Judge Lets Napster Investor Case Proceed -- VCs Everywhere Freak Out

from the bad-news... dept

In a ruling that is bad news for investors everywhere, a judge has allowed the recording industry's lawsuit against the original Napster's investors continue. No matter what the legality of Napster was, this case represents a much bigger issue: are investors liable for what the company's they invest in do? Taken to its logical extreme, all the stockholders of companies like Enron and MCI should be responsible for the corporate misdeeds of those companies. Obviously, that's a bit ridiculous, but should major shareholders be responsible? If that's the case, life just got a lot harder for just about any VC, who has to be even more careful about what he or she invests in and some how has to personally guarantee the company won't break any laws.

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