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I would assume it can use investor funds. Presumably, if a defense is a rational choice compared to a settlement, the use of investor funds helps avoid the loss of even more investor funds.

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I'm referring to the open criminal investigations against Theranos: http://www.bloomberg.com/news/articles/2016-04-18/theranos-i...

Is this investor money being used to defend against a suit about defrauding investors?

Companies frequently defend themselves against shareholder lawsuits, and naturally that money would otherwise provide value for the shareholders. Also, if the SEC fines them the (current) investors will basically be punished!

Oh fascinating, I hadn't thought about this before. So if the plaintiffs win a shareholder lawsuit, they're winning money at the expense of all of the other shareholders? And what about a class-action by all of the shareholders (is that even possible)? That'd just be the shareholders suing themselves? I guess that'd just be a forced liquidation/dividend in effect, right?

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