... Litigation, the number of Delaware corporations with an exclusive forum provision in their certifi... statement, in dicta, that "if boards of directors and stockholders believe that a particular forum w... action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employ...
This article examines the federal government's growing use of 18 USC § 1346 to prosecute public company executives for breaching their fiduciary duties. Section 1346 is a controversial but under-examined statute making it a felony to engage in a scheme "to deprive another of the intangible right of honest services." Although enacted by Congress over twenty years ago, the Supreme Court repeatedly declined to review the statute, until now. The questions before the Supreme Court are of particular interest to public company executives and their professional advisors. Traditionally, Delaware law has governed the content and enforcement of executives' legal duties, largely protecting public company fiduciaries from civil liability. Now, with the emergence of honest services fraud as a weapon ...
... prosecution of corporate officers and directors for any crimes that contributed to the economic do... courts reason, the defendant must owe some duty to provide honest services to some person who has ... their fiduciary duties to the corporation. As the civil law has developed over time, private...; rather, it is part of the duty of loyalty owed by directors to the corporation.64. Having summari...
... of contract, fraud, and breach of fiduciary duty. Jernberg voluntarily dismissed the breach of... proving that Jernberg's sale of his corporation to her was fair and reasonable to him. BACKGROUND.... court instructed the jury both that Mann owed a fiduciary duty to Jernberg and that she bore "th... elsewhere, that a corporate officer or director owes a fiduciary duty of fair dealing in respect t...
This article suggests that statutes governing both corporations and limited liability companies should require all owners to read several warnings about the dangers of a lack of advance planning before starting a business, or before purchasing an equity interest in an existing closely held business. Part I of this article reviews the current landscape of available business forms and details the many ways in which the majority owners of a business can take advantage of the minority owners. Part I also reviews the many ways in which the minority owner could have protected himself -- if he had the foresight to do so. Part II then reviews the main statutory and judicial responses to the problem of minority owner oppression and discusses their inadequacy. After discussing some other suggesti...
... one-third of the equity and serve as directors of the corporation (or managers of the LLC). Altho... that their actions have breached the fiduciary duties that shareholders in a closely held corpora...Suing the majority owners under a fiduciary-duty claim or bringing an involuntary dissolution claim... found that a member of a member-managed LLC owed fiduciary duties to another member, even though th...
...) partners to partners, (28) corporate directors to shareholders, (29) general partners to limited ... scope of the fiduciary duty that the broker owed the plaintiffs. (47) The court of appeals reasoned...1992) (officers and directors of a corporation have fiduciary obligations to the corporation and ...
... ROBERT COOK, DIRECTOR, DIVISION OF TRADING AND MARKETS, ... DIRECTOR, DIVISION OF CORPORATION FINANCE, SECURITIES AND EXCHANGE C... in investments proceeds -- proceeds that he owed to investors in his fund. On March 3rd, the SEC ch..., which has proposed a new definition of fiduciary, which would significant modify 35 years of establ... the adoption of a uniform fiduciary duty standard for broker-dealers and investment advisor...
In July 2008, bankruptcy courts across the US prepared themselves for a busy season. As many as 5,664 companies sought to liquidate or restructure that month alone, a 57% increase from the prior year. This Note looks behind the shield of D&O insurance and examines its treatment under the Bankruptcy Code. Part I provides an overview of the duties of directors and officers of a corporation, as well as the protections they receive under the business judgment rule and indemnification contracts. Part II explains the three different "sides" of D&O insurance policies. Part III discusses basic bankruptcy concepts including directors' and officers' duties in bankruptcy, automatic stay, and property of the estate provisions of the Code, as well as the treatment of contracts in bankruptcy....
...Directors and officers owe fiduciary duties of due care, good faith and loyalty6 to me ... the shareholders of those corporations.8 The duty of care requires directors and officers to conduct... to pay for giving up the fiduciary duties owed to them - there seems to be something inherently u...
... example, the purchase or sale by a corporation of its own securities constitutes a purchase or sa... or sell any security in breach of a fiduciary duty. (177) In United States v. O'Hagan, the Supre... violators from serving as officers or directors of public companies. The 1990 Act provides that a ... which a corporate insider breaches a duty owed to the corporation's stockholders by trading on co...
This article explores the competing interests between director authority and accountability within the doctrinal developments underpinning the arguments for and against director oversight liability. The historic losses suffered by companies entangled in the web of subprime mortgages, collateralized debt holdings, and the ensuing credit crisis have brought the role of corporate directors as risk managers under renewed public scrutiny. Directors' authority and their accountability to shareholders are two critical pieces to striking the appropriate balance among the roles, rights, and responsibilities of directors, officers, shareholders, and other corporate constituencies who operate within the corporate power puzzle. Numerous shareholder derivative suits brought in the wake of such losse...
... That authority, coupled with directors' fiduciary duties of loyalty (and its derivative duties of go... to steer the direction of the corporation.8 Directors' authority is underscored by courts' r... corporation in accordance with the fiduciary duty of loyalty, which requires "good faith"-raises dif... and its shareholders and into a subsidiary owed by AIG's top management.158 Certain failures to ex...
In United States v. O'Hagan, the Supreme Court established that there are two complementary theories of insider trading liability, each with a fiduciary principle at its core. Under the "classical" theory, liability is premised on a fiduciary's deceptive silence about material nonpublic information in a securities transaction with corporate shareholders. Under the "misappropriation " theory, liability is premised on a fiduciary's deception of the source of the material nonpublic information used in the securities transaction. This Article analyzes the law of insider trading, with a focus on developments since O'Hagan. Based on a comprehensive review of lower-court decisions, settled enforcement proceedings, and rules promulgated by the Securities and Exchange Commission, it argues that...
...-5 thereunder 5 when they trade their corporation's securities while aware of material nonpublic inf...." 7 Insiders (namely, officers, directors, and employees) who are aware of material nonpubli..."limited to those who breach[ed] a recognized duty" owed to the information's source. 15 . Despite ...
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