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Article Excerpt
FORMER DIRECTORS of Bear Stearns Companies Inc. won a rare early litigation victory in December, a summary judgment motion exonerating them from liability for their hasty decision to sell Bear Stearns to JP Morgan Chase in March 2008. Before they got to trial, class action plaintiffs were defeated in their claims that the directors violated their fiduciary duty, despite expert testimony that there were better options than a fire sale price of $10 per share (14 months earlier, Bear Stearns shares reached $171.52). In a 44-page opinion that no doubt cheered directors everywhere, the New York judge provided a lucid explanation and affirmation of the business judgment rule, writing: "The Court should not, and will not, second guess their decision."
It may be comforting in this time of financial debacles and business failures for directors to be assured they will not be personally liable if they have acted in disinterested good faith. But legal immunity is cold comfort to directors who are accustomed to winning--not just avoiding trouble. It is simply not good enough for ambitious men and women with histories of personal success to know that they will be covered if the company fails....
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