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: USA -- Board of directors -- Fiduciary duty -- Delaware Court of Chancery -- Litigation risk -- Sell-side financial advisor; Institutional investments -- Law and legislation -- Periodicals; Securities -- Periodicals; 332.6
• DOI: 10.1108/JOIC-05-2014-0021
• Languages: English
• ISSNs: 1528-5812

Abstract

Abstract : Purpose: – 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. Design/methodology/approach: – 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. Findings: – 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. Practical implications: – Director and financial advisor liability most often results from process failures. Originality/value: – Practical guidance from experienced mergers and acquisitions and securities and corporate governance lawyers.