Law Commons^™

A Theoretic Analysis Of Corporate Auctioneers Liability Regimes, Randall Thomas, Robert G. Hansen

Vanderbilt Law School Faculty Publications

In Schneider v. Lazard Freres & Co. a New York appellate court greatly expanded the liability of investment advisers working as corporate auctioneers. Under this new legal regime, auctioneer/advisers accused of simple negligence are exposed to billions of dollars of potential legal liabilities. This article first reviews the existing law covering auctioneer/advisers and shows that the Schneider decision conflicts with the law governing general auctioneers and with the law governing the role of advisers and directors during the sale of the corporate control. Next, using an auction-theoretic framework, this Article shows that Schneider will likely result in: (1) increased indemnification …