Download This PaperDelaware and Santa Fe
Published as "Delaware and Santa Fe Industries v. Green" in Can Delaware be Dethroned? Evaluating Delaware’s Dominance of Corporate Law (edited by Iman Anabtawi, Stephen Bainbridge, Sung Hui Kim, and James Park). Cambridge Univ. Press (2018).
31 Pages Posted: 7 Apr 2017 Last revised: 17 Nov 2020
Date Written: April 5, 2017
Abstract
This book chapter examines the U.S. Supreme Court’s decision in Santa Fe Industries v. Green, which is often credited with enabling Delaware to become the leading creator of corporate law. It discusses the cases leading up to Santa Fe to understand why the plaintiff thought he could win a Rule 10b-5 claim based solely on a breach of fiduciary duty. Though Santa Fe played a role in moving minority shareholder litigation back to the state courts, it never created a complete separation between corporate and securities litigation. Santa Fe must be understood within a particular context, suits by minority shareholders who allege some abuse by a controlling shareholder. Delaware came to dominate this area of litigation by developing a fairness test that better fit the typical dispute between majority and minority shareholders than a Rule 10b-5 securities fraud claim. As corporate governance disputes have shifted to other areas, Santa Fe has not been particularly effective in separating federal securities and state corporate law.
Keywords: Corporate Governance, Corporate Law, Securities Law, Securities Regulation, Rule 10b-5
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