt enhanced corporate governance procedures, including a policy to disclose political contributions made directly by the company.

The News Corp phone hacking and bribery scandal first surfaced in 2009. Since then dozens of News Corp employees have been arrested and the hugely popular tabloid, News of the World, closed.

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Published on Apr-22-13


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