# Fiduciary duty

`kaal:entity:fiduciary-duty`

**Status.** derived

This node is assembled mechanically from the 17 claims that carry the concept tag `fiduciary-duty`. It is a roster of what the corpus says under this term. It is **not** an adjudicated definition: no single statement here has been ruled canonical, and no first-appearance call has been made. Read the claims and judge for yourself.

## Every claim under this term

17 claims across 9 works, 2012 to 2021.

**2012**

- [2097160-028](https://wulfkaal.github.io/claims/2097160-028) [failure/argued] *(failure mode)* -- Where rules and regulatory guidance are absent, fiduciary duties are the only constraint on executives, and existing fiduciary duties could prove insufficient to limit opportunism and abuse when the payoff is substantial.
  > Without rules and regulatory guidance regarding the design and issuance of contingent convertible bonds, SIFI executives may only be curtailed by their fiduciary duties. Existing fiduciary duties could prove insufficient to limit opportunism and abuse if the payoff for executives is substantial.193
  Wulf A. Kaal, Contingent Capital in Executive Compensation (2012). SSRN: https://ssrn.com/abstract=2097160

**2013**

- [2337268-036](https://wulfkaal.github.io/claims/2337268-036) [normative/argued] -- Because investment advisers owe a duty to obtain best execution for customer orders, they ought to evaluate the executions carried out on their clients' behalf on a periodic basis.
  > investment advisers are subject to a duty to obtain the best execution for customer orders,103 investment advisers ought to periodically evaluate the executions on behalf of their clients.
  Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268
- [kaal-2013-acomparativeperspectiveo-007](https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-007) [condition/evidenced] -- Oversight liability in Delaware can be established only on a showing that the directors knew they were not discharging their fiduciary duties or consciously disregarded their responsibilities.
  > However, oversight liability can be established if the plaintiff showed that "the directors knew that they were not discharging their fiduciary [duties] or that the directors demonstrated a conscious disregard for their
  Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)
- [kaal-2013-acomparativeperspectiveo-009](https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-009) [empirical/evidenced] -- Courts often provide very specific language about the standard of conduct expected of directors, but lawyers do not sufficiently communicate that expected conduct to directors.
  > Professors Johnson & Garvis show in an empirical study that courts often provide very specific language regarding the appropriate standard of conduct for directors.17 However, their study highlights that lawyers do not sufficiently communicate to directors what conduct is expected of them.
  Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)
- [kaal-2013-acomparativeperspectiveo-015](https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-015) [empirical/evidenced] -- The German Federal Court of Justice held in Mannesmann that directors breached their fiduciary duty by awarding a bonus of roughly seventeen million dollars to a chief executive whose tenure had substantially increased shareholder value, whereas Delaware courts imposed no liability for the far larger Ovitz payout in Disney.
  > decision in Mannesmann28 determined that the directors of the German Mannesmann AG breached their fiduciary duty to the company by awarding a bonus of approximately $17 million to the Mannesmann CEO whose tenure at Mannesmann resulted in a substantial increase of shareholder value.
  Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)
- [kaal-2013-acomparativeperspectiveo-036](https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-036) [design/asserted] -- Corporate Integrity Agreements are one form of dynamic governance that may be able to temporarily increase fiduciary duties as a form of quasi law.
  > Corporate Integrity Agreements (CIAs), for instance, could be one form of dynamic governance that may be able to temporarily increase fiduciary duties as a form of quasi law.
  Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)
- [kaal-2013-acomparativeperspectiveo-037](https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-037) [predictive/speculative] -- More research is needed to understand how dynamic forms of governance could help improve fiduciary duties and corporate governance.
  > More research may be needed to understand how dynamic forms of governance could help improve fiduciary duties and corporate governance.
  Kaal, A Comparative Perspective on the Limitations of the Duty of Oversight – A Comment on Lisa Fairfax (2013)

**2016**

- [2715083-023](https://wulfkaal.github.io/claims/2715083-023) [failure/argued] *(failure mode)* -- The inherent conflict of interest facing an adviser who simultaneously runs a mutual fund and a hedge fund is an important limiting factor on the continued rise of side-by-side management.
  > An important limiting factor in the steady rise of side-by-side management is the inherent conflict of interest for the investment manager (SEC (2003), Chen & Chen (2009) and Cici et al. (2010)).
  Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083
- [2811718-016](https://wulfkaal.github.io/claims/2811718-016) [empirical/evidenced] -- In the hand selected sample of cases, the ranking of causes of action differs from the full search results: fiduciary duty leads, followed by negligent misrepresentation and breach of contract.
  > Unlike Figure 4, in the hand-selected sample of cases in Figure 5, the leading causes of action were by order of preference: (1) fiduciary duty, (2) negligent misrepresentation, (3) breach of contract.
  Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718
- [2811718-017](https://wulfkaal.github.io/claims/2811718-017) [empirical/evidenced] -- While some courts found that a complete lack of investor due diligence can amount to securities fraud or breach of contract, and that lacking due diligence can breach fiduciary duties, the majority of courts evaluate private fund due diligence issues in the context of misrepresentation.
  > IDD can be a breach of fiduciary duties,84 the majority of courts evaluate issues pertaining to private fund IDD in the context of misrepresentation.
  Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718
- [2811718-024](https://wulfkaal.github.io/claims/2811718-024) [condition/evidenced] -- Failure to supervise and direct investment of assets in accordance with an investment plan's policy, together with offering memoranda or quarterly letters that misrepresent due diligence processes, can show a failure to exercise reasonable care sufficient to plead breach of fiduciary duty.
  > assets in accordance with an investment plan's investment policy, and offering memoranda or quarterly letters with misrepresentations of due diligence processes can demonstrate a failure to exercise reasonable care and sufficient to plead breach of fiduciary duty.
  Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718

**2017**

- [3017612-020](https://wulfkaal.github.io/claims/3017612-020) [empirical/evidenced] -- Courts have recognized an enhanced fiduciary duty among participants in closely held corporations, holding that majority shareholders owe fiduciary duties not only to the corporation but to minority shareholders as a class.
  > The distinct needs of close corporations is also shown as courts have recognized an enhanced fiduciary duty among participants in closely held corporations.64 Courts have held that majority shareholders have a fiduciary duty not only to the corporation but also to minority shareholders as a class
  Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612
- [3017612-021](https://wulfkaal.github.io/claims/3017612-021) [mechanism/evidenced] -- Fiduciary responsibility follows actual control rather than formal office: a shareholder exercising absolute de facto control over a corporation owes fiduciary duties regardless of whether that shareholder holds de jure title.
  > If a shareholder "exercises absolute de facto control over a corporation, such actual dominion carries with it fiduciary responsibility regardless of the presence or absence of de jure titles.
  Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612
- [3017612-022](https://wulfkaal.github.io/claims/3017612-022) [failure/evidenced] *(failure mode)* -- Contractual consent to a cash out does not extinguish fiduciary claims: a minority shareholder who agreed to receive cash for shares may still challenge the merger as a breach of fiduciary duty.
  > The merger agreement allowed the company to give the minority shareholder cash in exchange for shares, but the Third Circuit determined that even if a minority shareholder agrees to a cash out, he may still object to the merger on grounds of a breach of fiduciary duty.
  Wulf A. Kaal, Shareholder Agreements - National Report of the United States of America (2017). SSRN: https://ssrn.com/abstract=3017612
- [3071378-027](https://wulfkaal.github.io/claims/3071378-027) [normative/argued] -- Because directors must act in good faith and in the best interests of the corporation, and a diverse board helps protect against group thinking, fiduciary obligations supply a business reason for board diversity.
  > Arguably, a diverse board helps protect against group thinking which is in the best interest of the corporation.
  Wulf A. Kaal, Blockchain Technology and Race in Corporate America (2017). SSRN: https://ssrn.com/abstract=3071378

**2020**

- [3606663-015](https://wulfkaal.github.io/claims/3606663-015) [failure/argued] *(failure mode)* -- Institutional investors face a distinct barrier beyond volatility: fiduciary responsibility to their clients limits the type of risk they may take on, and the lack of custody solutions recognized by regulators compounds the problem.
  > While larger institutional players face the same issues, they are also limited by their fiduciary responsibility to their clients, which limits the type of risk they can be exposed to. Compounding these challenges is the lack of stable custody solution(s) that are recognized by the regulators.
  Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663

**2021**

- [3936876-024](https://wulfkaal.github.io/claims/3936876-024) [normative/argued] *(failure mode)* -- Applying the trust label to digital asset firms without an accompanying fiduciary duty is problematic, because the typical legal obligation of a trust company is to place customers' interests above its own.
  > The applicability of the trust label to digital asset firms, without a fiduciary duty, can be problematic. A typical legal obligation for trust companies is a fiduciary duty – to place customers' interests above the company's own.
  Wulf A. Kaal, Hayley Howe, Custody of Digital Assets (2021). SSRN: https://ssrn.com/abstract=3936876

## Verify

Every claim above resolves to a record carrying a verbatim source quote, the sha256 of the source PDF, and a preformatted citation. Nothing here asks to be taken on trust.

    curl -s https://wulfkaal.github.io/entities/fiduciary-duty.md | sha256sum

**Canonical form.** This markdown file is the canonical hashed representation of this entity node. Its sha256 is the content hash.