Discovering the Madoff Scheme by 1997-1998

The saga of Ponzi scheme king Bernard Madoff continues with the filing of a new action by New York Attorney General Andrew Cuomo against an investment adviser who is alleged to have had information of the fraud by the late 1990s. The complaint suggests that millions of dollars in investor losses...

Delaware Supreme Court Addresses Appropriate Remedy for Breach of Fiduciary Duty

Lingo v. Lingo, No. 713, 2009 (Del. Supr., June 10, 2010), read opinion here. The factual background of this Delaware Supreme Court decision involves a faithless fiduciary who abused the Power of Attorney given to her, but the part of the opinion that will be of interest for readers of this blog...

Delaware Court of Chancery Refuses to Impose Fiduciary Duties on Parties to LLC Agreement

Related Westpac LLC v. JER Snowmass LLC , C.A. No. 5001-VCS (Del. Ch. July 23, 2010), read opinion here . Brief Overview This case involves a suit between members of two LLCs formed to pursue a land development project in Snowmass, Colorado. When the funding needs of the project exceeded the...

Chancery Upholds Poision Pill of Barnes & Noble; Rejects Fiduciary Claims

Yucaipa American Alliance Fund II, L.P. v Riggio , C.A. No. 5465-VCS (Del. Ch. Aug. 12, 2010), read post-trial opinion here. This Delaware Court of Chancery opinion rejected breach of fiduciary duty claims and upheld the poision pill defense that Barnes & Noble implemented as part of a plan...

Duty of Disclosure

Recent decisions of the Delaware courts have clarified the remedies for breaches of the duty of disclosure. The duty of disclosure owed by directors to stockholders is not a separate fiduciary duty, but instead an application of the duties of care and loyalty. In In re Transkaryotic Therapies, Inc. ...

Chancery Rejects Request to Enjoin Hertz Takeover of Car Rental Rival Dollar Thrifty

In Re Dollar Thrifty Shareholder Litigation, C.A. No. 5458 (Del. Ch., Sept. 8, 2010), read 84-page opinion here . The Court of Chancery issued this opinion last night, denying the request for a preliminary injunction to block the merger by which Hertz would buy the shares of its smaller car rental...

This Investment Adviser Should Have Listened to Gordon Gekko

In the initial Wall Street film, financier Gordon Gekko says the now-famous line "greed is good." In the recently released sequel, Wall Street, Money Never Sleeps , Mr. Gekko repeats the line, noting "now it seems it's legal." Later he amplifies citing the old investment saw...

Statutory Fiduciary Duties, Unocal, and Revlon Outside Delaware

I've written on this before . In the 1980s during the great takeover boom and hollowing out of the industrial heartland, many states adopted amendments to their corporate codes that codified directors' fiduciary duties. In general, these provisions made it clear that a director need not "maximize...

THIS WEEK IN SECURITIES LITIGATION (Week ending June 1, 2012)

SEC enforcement this holiday shortened week dismissed the remaining defendants in an insider trading case centered on an international take over which had been filed largely on the trading and within days of the announcement. The Court cited discovery difficulties which in part traced to the defendants...

Third Circuit Rejects Claim That Fiduciary Duty Required For Insider Trading

Insider trading cases frequently turn on the nature of the relationship between the trader and the person who is the source of information. The breach of that relationship of trust and confidence can supply the statutory element of deception, the predicate for a violation of Exchange Act Section 10(b...