Delaware's court of chancery had a chance to sock-it-to Citi's board for failing to avoid the stampede into the mortgage-backed securities market (and derivatives thereof).  At least, to allow aggrieved shareholders to continue their lawsuit against them.  Not to be.

The other day, the Court decided that the shareholders failed to meet the "demand requirement" of pleading--a rule saying that they've got to allege specific facts in their complaint showing that the board maliciously (wrongfully and with bad faith) failed to take action to stop such investments.  They needed to plead more than mere negligence -- the failure to stop their employees from investing in such securities had to be what amounts to criminal recklessness.  This, the shareholder plaintiffs could not do.

Well, at least the Court is allowing the shareholders go forward on the corporate waste (executive pay) argument.

Oh well.  Better luck next time.  but this does not bode well for exacting the public vengeance so many desire.  Or filling the banks' coffers with directors' savings accounts.  Remember, we the taxpayers are now citi's largest shareholders.  And you just lost your lawsuit.

You can read the opinion here:  http://www.delawarelitigation.com/2009/02/articles/chancery-court-updates/
chancery-court-dismisses-shareholder-claims-against-citigroup-for-failure-to-monitor-subprime-
risks-but-allows-waste-claim-for-ceo-pay/