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A stockholder of a Delaware corporation has a statutory right to inspect the books and records of the corporation under Section 220 of the Delaware General Corporation Law. The statute prescribes form and manner requirements for a request, chief among them that the stockholder has a “proper purpose” for the inspection. It is not uncommon for stockholders, whether acting together or not, simultaneously to pursue a federal securities class action and a state court books-and-records initiative, ostensibly to investigate a possible derivative suit relating to the same core facts as the federal suit. It is now generally accepted that in enacting the Private Securities Litigation Reform Act (“PSLRA”) and the Securities Litigation Uniform Standards Act (“SLUSA”) Congress did not intend categorically to preempt lawsuits by stockholders under Section 220 seeking to compel an inspection of books and records related to the conduct at issue in a parallel federal class action. The intersection of a books-and-records action with a related putative federal securities class action raises important jurisdictional and strategic issues for the corporation and its management. Recent decisions from the Delaware Court of Chancery and elsewhere provide importance guidance on the interplay between the PSLRA and SLUSA, and a stockholder’s demand rights under Section 220.

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