Opinion ID: 2361133
Heading Depth: 2
Heading Rank: 2

Heading: Commonwealth's Alleged Conflict of Interest

Text: Appellants accuse Zaucha of falsely reporting to the stockholders that Commonwealth has assured me that it has had no business dealings with DeSimone since his resignation. According to appellants, a Commonwealth employee told Zaucha in May 1996 that Commonwealth was representing a public company founded by DeSimone. In light of the fact that Northstar had taken legal action against DeSimone and was considering legal action against Commonwealth, appellants argue that Zaucha's statements concerning Commonwealth's relationship with DeSimone materially misled Northstar's stockholders. This claim also fails. Commonwealth's purported involvement in DeSimone's wrongdoing, as explained by the Court of Chancery, amounted to nothing more than suspicions and accusations. No formal charges were brought against Commonwealth; at most, the board was investigating a possible suit against Commonwealth. Zaucha had no obligation to disclose either the board's suspicions of wrongdoing or the possibility of legal action. [9] Moreover, the record does not support appellants' claim that Zaucha's statement to the stockholders was inaccurate. While it may be that Commonwealth at one time represented a company associated with DeSimone, there is no evidence that Zaucha was ever privy to such information.