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Justices weigh whether shareholders can sue adviser directly or must bring derivative claim
Summary
In a dispute over whether NexPoint may pursue a direct claim against an investment adviser, advocates debated whether the advisory agreement created individualized rights for shareholders or whether the alleged harms are derivative and belong to the REIT.
May it please the court — counsel for the adviser and for NexPoint argued a central corporate‑law question: when do shareholders have a direct cause of action against a third‑party adviser for alleged mismanagement, and when are such claims derivative and therefore subject to derivative‑action rules?
Petitioners' counsel, Mister Hawkins, urged the court to find NexPoint’s claims are derivative and to dismiss the direct complaints. His argument tracked long‑standing Delaware and Texas principles that an individual shareholder cannot recover for injuries that are collective and pro rata: such claims must ordinarily be brought derivatively on behalf of the entity. Hawkins contended that…
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