How sell side advisors can reduce litigation risk in light of Delaware's Rural/Metro decision. Issue 2 (3rd June 2014)

• Record Type: Journal Article
• Authors: Gooding, Gregory; Regner, William; O'Connor, Maeve; Kubek, Gary
• Is Part Of: Journal of investment compliance. Volume 15:Issue 2(2014)
• Page Start: 39
• Page End: 42
• Publication Date: 2014-06-03
• Subjects: Institutional investments -- Law and legislation -- Periodicals; Securities -- Periodicals; 332.6
• DOI: 10.1108/JOIC-05-2014-0021
• Languages: English
• ISSNs: 1528-5812

Abstract

<abstract> <title> <x content-type="archive" xml:space="preserve">Abstract</x> </title> <sec> <title content-type="abstract-heading">Purpose</title> <p> – To explain the implications of a March 2014 Delaware Court of Chancery decision that found RBC Capital Markets liable for damages for aiding and abetting breaches of fiduciary duty by the directors of Rural/Metro Corporation in connection with the company's 2011 sale to an affiliate of Warburg PIncus. </p> </sec> <sec> <title content-type="abstract-heading">Design/methodology/approach</title> <p> – Explains the court's findings and decision, offers procedural lessons for sell-side financial advisors, and recommends what sell-side advisors can do to limit exposure to aiding and abetting claims. </p> </sec> <sec> <title content-type="abstract-heading">Findings</title> <p> – The Rural/Metro decision opens the door to additional litigation risk for sell-side advisors. However, Vice Chancellor Laster's opinion also provides a roadmap for how an advisor can limit that risk. </p> </sec> <sec> <title content-type="abstract-heading">Practical implications</title> <p> – Director and financial advisor liability most often results from process failures. </p> </sec> <sec> <title content-type="abstract-heading">Originality/value</title> <p> – Practical guidance from experienced mergers and acquisitions and securities and corporate governance lawyers.</p> </sec> </abstract>