Failing investment - Technology was withdrawn after 5 years. What are my rights as a shareholder?

Las Vegas, NV Viewed 33 times. Posted about 1 month ago in Business

Five years ago, I invested in an company whose viability was based on a technology. The inventor/incorporator, who was a board member and officer for five years until a few months ago, withdrew his technology and resigned as a board member. The company does not have any other viable means to make money without this technology. I also found out that there is no contract or license agreement between the inventor and the company when I invested 5 yrs ago. What are my rights as a shareholder? Is this considered fraud?

Answer this question Add to list

Answers (2)

Robert John Murillo

This attorney is licensed in Colorado and 1 other state. Posted about 1 month ago.

You need to speak with a local business attorney. The answer depends on the nature of this investment and the offering documents and contracts. In many cases, regardless of how the promoter terms it, what you are being offered is a security. There are rules regarding disclosure and anti-fraud related to all securities offerings. Again, contact an attorney immediately to discuss options.

DISCLAIMER—This answer is for informational purposes only and discusses general legal principles, trends, and considerations and is not intended as specific legal advice regarding your question. This answer does not establish an attorney client relationship.

Reed Richard Kathrein

This attorney is licensed in California and 1 other state. Posted about 1 month ago.

The answer depends on the representations made to you at the time of your investment. If this was a public company, there would be a registration statement and a prospectus if it was new stock. If it was a private offering, there was likely some sort of offering memorandum.

Fraud may not be your only recourse. As an officer and director, the inventor owed fiduciary duties to the company, and may have breached those duties.

As a shareholder, you could sue for fraud individually or as a class most likely in federal court. Alternatively, for breach of fiduciary duty you could bring a derivative action, on behalf of the company, against the inventor.

The above is not legal advice, nor is it complete. It is information based on a hypothetical situation about the law designed to help users safely cope with their own legal needs. But legal information is not the same as legal advice -- the application of law to an individual's specific circumstances. Although I go to great lengths to make sure this information is accurate and useful, I recommend you consult a lawyer if you want professional assurance that this information, and your interpretation of it, is appropriate to your particular situation.