TY - JOUR
T1 - Wells Fargo and Company
T2 - Shareholder Derivative Action Should the Case Succeed in Federal Court for the Board of Directors?
AU - Bryant, Murray
AU - Sigurjonsson, Olaf
N1 - Published online: 27. November 2018
PY - 2019
Y1 - 2019
N2 - A shareholder derivative suit is an action allowed by the courts available for shareholders who believe that they have been harmed by actions of the board of directors and management. In most instances, particularly in the US state of Delaware, the actions are not allowed to proceed. The rationale being that the business judgment rule applies and as a consequence boards of directors are not held responsible for bad decisions and as a result, the business judgment is held to be supreme. Thus they are presumed to act with diligence, without self-interest and in the best interests of the corporation. In the case of the action against Wells Fargo and Company, Judge Tigar of the Northern District of California, has allowed the action to go ahead, on the basis that the directors had been negligent on multiple actions with respect to several proceedings by Federal Agencies against the bank and furthermore that the directors failed to hold senior management to account when concerns were raised from several sources about malfeasance occurring in the bank. The paper suggests the arguments both for the plaintiffs and the defendants in the case.
AB - A shareholder derivative suit is an action allowed by the courts available for shareholders who believe that they have been harmed by actions of the board of directors and management. In most instances, particularly in the US state of Delaware, the actions are not allowed to proceed. The rationale being that the business judgment rule applies and as a consequence boards of directors are not held responsible for bad decisions and as a result, the business judgment is held to be supreme. Thus they are presumed to act with diligence, without self-interest and in the best interests of the corporation. In the case of the action against Wells Fargo and Company, Judge Tigar of the Northern District of California, has allowed the action to go ahead, on the basis that the directors had been negligent on multiple actions with respect to several proceedings by Federal Agencies against the bank and furthermore that the directors failed to hold senior management to account when concerns were raised from several sources about malfeasance occurring in the bank. The paper suggests the arguments both for the plaintiffs and the defendants in the case.
KW - Business judgment rule
KW - Responsibility of boards of directors
KW - Shareholder derivative action
KW - Malfeasance
KW - Fraud
KW - Multiple firings
KW - Judicial hearing
KW - Strategy and performance measurement systems
KW - Business judgment rule
KW - Responsibility of boards of directors
KW - Shareholder derivative action
KW - Malfeasance
KW - Fraud
KW - Multiple firings
KW - Judicial hearing
KW - Strategy and performance measurement systems
U2 - 10.1504/IJCA.2019.103820
DO - 10.1504/IJCA.2019.103820
M3 - Journal article
SN - 1757-9848
VL - 11
JO - International Journal of Critical Accounting
JF - International Journal of Critical Accounting
IS - 1
ER -