Delaware Court Holds Investment Banker Liable for Aiding and Abetting Buyout Target Board's Breach of Fiduciary Duty
In re Rural Metro Corporation Shareholders Litigation, No. 3650-VCL, 2014 WL 971718 (Del. Ch. March 7, 2014), will send chills through the investment banking community. The Rural Metro case, following in the wake of the Chancery Court’s El Paso, Atheros and Del Monte decisions, demonstrates the Delaware Court’s heightened sensitivity to investment bankers’ potential conflicts of interest that may compromise their loyalty and objectivity.1
Boards should carefully consider potential conflicts of interest when selecting financial advisors and should specifically discuss and consider imposing limits upon the sell-side financial advisor’s ability to provide staple financing or otherwise participate in buy-side financing.
1 In re El Paso Corp. S’holder Litig., 41 A.3d 432, 439 (Del. Ch. 2012); In re Atheros Commc’ns S’holder Litig., No. 6124-VCN, 2011 WL 864928 (Del. Ch. March 4, 2011); In re Del Monte Foods Co. S’holder Litig., 25 A.3d 813, 830-31 (Del. Ch. 2011).
Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our clients and colleagues. If you have any questions about this Alert or would like to discuss the topic further, please contact your Foley attorney or the following:
Gardner F. Davis
Jacksonville, Florida
904.359.8726
[email protected]