Legal Question in Business Law in Louisiana

My husband's family owns a privately held business which he held 200 shares of stock. Last year, we both lost or jobs and we in financial distress. He asked his family to buy back the stock at value. They agreed and advised that the stock was worth $42K. We did not have the money to pay an independent CPA or attorney to review the financials and we had no reason to believe that the stock was worth more. We simply didn't know the value. We received a call from my husband's sister yesterday (just over a year from the sale of the stock). She advised that the family company had far undervalued the stock at the time of the sale. She stated that the stock was really worth $300K at the time the sale took place. She knows this because she was president of the company at the time. She stated that she objected to buying back the stock at so little but was over-ruled by other family members. She has stated that she has financial paperwork that proves they did not disclose the full value of the stock. My question is this: Was not disclosing the actual value of the stock illegal? and Does he have the ability to request of the court an accounting and asking for the full value of the stock?


Asked on 7/07/11, 7:51 am

1 Answer from Attorneys
Kevin B. Murphy Franchise Foundations, APC

As a Franchise Attorney I can say the following. Based on the facts stated, and the significant amount of the understated value, you likely have a case against them for misrepresentation or fraud. One element of your damages would be the fair market value at the time (less the $42k that you presumably received). Consult with a good business or franchise attorney in your area for specific advice.

Mr. Franchise - Kevin B. Murphy, B.S., M.B.A., J.D.

Franchise Foundations, a Professional Corporation

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Answered on 7/07/11, 2:21 pm


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