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Wal-Mart has been sued by the $153 billion California State Teachers' Retirement System, which holds over 5.3 million shares of the company.
LOS ANGELES — Wal-Mart has been sued by the second-largest pension plan in the United States, the California State Teachers' Retirement System, over the retailer's alleged mishandling and cover-up of bribery in their Mexico division, Reuters reported Thursday.
The California State Teachers' Retirement System (CalSTRS), which holds over 5.3 million shares of Wal-Mart, filed their lawsuit late Thursday in state court in Delaware, the Associated Press reported.
The type of suit CalSTRS filed is called a derivative suit, in which a shareholder brings legal action on behald of a corporation against a third party, who is often an insider in the company that has failed in their duties. In this case, the lawsuit was filed on behalf of Wal-Mart itself against the company’s board and several current or former executives or board members, the New York Times reported.
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"CalSTRS is seeking to remedy the damages sustained by Wal-Mart as a result of alleged gross misconduct by Wal-Mart's executive officers and directors," CalSTRS Chief Executive Jack Ehnes said, the Los Angeles Times reported. "The focus of this action is corporate governance reform. We need truly independent directors who will set the right tone from the top."
Derivative lawsuits are not uncommon in the wake of corporate wrongdoing, according to the New York Times, but this is the first such suit for CalSTRS, whose Wal-Mart shares are valued at $313 million, less than one percent of the company's total value, the Times reported.
The lawsuit comes in the wake of allegations that Wal-Mart allowed widespread bribery in Mexico in order to secure building permits for new stores, and then covered up their investigation into the misconduct.
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The suit names the chain retailer's current CEO Mike Duke and Vice Chairman Eduardo Castro-Wright, as well as former chairman John Menzer and board members including Lee Scott, who was CEO at the time of the alleged bribery scheme, and Jim C. Walton and Robson Walton, members of the founding family of Wal-Mart, the AP reported.
The New York City Pension Funds urged their shareholders to vote against re-electing Duke and four other board members earlier this week. The pension group owns 5.6 million shares of Wal-Mart, the AP reported.
"We take our responsibility to our shareholders very seriously," Greg Rossiter, a Wal-Mart spokesman, told Reuters. "We are reviewing the lawsuit closely and are thoroughly investigating the issues that have been raised."
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