Which of the following would be likely to result in liability to a director of a textile company?
A)The director sells stock in the textile company before a merger is announced.
B)The director uses the corporation's offices to buy and sell his own investment securities.
C)The director owns stock in an automobile company.
D)The director agrees to hire as president a man he has not personally investigated.
E)Both (a) and (b).

Question

Quizplus · Accepted Answer

Choice (a), selling stock before a merger is announced, could be considered insider trading and would result in liability for the director. Choice (b), using the corporation's offices for personal gain, is a breach of the director's fiduciary duty and would also result in liability. Choices (c) and (d) are not likely to result in liability unless there is evidence that the director acted improperly or breached their duty of care.

Which of the Following Would Be Likely to Result in Liability