On the Sufficiency of Corporate Regulation as an Alternative to Corporate Criminal Liability
This Article addresses the current debate over whether criminal corporate misconduct can be better managed by more corporate regulation, specifically placing more regulatory focus on personal, individual liability of the directors and officers of these corporations. The Author brings to the surface the most significant issues causing this debate, namely the standard procedural and substantive hurdles on which potential plaintiffs-usually shareholders-stumble over in their attempt to hold directors and officers liable for breaching fiduciary duties. Corporate laws are first addressed, with the Author illustrating how precedent has led to little to no individual liability for directors, especially outside directors. Securities laws are next examined, with no substantial difference found. The Author includes the findings of a study indicating that during the twenty-five-year period examined, no cases held the directors themselves personally liable under securities actions. After noting a few additional situations in which directors see very little risk of personal liability, the Author addresses, and discounts, the leading arguments for heavier corporate regulation by means of individual liability. In addressing each argument, the Author points out-as discussed in detail in Part I of the Article-that current corporate regulation has essentially eliminated individual liability for directors. The Author notes that if higher legal sanctions are placed on directors and officers, corporations will still almost always foot the bill as a result of their insurance and indemnification provisions. The Author concludes by opining that the real issue may well be that the corporate and securities laws themselves are insufficient to support such regulation.
Stetson Law Review
Fairfax, Lisa, "On the Sufficiency of Corporate Regulation as an Alternative to Corporate Criminal Liability" (2011). All Faculty Scholarship. 3234.