Corporate Fiduciary Duties and Prudential Regulation of Financial Institutions

2015 ◽  
Vol 16 (1) ◽  
Author(s):  
Edward M. Iacobucci
Keyword(s):  
Supreme Court ◽  
Financial Institutions ◽  
Financial Regulation ◽  
Fiduciary Duty ◽  
Court Cases ◽  
Fiduciary Duties ◽  
The Supreme Court ◽  
Recent Developments ◽  
Clear Statement ◽  
Fiduciary Liability

AbstractWhile corporate fiduciary duties in many jurisdictions are generally understood to be owed to shareholders, recent Canadian Supreme Court cases have held that directors owe their duties to the corporation, period, not to shareholders or any other stakeholders. This development has introduced significant indeterminacy to the law since it is not clear what such a conception of the duty requires. The Supreme Court did, however, make one clear statement: it held that directors owe a fiduciary duty to ensure that their corporations obey statutory law. Such a duty encourages compliance with law, but may over-encourage compliance: individual directors do not necessarily gain personally from legal breaches, but may lose personally from them because of fiduciary liability, so they will have excessively strong incentives to avoid such breaches. The Article connects the fiduciary duty to obey law with recent developments in financial regulation that have increased the obligations on directors of financial institutions to oversee risk. By requiring directors to be engaged with risk at a governance level, regulators have enhanced the probability that directors will face liability under their fiduciary duties if their institutions do not comply with financial regulations. As the Article explains, the policy tradeoff between enhanced compliance benefits and over-compliance costs of fiduciary liability is different in the context of financial regulation from that in other settings. For example, significant corporate penalties, as opposed to penalties borne by individual directors, may be inconsistent with the prudential goals of regulation, perhaps because of toobig- to-fail concerns. The fiduciary duty to cause the corporation to obey financial regulation, and a stricter application of this duty than the highly deferential standard that exists in Delaware law, has advantages that do not exist in other legal and regulatory contexts.

FIDUCIARY LIABILITY AND CONTRIBUTION TO LOSS

2001 ◽  
Vol 60 (3) ◽  
pp. 441-492
Author(s):  
Matthew D.J. Conaglen
Keyword(s):  
Supreme Court ◽  
South Australia ◽  
Fiduciary Duty ◽  
Breach Of Contract ◽  
High Court ◽  
The Supreme Court ◽  
Fiduciary Liability

Having made a successful takeover bid for Western United, Kia Ora found that it had paid $25.7m in cash and issued 67.9m $1 shares in return for Western United shares worth only $6.4m. Kia Ora successfully sued several former directors. The High Court of Australia’s decision in Pilmer v. Duke Group Ltd. (in liq.) (2001) 180 A.L.R. 249 concerns aspects of the liability of Kia Ora’s accountants, Nelson Wheeler, for providing a report stating that the price proposed for the Western United shares was fair and reasonable. The report was prepared incompetently and Nelson Wheeler were held liable by the Full Court of the Supreme Court of South Australia for breach of contract, negligence and breach of fiduciary duty. The High Court allowed an appeal by Nelson Wheeler.

scholarly journals Extending The Scope Of Proprietary Remedies To Recovery Of Pure Profits From Successful Investment Of Bribes: The Endgame In Lister V Stubbs

2015 ◽  
Author(s):  
Aiman Nariman Mohd Sulaiman ◽  
Mohsin Hingun
Keyword(s):  
Hong Kong ◽  
Supreme Court ◽  
Common Law ◽  
Attorney General ◽  
Fiduciary Duty ◽  
Privy Council ◽  
Fiduciary Duties ◽  
The Supreme Court ◽  
Court Of Appeal ◽  
Harsh Reality

For more than a century Lister v Stubbs (1890) 45 Ch D 1 stood as authoritative Court of Appeal judgment denying the recovery of profits acquired from the successful investment of gains obtained in breach of fiduciary duties. The rule was rationalized on the basis that while the claimant was entitled to the proceeds so unlawfully obtained, he lacked any form of proprietary title to the profits accumulated by the defaulting fiduciary. The harsh reality of the rule produced an unfair outcome to the claimant and the Privy Council refused to apply it in Attorney-General for Hong Kong v Reid [1994] 1 AC 324. The rule also fell out of favour in other leading commonwealth jurisdictions and recently the English courts at all levels had the opportunity to reassess its relevance when the Supreme Court in FHR European Ventures LLP and others v Cedar Capital Partners LLC [2014] 4 All ER 79 consigned it to oblivion. The objective of this paper is to analyse the merits and the deficiencies of the rule and show how the judges of the English courts were prepared to act on policy ground, in comity with other common law jurisdictions in upholding justice in a borderless world. Keywords: breach of Fiduciary duty; Accounts of profits; Proprietary interests; Recovery of pure profits.

Fiduciaries, bribes and constructive trusts—a policy-based justification

2019 ◽  
Vol 25 (8) ◽  
pp. 835-840
Author(s):  
Mark Belshaw
Keyword(s):  
Supreme Court ◽  
Fiduciary Duty ◽  
Fiduciary Duties ◽  
The Supreme Court ◽  
The Law

Abstract The Supreme Court in FHR European Ventures LLP v Cedar Capital Partners LLC [2015] AC 250 made clear that a fiduciary who breaches his fiduciary duties by receiving a bribe will hold that bribe on constructive trust for his principal. This article suggests that the law’s response to a breach of fiduciary duty is focused on the wrong of breach, rather than on enforcing the fiduciary’s primary duties. Viewed through this prism, a more thorough justification than that identified by the Supreme Court is necessary for imposing a constructive trust over a bribe. This article suggests that there is no principled reason for imposing a constructive trust, but that the justification is rooted in the policies underlying the entirety of the law of fiduciary duties—deterrence and prophylaxis.

PROPRIETARY REMEDIES FOR BREACH OF FIDUCIARY DUTY

2014 ◽  
Vol 73 (3) ◽  
pp. 490-493
Author(s):  
Matthew Conaglen
Keyword(s):  
Hong Kong ◽  
Informed Consent ◽  
Supreme Court ◽  
Attorney General ◽  
Fiduciary Duty ◽  
Fiduciary Duties ◽  
Trade Finance ◽  
The Supreme Court ◽  
English Law ◽  
Court Of Appeal

FHR bought a long lease for €211.5 million. Cedar Capital conducted the negotiations on FHR's behalf, but also received a €10 million commission from the vendor. On becoming aware of this commission, FHR sought to recover it from Cedar Capital. As its negotiating agent, Cedar Capital owed fiduciary duties to FHR, and had not obtained FHR's fully informed consent to the commission. Cedar Capital therefore had to account to FHR for the commission. However, applying the Court of Appeal's decision in Sinclair Investments (UK) Ltd. v Versailles Trade Finance Ltd. [2011] EWCA Civ 347, [2012] Ch. 453, Simon J. held that the remedy was purely personal; FHR could not assert a proprietary constructive trust over the €10 million: FHR European Ventures LLP v Mankarious [2011] EWHC 2999 (Ch). The Court of Appeal allowed an appeal as to remedy, distinguishing the facts from those in Sinclair v Versailles, but also casting some doubt on the correctness of that decision: [2013] EWCA Civ 17, [2014] Ch. 1. The Supreme Court was thus required to pass judgment on the voluminous debate as to whether English law should follow Lister & Co. v Stubbs (1890) 45 Ch.D. 1, or Attorney-General for Hong Kong v Reid [1994] 1 A.C. 324.

scholarly journals Are Bank Fiduciaries Special?

2017 ◽  
Author(s):  
Robert C. Hockett
Keyword(s):  
Collective Action ◽  
Financial Institutions ◽  
Financial Crises ◽  
Financial Regulation ◽  
Banking Regulation ◽  
Fiduciary Duty ◽  
Individual Rationality ◽  
Fiduciary Duties ◽  
Collective Action Problems ◽  
Argument Proceeds

A growing body of post-crisis legal and economic literature suggests that future financial crises might be averted by tinkering with the internal governance structures of banks and other financial institutions. In particular, contributors to this literature propose tightening the fiduciary duties under which officers and directors of the relevant financial institutions labor. I argue in this symposium article that such proposals are doomed to failure under all circumstances save one - namely, that under which the relevant financial institutions are in whole or in part treated as publicly owned.The argument proceeds in two parts. I first show that the financial dysfunctions that culminate in financial crises are not primarily the products of defects in individual rationality or morality, ubiquitous as such defects of course always are. Rather, I argue, fragility in the financial markets stems from what I elsewhere dub recursive collective action problems, pursuant to which multiple acts of individual rationality aggregate into instances of collective calamity. This form of vulnerability is endemic to banking and financial markets.I next show that the best understanding of fiduciary obligation is that pursuant to which she who is subject to the obligation minimizes the 'space,' or separateness, that subsists between her and the beneficiary of her obligation. Ideal fiduciaries, in other words, stand-in for those to whom they are fiduciaries, while legal allowances for departure from this exacting ideal amount to pragmatic compromises we make with the brute fact of fiduciaries' being separate persons with interests of their own.It follows from these two lines of argument that merely tightening fiduciary duties back up in the case of financial fiduciaries will be no help at all if our object is to address financial fragility. It will simply ensure that fiduciaries behave more as their beneficiaries would behave - beneficiaries whose individually rational behavior is precisely the problem where markets beset by recursive collective action problems are concerned.Because the only way to solve a collective action problem is through collective agency, the only way to fashion a 'fiduciary fix' to financial dysfunction is to reconceive financial fiduciaries as collective agents, not individual agents. And that is to reconceive financial institutions as public institutions.Keywords: Banks, Banking, Banking Regulation, Collective Action Problems, Fiduciaries, Fiduciary Duty, Fiduciary Duties, Fiduciary Obligation, Finance, Financial Institutions, Financial Regulation, Public Ownership, Recursive Collective Action Problems

scholarly journals A Review of the Recent Developments of Green Banking in Bangladesh

2021 ◽  
Vol 13 (4) ◽  
pp. 1904
Author(s):  
Fatema Khairunnessa ◽  
Diego A. Vazquez-Brust ◽  
Natalia Yakovleva
Keyword(s):  
Central Bank ◽  
Financial Institutions ◽  
Financial Regulation ◽  
Economic Transition ◽  
Secondary Data ◽  
Developed Countries ◽  
Annual Reports ◽  
Infrastructure Development ◽  
Recent Developments ◽  
The Developed Countries

This paper aims to explore the emergence of ‘Green Banking’ in Bangladesh, with a focus on the role of financial regulation and regulators in greening the financial sector. It also examines the contribution and involvement of banks and non-bank financial institutions in promoting green economic transition. The study is based on the review of secondary data collected from various sources, such as quarterly reports, annual reports, websites of the central bank of Bangladesh, and other commercial banks and non-bank financial institutions as well as various articles, and newspapers reports on green banking in Bangladesh. The collected data is reviewed using descriptive statistics. The research results reveal that the central bank of Bangladesh played a major role in greening the financial system of the country by implementing various green policies and regulatory measures. Although Bangladesh is still far behind the developed countries in terms of environmental performance, the country has made a remarkable progress in initiating and expanding green banking practices, infrastructure development, and accelerating green growth in recent years.

EXPRESSIVE MEANING, RACE, AND THE LAW:

Legal Theory ◽  
1999 ◽  
Vol 5 (1) ◽  
pp. 75-99
Author(s):  
Andrew Altman
Keyword(s):  
Supreme Court ◽  
Legal Reasoning ◽  
Court Cases ◽  
The Supreme Court ◽  
Expressive Meaning ◽  
The Law

Recently, legal and social thinkers have turned to the idea that actions possess a nonlinguistic meaning, called “expressive meaning.” In this article I examine the idea of expressive meaning and its role in legal reasoning. My focus is on a series of U.S. Supreme Court cases involving constitutional challenges to election districts drawn on the basis of race. The Supreme Court used the idea of expressive meaning in striking down the districts. After explicating the idea of expressive meaning, I explain and criticize the Court’s reasoning. I distinguish the approach of Justices Thomas and Scalia, who hold that all uses of race in districting do constitutional harm, from that of Justice O’Connor, who distinguishes uses of race that do constitutional harm from those that do not. I contend that Justice O’Connor is right to make the distinction but she draws the line using a questionable standard. A more defensible standard would be more accommodating to the districts that the Court invalidated.

scholarly journals Retiring Forum Non Conveniens

2018 ◽  
Author(s):  
Maggie Gardner
Keyword(s):  
New York ◽  
Supreme Court ◽  
Federal Courts ◽  
New York University ◽  
The Supreme Court ◽  
Recent Developments ◽  
Forum Non Conveniens ◽  
Scope Of Application

92 New York University Law Review 390 (2017)When it comes to transnational litigation in the federal courts, it is time to retire the doctrine of forum non conveniens. The doctrine, which allows judges to decline jurisdiction in cases they believe would be better heard in foreign courts, is meant to promote international comity and protect defendant fairness. But it is not well-designed for the former purpose, and given recent developments at the Supreme Court, it is dangerously redundant when it comes to the latter. This Article seeks to demythologize forum non conveniens, to question its continuing relevance, and to encourage the courts and Congress to narrow its scope of application so that, when the time is right, it may be fully interred.

scholarly journals Fiduciary Law and the Constructive Trust: Perfecting the Fiduciary Undertaking

2012 ◽  
Vol 49 (3) ◽  
pp. 655 ◽  
Author(s):  
Ciara Toole
Keyword(s):  
Supreme Court ◽  
Fiduciary Duty ◽  
Supreme Court Of Canada ◽  
Best Interest ◽  
The Supreme Court ◽  
Fiduciary Obligations ◽  
Breach Of Duty ◽  
Fiduciary Relationships

Two recent unanimous decisions from the Supreme Court of Canada in Galambos v Perez and Alberta v Elder Advocates of Alberta Society have narrowed and refreshed the requirements for recognizing fiduciary relationships and obligations. All fiduciary obligations must be founded by an undertaking, either express or implied, on the part of the fiduciary to act in the best interest of the beneficiary. At the heart of the fiduciary obligation, the undertaking of a fiduciary may also serve as a foundation for the goals of fiduciary accountability. The developing “Galambos approach” remains incomplete in its application in this regard. In the spirit of Galambos and Elder Advocates, I propose that the undertaking of the fiduciary can provide principled guidance in the availability of gain-based relief for breach of fiduciary duty. Particularly, I suggest that the imposition of a constructive trust as proprietary gain-based relief may be rationalized under the objective of perfecting or enforcing the fiduciary undertaking. To demonstrate my proposal, I investigate three example undertakings and breaches of fiduciary duty in which the fiduciary acquires property through the breach of duty. By grounding this overall discussion towards a conceptual remedial goal of enforcing the fiduciary’s undertaking, Galambos may spark the development of a principled approach to understanding both the making and the breach of fiduciary obligations.

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