Investment advisers usually charge an annual advisory fee equal ...

[fnuegbu]

Investment advisers usually charge an annual advisory fee equal to 0.5 percent of the net asset value of the fund they manage.
 a. True
  b. False
  Indicate whether the statement is true or false

Question 2

Duty of Loyalty. Digital Commerce, Ltd., designed software to enable its clients to sell their products or services over the Internet. Kevin Sullivan served as a Digital vice president until 2000, when he became president. Sullivan was dissatisfied that his compensation did not include stock in Digital, but he was unable to negotiate a deal that included equity (that is shares of ownership in the company). In May, Sullivan solicited ASR Corp's business for Digital while he investigated employment opportunities with ASR for himself. When ASR would not include an equity component in a job offer, Sullivan refused to negotiate further on Digital's behalf. A few months later, Sullivan began to form his own firm to compete with Digital, conducting organizational and marketing activities on Digital's time, including soliciting ASR's business. Sullivan had all e-mail pertaining to the new firm deleted from Digital's computers in August, and then resigned. ASR signed a contract with Sullivan's new firm and paid it 400,000 for work through October 2001. Digital filed a suit in a federal district court against Sullivan, claiming that he usurped a corporate opportunity. Did Sullivan breach his fiduciary duty to Digital? Explain.

[aliotak]

Answer to Question 1

TRUE

Answer to Question 2

Duty of loyalty
The court found that Sullivan knew he was being disloyal to Digital and that he actively concealed this disloyalty. Specifically, Sullivan affirmatively advised ASR not to work with Digital Commerce in May 2000. Then, a few months later, while still employed as President of Digital Commerce, Sullivan solicited ASR's business for himself. The court pointed out that the a corporate officer or director is under a fiduciary obligation not to divert a corporate business opportunity for his own personal gain. The rule is that if there is presented to a corporate officer or director a business opportunity which the corporation is financially able to undertake which is, from its nature, in the line of the corporation's business and is of practical advantage to it, and which is one in which the corporation has an interest or a reasonable expectancy, and if, by embracing the opportunity, the self interest of the officer or director will be brought into conflict with that of this corporation, the law will not permit him to seize the opportunity for himself. In this case, the chance to work for ASR was a potentially valuable business opportunity for Digital Commerce. After deciding to start his own company, Sullivan diverted the opportunity to work with ASR for his own benefit. In so doing, Sullivan breached his fiduciary duty to Digital.

[fnuegbu]

TYSM

[CAPTAINAMERICA]

Gracias!