Opinion ID: 1927508
Heading Depth: 2
Heading Rank: 3

Heading: Direct Liability of Bancorp Based on a Disclosure Duty Owed by the Corporation

Text: Plaintiff has not cited a single case in which Delaware courts have held a corporation directly liable for breach of the fiduciary duty of disclosure. Fiduciary duties are owed by the directors and officers to the corporation and its stockholders. This Court has stated: The only defendant is the corporate entity ... so there are no fiduciary duty claims. [11] Plaintiffs cite only a single line of dictum from a 1993 Court of Chancery case, [12] and Federal Rule 14a-9 cases under section 14(a) of the 1934 Act. [13] In order to have standing under section 14(a), the plaintiff must have been a stockholder at the time of the alleged misstatement. [14] Hazen, 2 Securities Regulation § 11.3 at 223 (3rd ed. 1995). There is no purchase or sale standing requirement as in section 10(b) cases. Id. Section 14(a) and Rule 14a-9 make it unlawful for any person ... to solicit any proxy by way of a materially misleading proxy statement. Gould v. American Hawaiian Steamship Co., D.Del., 331 F.Supp. 981, 998 (1971). The corporation, as the issuer of the proxy statement, is directly liable under the statute and the rule. Id. Liability can be imposed against a corporation for negligently preparing a proxy statement. Gerstle v. Gamble-Skogmo, Inc., 2d Cir., 478 F.2d 1281 (1973). Individual directors can also be liable personally if they participated sufficiently in the drafting. See Salit v. Stanley Works, D.Conn., 802 F.Supp. 728, 733 (1992); Wilson v. Great Am. Indus., Inc., 2d Cir., 855 F.2d 987, 995 (1988). We see no legitimate basis to create a new cause of action which would replicate, by state decisional law, the provisions of section 14 of the 1934 Act. Such a result would represent a significant change to the existing matrix of duties which governs the relationship among stockholders, directors and corporations. If such a change is to be, it is best left to the General Assembly.