BU231 Lecture Notes - Lecture 21: Financial Statement, Strict Liability, Consumer Protection
Document Summary
Directors owe fiduciary duty to the corporation itself - not stakeholders/shareholders. Fiduciary obligation is to do what is best interest of the corporation. Prevent fraudulent practices in the securities industry. To obtain full disclosure of information to investors and public. Misrepresentation- civil libaility for both primary and secondary markets. Technically governed by the securities act - as soon as number of shareholders exceeds 50 deemed too big. Company has to be organized a certain way - Span of people who get sued for mistakes bigger and more personal: shareholders sell between themselves in the secondary exchange market - match existing owners with new buyers. Liability for mistakes continues in the secondary market. Only way is to use a registered and licenced securities dealer - to offer shares: now the independent valuer to ensure to shares are good. Misrepresentation value of facebook in ipo: caused major class action lawsuits 2. Civil: negligence, contract - indoor management rule.
