individual stockholder liabilitya friend says his accountant told him that if certain stocks, reits, mlps etc have judgements against them that they cannot satisfy, then the party can come after individual stockholders. I never heard of this. Can you comment?? thank you.
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I am not an accountant or tax lawyer, but my experience as a compliance officer for a B/D would lead me to this answer. Most publicly traded stocks, MLP’s, REIT’s etc would have you, as an “investor” owning shares of stock in a corporation, limited partnership units in an MLP or non-managing LLC member, or the owner of an ETN [which is basically a promissory note issued by the issuer of the ETN]. Assuming your relationship with the entity you are invested in is limited to this, you are not anywhere in the lineup of liable entities if the underlying company/mlp/reit/etn should go belly up. However, if you as an investor in a private placement have wound up being not a limited partner or non-managing member of an LLC, but are a partner in the partnership, or one of the managing members of the LLC then you could very well be in line for a judgment against you. Also, if you own stock [public or private entity] and are also an active manager of that corporation, then it is possible, under certain circumstances, for a judge to “pierce” the corporate veil and go after you.
HTH
Ken
PS.. best advice in any individual situation is to consult with a qualified and experienced securities lawyer if you have a real concern
Can you tell us more about this? I’d want to find out more details.