BA260 Week 6 Assignment
This is clearly fraudulent activity on the part of Jimmy and Johnny. As a shareholder, they are definitely in their right to sue Jimmy claiming he “violated his fiduciary duty of loyalty” It is clear that Jimmy and Johnny schemed to make a quick buck at the expense of shareholders. “A partner’s duty of care is limited to refraining from negligent or reckless conduct, intentional misconduct and violations of the law.” Jimmy and Johnny both violated all of these standards of conduct required by fiduciary duties. To make the shareholders case even more relevant Jimmy and Johnny never disclosed they were related and worked together on the deal before Jimmy submitted it to Television Inc. this is gross intentional misconduct. Yes the shareholder is correct.
The court system takes fiduciary responsibilities seriously. Any breach of fiduciary responsibilities can land you in some serious trouble with your company’s shareholders and boards. “The courts stringently examine transactions between people involved in fiduciary relationships toward one another. Particular scrutiny is placed upon any transaction by which a dominant individual obtains any advantage or profit at the expense of the party under his or her influence. Such transaction, in which Undue Influence of the fiduciary can be established, is void.” (http://legal-dictionary.thefreedictionary.com/fiduciary+duty)
Avoiding a breach of fiduciary duty is really easy if you are not maliciously trying to fraud a company or make unethical choices. Fiduciary rule is simply putting the clients best interests ahead of their own. Simply involving the board of directors and ensuring board resolutions are created every time a major decision is made. This ensures the board and shareholders know exactly what’s going on and there are no surprises. “It’s also important to understand the basics of fiduciary duty so that you know what’s to be expected of you, and what actions might be in breach of your duty. Understanding and avoiding prohibited transactions” “will also help you avoid breaching your duties.” (https://www.rocketlawyer.com/article/what-is-a-breach-of-fiduciary-duty-and-how-to-avoid-it-cb.rl)
Another interesting turn, President Trump has recently has asked the Labor Department to review the fiduciary rules set to go in effect April of this year. He claims “fiduciary rule will limit investment choices and burden the industry with unnecessary regulations.” “President Trump was not convinced that any lower consumer costs associated with the enactment of the fiduciary rule would be enough to overcomes its perceived shortfalls.” It will be interesting what the Department of Labor will come up with if they end up doing the review. The long term results of this rule could be catastrophic, so having another organization look into it is a good idea. (https://www.forbes.com/sites/greatspeculations/2017/02/03/trump-the-fiduciary-rule-and-your-ira/#3aa34e724a3chttps://www.forbes.com/sites/greatspeculations/2017/02/03/trump-the-fiduciary-rule-and-your-ira/#3aa34e724a3c)
Business Law Texts and Exercises, Eighth Edition, Chapter 29