Business Organizations Law Commons^™

Political Insider Trading, Michael R. Siebecker

Fordham Law Review

A fiduciary breach due to secret use of Business Organizations assets for personal gain marks the essential concern in both the insider trading realm and in the context of Business Organizations political spending. Therefore, adopting a similar common law fiduciary rule that Business Organizations managers must disclose the amount and target of political expenditures or refrain from engaging in political activity does not seem like much of an intellectual leap. Not only would such a common law disclosure duty fit neatly within existing Business Organizations governance principles, but the compelled transparency would not offend corporations’ First Amendment rights. In the …

Intermediate Scrutiny For Corporate Political Contributions, Joseph K. Leahy

Florida State University Law Review

A corporation contributes to a Super PAC that supports a candidate for public office. A shareholder sues, alleging that management breached its duty of loyalty by making the contribution to promote its own political views rather than to serve the corporation’s best interests—i.e., by acting in bad faith. What standard will a Delaware court apply when reviewing management’s decision to cause the corporation to make the contribution?

Myriad scholars have opined that the court will apply the standard of review for ordinary business decisions: the management-friendly business judgment rule. Unfortunately for our shareholder plaintiff, this rule presumes that management acts …