A breach of fiduciary duty can bring considerable harm to a corporation. Fiduciaries have access to sensitive financial information of a company. They are expected to take their position seriously, and act with the utmost of integrity and good faith. However, they don’t always live up to such expectations. An Orange County business attorney can help a company fight an individual who violates its trust, but it is better to take precautions to avoid a problem in the first place.
Who Are Fiduciaries?
Fiduciaries are those to whom a corporation provides access and control of its finances. These caninclude directors, representatives, and advisors such as investment bankers. Often such individuals must possess licensing and insurance, but a corporation might also foolishly relegate such responsibility to an individual who is not screened properly.
Breaching Fiduciary Duty
A breach may occur in a number of ways. Insider trading is perhaps the most commonly recognized, but least understood. This is because certain forms of insider trading are actually legal. However, passing information about a pending corporate action that is likely to affect value of stock certainly is not. An unscrupulous fiduciary may be convinced to pass along such information for monetary gain. Also, he might work in consort with a rival company to undermine the corporation as the action approaches. Either way, the company can suffer enormous financial loss. When this occurs, an Orange County business attorney will need to be brought in to seek compensation.
Another form of breach is constructive fraud. Unlike insider trading, this does not entail a criminal act; nonetheless, it can cost the corporation a great deal. Constructive fraud is committed when a fiduciary conceals information that places him in a position of financial advantage at the cost of the corporation.
An Orange County business attorney will need to assist the company as it seeks financial remedy for a breach of fiduciary duty. In addition, if an illegal act is committed with the breach, criminal charges can be brought.
Call for Assistance
OrangeCountybusiness attorneys Reed Aljian and Justin Daily are dedicated to fighting for the rights of clients in many areas of business law. Call for a consultation at 949-861-2524.