Leonard Riggio, the founder of Barnes & Noble has agreed to settle a shareholder lawsuit that alleged that he wrongfully profited by pushing the bookstore chain to buy a college textbook firm that was also owned by him. Under the terms of the settlement, Riggio, who also serves as the chairman of Barnes & Noble, will pay $29 million to settle those allegations.
The shareholder lawsuit had alleged that Riggio had unfairly profited from the buyout of the textbook firm, Barnes & Noble College Booksellers in 2009. The lawsuit claims that the College Booksellers buyout was designed to unfairly reward Riggio, and was a waste of the assets of the company.
The lawsuit had been filed by shareholders including pension funds from Pennsylvania and Louisiana. Riggio as well as other directors of the company were sued after Riggio announced the acquisition of Barnes & Noble College Booksellers Inc.. According to the shareholders, the board of Barnes & Noble simply allowed Riggio to dictate the terms of the buyout, without requiring them to look at other offers. As a result, Riggio became richer from the buyout, at the expense of shareholders.
The settlement also includes a request for the legal fees of the plaintiff lawyers and expenses of about $10 million. A judge will review those additional requests later. The settlement will be paid out by Riggio, and will not be covered by the insurance coverage of Barnes & Noble. Riggio’s representatives have said that he will pay the settlement out of the proceeds of the company’s purchase of Barnes & Noble College Booksellers. That unit closed in 2009.
If you’re a shareholder who is facing losses as a result of corporate misconduct, consult with a shareholder dispute lawyer who has specific experience in shareholder litigation.