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Court Of Chancery Upholds Novel Fiduciary Breach Case

Posted In Fiduciary Duty
Lee v. Pincus, C.A. 8458-CB (November 14, 2014) This decision holds that the waiver of a lockup in favor of 4 directors may constitute a breach of their fiduciary duties to the other stockholders who were subject to the lockup and whose shares could only be sold later at a reduced market price. There is no prior case dealing with this set of facts. The key point is that the directors secured a benefit for themselves that was not available to the class of stockholders who remained subject to the lockup and who presumably would have sold their stock before the price declined had they been able to do so. This leaves open some interesting damages issues. Share


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