| Directors' Ignorance of Corporate Affairs |
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| To carry out fully their duties and responsibilities to shareholders and the corporation, directors must be reasonably familiar with the workings of the corporation and have a general knowledge of how the corporation conducts its business. Directors are not expected to have superior knowledge about all business and financial aspects of the corporation, but they are assumed to have competent knowledge of the duties they have taken on when named to the board. More... |
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| Injunctive Relief Under Federal Antitrust Laws |
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| Injunctions may be sought to prevent a violation of federal antitrust laws from occurring or to halt an ongoing violation of the federal antitrust laws. Section 15 of the Clayton Act, 15 U.S.C.S. § 25, provides for injunctions sought by the government. The section gives U.S. District Courts jurisdiction to prevent and restrain violations of the Clayton Act and directs U.S. Attorneys, under the supervision of the Attorney General, to file actions seeking to prevent and restrain the violations. Section 16 of the Clayton Act, 15 U.S.C.S. § 26, authorizes "any person, firm, corporation, or association" to seek injunctive relief against threatened loss or damage by a violation of the antitrust laws. More... |
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| Investor Suitability Requirements for Broker Dealer Recommendations |
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| Broker dealers may make investment recommendations to investors only if the broker dealer first determines that the recommended investment would be suitable for the investor. Suitability depends upon the investor's tolerance for risk, other investments, income, net worth, financial requirements, and investment objectives. More... |
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| Degree of Culpability |
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| Typically, directors who conduct the corporation's business must exercise the care that an ordinary prudent person would exercise in the management of his or her own affairs under similar circumstances. This "ordinary" standard of care has been adopted by a majority of states and enacted in their corporation statutes. However, courts consistently interpret the culpability standard for the duty of care as one of gross negligence. More... |
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| Corporate Criminal Liability |
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| Corporations were not initially held criminally responsible for corporate activities. A corporation was considered to be a legally fictitious entity, incapable of forming the mens rea necessary to commit a criminal act. The Supreme Court ultimately rejected this notion in 1909 in New York Central & Hudson River Railroad v. U.S. A railroad company employee paid rebates to shippers in violation of federal law. The court upheld the corporation's criminal conviction, finding no reason that corporations could not be held "responsible for and charged with the knowledge and purposes of their agents, acting within the authority conferred upon them." The Supreme Court concluded that criminal liability could be imputed to the corporation based on the benefit it received as a result of the criminal acts of its agents. The case and its progeny have essentially imported the doctrine of respondeat superior from tort law into the corporate criminal realm. A corporation may be convicted for its agent's unlawful acts when the agent acted within the scope of his or her actual or apparent authority. Another theory of corporate criminal liability is the "collective knowledge doctrine." As knowledge of criminal activity is often the scienter element of a particular crime, the requisite knowledge can be imputed to the corporation based on the collective knowledge of the directors and officers. More... |
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