Also known as: breaches of fiduciary duty · breaching fiduciary duty · fiduciary breach
Written by attorneys · grounded in primary & secondary sources — see below
A violation by a fiduciary of duties of loyalty or care owed to the beneficiary. The breach occurs when the fiduciary retains secret profits from a transaction with the beneficiary without full disclosure and approval from all persons to whom the duty is owed.
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Bobby Brady formed Boulder Construction and sold his own land to the new corporation at an inflated price while keeping the markup hidden. He disclosed the deal only to two early subscribers but not to all persons contemplated as original investors. The corporation later discovered the nondisclosure and sued to recover the secret profit.
Blake Butler, a corporate officer, used company funds to pay his personal debts through an account at Central Bank. The bank processed the transfers knowing Butler's fiduciary status but without inquiring further. The corporation sued the bank for participating in the breach.
Bianca Baker, a nonresident director, was sued in Delaware for breach of fiduciary duty arising from corporate decisions. Her only contact with Delaware was ownership of shares in the defendant corporation. The court assessed whether that ownership alone supported personal jurisdiction over the fiduciary claim.
Brian Bailey, a majority shareholder, approved a cash-out merger that eliminated minority interests without disclosing material facts about the company's value. Minority shareholders sued alleging the transaction constituted a breach of fiduciary duty even absent deception in the securities sense.
Brittany Bell brought a stockholder derivative action alleging directors committed breach of fiduciary duty and gross negligence in approving excessive brokerage commissions. The corporation sought recovery of the improper payments. The court addressed whether the breach claim entitled the parties to a jury trial.
Brianna Burke, a shareholder in a public corporation, sought to bring a derivative suit claiming directors breached fiduciary duties by authorizing political expenditures. The court considered whether corporate democracy mechanisms adequately addressed such internal governance claims.
A promoter breaches the duty by retaining secret profits on a sale of property to the corporation without full disclosure and approval from all persons contemplated as original investors. Disclosure only to some initial subscribers is insufficient. The corporation may then recover the profit or rescind the transaction.
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A bank may be liable if it takes an instrument from a fiduciary with knowledge of the fiduciary status and the transaction constitutes a breach, such as payment of the fiduciary's personal debt. Notice arises in specified circumstances under the UCC rules governing such instruments.
…against corporate directors in which recoveries are sought for the benefit of the corporation on the ground of claimed breaches of fiduciary duty on the part of directors." [^maj-6]: Admittedly, when one consents to suit in a forum, his expectation is enhanced that he may be haled into that State's courts. To this extent, I agree…
…By “corporate democracy,” presumably the Court means the rights of shareholders to vote and to bring derivative suits for breach of fiduciary duty
…willful misfeasance, bad faith, [and] gross negligence.” Both the individual defendants and Lehman Brothers were accused of breaches of fiduciary duty. It was alleged that the payments to Lehman Brothers constituted waste and spoliation, and that the contract between the corporation and Lehman Brothers had been violated. Petitioners…
…of securities, neither misrepresentation nor nondisclosure was a necessary element of a Rule 10b-5 action; the Rule reached “breaches of fiduciary duty
…another case involving "the reach and coverage of § 10(b)," 430 U. S., at 464, we considered whether § 10(b) "reached
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Stock ownership in a Delaware corporation without more does not create sufficient contacts for jurisdiction over a fiduciary duty claim. The claim is against the individual for breach, not a claim to the stock itself, so quasi in rem jurisdiction based solely on the shares fails minimum contacts analysis.
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No. A breach of fiduciary duty by majority shareholders, standing alone without deception, misrepresentation, or nondisclosure, does not violate the securities statutes. The conduct must involve manipulative or deceptive practices touching the sale or purchase of securities.
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Yes when the underlying corporate claim is legal in nature, such as one for money damages based on breach of fiduciary duty combined with gross negligence or breach of contract. The Seventh Amendment preserves the jury right that would have belonged to the corporation had it sued directly.
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