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Differentiate the direct suit or a derivative suit

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Question: Emory B. Perry, who represents numerous shareholders, owned stock of The RAMP Corporation, a now-defunct company that developed communications technologies for the health care industry. Darryl R. Cohen and Andrew M. Brown are former directors of RAMP. Perry fi led suit against Cohen and Brown in December 2004, alleging negligence, common law fraud, statutory fraud, and conspiracy. Perry claimed that Cohen and Brown made numerous misrepresentations in their original petition and that he received false information as a result. Perry argued that both men's misrepresentations induced the stockholders to hold and refrain from selling their RAMP stock. Is this an example of a direct suit or a derivative suit? Why?

Reference no: EM131675681

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