On Leaving Corporate Executives Naked, Homeless and Without Wheels: Corporate Fraud, Equitable Remedies, and the Debate Over Entity Versus Individual Liability
Donald C. Langevoort
Georgetown University Law Center
Wake Forest Law Review, Vol. 42, No. 3, 2007
Georgetown Law and Economics Research Paper No. 1015815
There is a lively debate about the relative merits of entity versus individual liability in cases involving securities fraud. After reviewing this debate in the context of both private securities litigation and SEC enforcement, this paper considers whether the legal tools available against individual executives are adequate, and if not, what changes might be made. The main focus is on equitable remedies, especially rescission and restitution, under both state and federal law. As to the former, Vice Chancellor Strine's opinion in In re Healthsouth offers an interesting template, although there are limits on the usefulness of derivative suits to police aggressively in this area. Federal law probably offers the more powerful tools, which could be used more effectively than they are at present.
Number of Pages in PDF File: 36
Keywords: Securities Regulation, Corporate Law, Corporate GovernanceAccepted Paper Series
Date posted: September 20, 2007
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