In a December 9, 2010 decision by Justice Kornreich, the Court dismissed a derivative action brought by shareholders of Morgan Stanley, against Morgan Stanley and its executive officers and directors. The complaint sought damages for compensation that Morgan Stanley paid and planned to pay its employees from the years 2006, 2007 and 2009. Plaintiffs alleged claims of breach of the duty of loyalty and waste against the individual director and officer defendants. Applying Delaware law, since Morgan Stanley is incorporated in Delaware, the Court analyzed the demand futility doctrine and business judgment rule, and concluded that the demand requirement under Rule 23.1 was neither excused nor satisfied.
Security Police & Fire Professionals of Am. Retirement Fund v Mack, Sup Ct, New York County, December 9, 2010, Kornreich, J., Index No. 600359/2010