SEC, Press Release, SEC Proposes to Enhance Protections and Preserve Choice for Retail Investors in Their Relationships With Investment Professionals (Apr. 18, 2018)

Under proposed Regulation Best Interest, a broker-dealer would be required to act in the best interest of a retail customer when making a recommendation of any securities transaction or investment strategy involving securities to a retail customer. Regulation Best Interest is designed to make it clear that a broker-dealer may not put its financial interests ahead of the interests of a retail customer in making recommendations.

In addition to the proposed enhancements to the standard of conduct for broker-dealers in Regulation Best Interest, the Commission proposed an interpretation to reaffirm and, in some cases, clarify the Commission’s views of the fiduciary duty that investment advisers owe to their clients. By highlighting principles relevant to the fiduciary duty, investment advisers and their clients would have greater clarity about advisers’ legal obligations.

Next, the Commission proposed to help address investor confusion about the nature of their relationships with investment professionals through a new short-form disclosure document — a customer or client relationship summary. Form CRS would provide retail investors with simple, easy-to-understand information about the nature of their relationship with their investment professional, and would supplement other more detailed disclosures. For advisers, additional information can be found in Form ADV. For broker-dealers, disclosures of the material facts relating to the scope and terms of the relationship would be required under Regulation Best Interest.

Finally, the Commission proposed to restrict certain broker-dealers and their financial professionals from using the terms “adviser” or “advisor” as part of their name or title with retail investors. Investment advisers and broker-dealers would also need to disclose their registration status with the Commission in certain retail investor communications.

via Benjamin P. Edwards

Wall Street Journal, ‘Fiduciary Rule’ Poised for Second Life Under Trump Administration, Jan. 10, 2018

The Securities and Exchange Commission is accelerating work on its own version of the “fiduciary rule,” a regulation issued by the Labor Department that put restraints on brokers handling retirement accounts. The SEC’s effort would affect all brokerage accounts-not just those for retirement funds-and could ban brokers from calling themselves financial advisers unless they accept a strict duty of loyalty to clients.


Quadrant Structured Products Co. v. Vertin, 2015 WL 2062115 (Del. Ch. May 4, 2015):

Plaintiff Quadrant Structured Products Company, Ltd. (“Quadrant”) owns debt securities issued by defendant Athilon Capital Corp. (“Athilon” or the “Company”), a Delaware corporation. Quadrant contends that Athilon is insolvent and has asserted derivative claims for breach of fiduciary duty against the individual defendants, who are members of Athilon’s board of directors (the “Board”).

To bring a derivative action, a creditor-plaintiff must plead and later prove that the corporation was insolvent at the time the suit was filed. This decision also rejects the defendants’ attempt to establish irretrievable insolvency as the metric for determining when a creditor has standing to sue derivatively. To bring a derivative action, the creditor-plaintiff must plead and later prove insolvency under the traditional balance sheet or cash flow tests. See

For purposes of summary judgment, there is evidence which, when viewed in favor of the non-moving party, supports a reasonable inference that Athilon was insolvent at the time Quadrant filed suit. The defendants’ motion for summary judgment on the breach of fiduciary duty claims is therefore denied.

完全な基準が適用される事案で利益相反のない取締役に関して訴え却下の申し立てが認められなかった事例—In re Cornerstone Therapeutics Inc. Stockholder Litigation 2014 WL 4418169 (Del. Ch. Sept. 9, 2014)

In re Cornerstone Therapeutics Inc. Stockholder Litigation, 2014 WL 4418169 (Del. Ch. Sept. 9, 2014)は,支配株主が行った少数株主のフリーズアウトの取引に関して完全な基準が適用される事案で,定款にデラウェア州一般会社法102条(b)項(7)号の定めがあるにも拘わらず,利益相反のない取締役に関して訴え却下の申し立てが認められなかった事例です。

Sullivan & Cromwellのニュースレターでの要約は,次の通りです。

In an opinion issued on September 9, 2014, the Delaware Court of Chancery (VC Glasscock) held that in a controlling stockholder freeze-out merger subject to entire fairness review at the outset, disinterested directors entitled under a company’s charter to exculpation for duty of care violations cannot prevail in a motion to dismiss even though the claims against them for breach of fiduciary duty are not pled with particularity; instead, the issue of whether they will be entitled to exculpation must await a developed record, post-trial. The decision once again highlights the litigation cost that will be imposed on companies engaged in controlling stockholder freeze-out mergers for failing to employ both of the safeguards that Delaware has endorsed to ensure business judgment, instead of entire fairness, review— (1) an up-front non-waivable commitment by the controller to condition the transaction on an informed vote of a majority of the minority stockholders and (2) approval of the transaction by a well-functioning and broadly empowered special committee of disinterested directors. At the motion to dismiss stage, disinterested directors effectively will be treated in the same manner as controllers and their affiliated directors.

via Sullivan & Cromwell, Francis Pileggi




via Francis Pileggi


デラウェア州, Delaware, LP, fiduciary duty, 50 states survey, Alabama, Uniform Partnership Act,Business Law Prof writes:

Only Delaware (Download Delaware GP Fiduciary duty statute) and Alabama (Download Alabama Statute) statutes allow for the complete elimination of fiduciary duties for general partners. The remaining 49 jurisdictions surveyed only allow for the expansion or restriction of fiduciary duties, but not the elimination. Of those 49 jurisdictions, 20 have a stand alone provisions that outlines the fiduciary duties of general partners, and 29 statutes establish the minimum fiduciary duties for general partners by linkage to the traditional partnership statutes. Of the 29 jurisdictions that rely on linkage to traditional partnership statutes, 13 use a Uniform Partnership Act (1914) “accounting” style fiduciary duty provision and 16 use a revised Uniform Partnership Act (1997) enumerated fiduciary duties style provision.

My initial research table is available here: Download LP Fiduciary Duty waiver Chart.

via Business Law Prof