Gregory Gooding, William Regner, Maeve O'Connor and Gary Kubek
To explain the implications of a March 2014 Delaware Court of Chancery decision that found RBC Capital Markets liable for damages for aiding and abetting breaches of fiduciary…
Abstract
Purpose
To explain the implications of a March 2014 Delaware Court of Chancery decision that found RBC Capital Markets liable for damages for aiding and abetting breaches of fiduciary duty by the directors of Rural/Metro Corporation in connection with the company’s 2011 sale to an affiliate of Warburg PIncus.
Design/methodology/approach
Explains the court’s findings and decision, offers procedural lessons for sell-side financial advisors, and recommends what sell-side advisors can do to limit exposure to aiding and abetting claims.
Findings
The Rural/Metro decision opens the door to additional litigation risk for sell-side advisors. However, Vice Chancellor Laster’s opinion also provides a roadmap for how an advisor can limit that risk.
Practical implications
Director and financial advisor liability most often results from process failures.
Originality/value
Practical guidance from experienced mergers and acquisitions and securities and corporate governance lawyers.