When I look at cases like this, I think about it from the perspective of the investor who is suing:
1. Were you aware that the stock you were buying was founder-controlled? In the Moelis case, this was fully disclosed to shareholders.
2. In a free market, shouldn’t investors be able to decide for themselves whether founder-controlled companies offer better returns—and invest accordingly? There are plenty of companies with traditional governance structures for those who prefer them.
3. If you own one share with one vote, should that give you the power to dictate the corporate structure for everyone else?
I completely agree that shareholder protections matter. The question is whether these lawsuits are really about protecting shareholders—or if they’re more about generating profits for attorneys through litigation.
Ultimately, the market provides options. We have 50 states, each with the ability to set its own corporate governance laws. Companies aren’t locked into one approach—they can choose the legal framework that best aligns with their needs. Delaware has long been the preferred choice, but as its legal environment shifts, states like Nevada, with their statute-driven approach, may become more attractive for businesses looking for stability. Competition among states is a feature of the system, not a flaw.
