On Leaving Corporate Executives Naked, Homeless and Without Wheels: Corporate Fraud, Equitable Remedies, and the Debate Over Entity Versus Individual Liability

36 Pages Posted: 20 Sep 2007  

Donald C. Langevoort

Georgetown University Law Center

Abstract

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.

Keywords: Securities Regulation, Corporate Law, Corporate Governance

Suggested Citation

Langevoort, Donald C., On Leaving Corporate Executives Naked, Homeless and Without Wheels: Corporate Fraud, Equitable Remedies, and the Debate Over Entity Versus Individual Liability. Wake Forest Law Review, Vol. 42, No. 3, 2007; Georgetown Law and Economics Research Paper No. 1015815. Available at SSRN: https://ssrn.com/abstract=1015815

Donald C. Langevoort (Contact Author)

Georgetown University Law Center ( email )

600 New Jersey Avenue, NW
Washington, DC 20001
United States
202-662-9832 (Phone)
202-662-9412 (Fax)

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