Tuesday, September 1, 2009

Fiduciary Duties

Now THAT's a title line that always gets a lot of hits.

Regardless, I'm referring to an article that appeared in the Stanford Law Review last year under the full title "Fiduciary Duties for Activist Shareholders," by Iman Anabtawi and Lynn Stout.

The question they raised is: do activist minority shareholders in publicly listed companies have fiduciary obligations? "We believe fiduciary duty doctrine can and should be interpreted in a new way that takes into account changes in the corporate landscape and reaches such opportunistic behavior. Indeed, we believe that the law of fiduciary duty is uniquely suited to address the growing problem that opportunistic shareholder activism poses for corporate governance."

Sounds to me like high-falutin' language for a new tool that will let management entrench itself. Now, if you challenge them, they'll cook up a charge that you aren't a good fiduciary. An ivory-tower idea that could, like many ivory tower ideas before it, do a good deal of harm if unleashed in real world circumstances.

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