"You know the basic idea. A company does something bad, or something bad happens to it. Its stock price goes down, because of the bad thing. Shareholders sue: Doing the bad thing and not immediately telling shareholders about it, the shareholders say, is securities fraud."
Immediately telling them would still make the stock price plummet and you'll still lose probably the same amount of money. I think what most people want is: Tell me and only me first when there is something bad, so I can sell before the stock goes south.
And then shareholders sue their own company, and for every dollar of the settlement that they take out of their own pockets to give to themselves, they give 20 cents to a lawyer.
Immediately telling them would still make the stock price plummet and you'll still lose probably the same amount of money. I think what most people want is: Tell me and only me first when there is something bad, so I can sell before the stock goes south.