Jimmy is the CEO of News Corp. His son, Johnny, runs Television Inc. One day Jimmy suggests that Johnny sell Television Inc. to News Corp. Jimmy and Johnny work together to radically inflate the value of Television Inc. Jimmy brings a proposal to the Board of Directors to buy Television Inc. for $500 million dollars even though the corporation is only worth $2 million. The board of directors diligently examines the transaction, but due to clever forgeries, the board does not discover the radical inflation of the corporation. Jimmy never discloses his relationship with Johnny. The sale goes through, and it is shortly discovered that Television Inc., is practically worthless. • A shareholder sues alleging that Jimmy violated his fiduciary duty of loyalty. • Additionally, the shareholder claims that the directors violated their fiduciary duties of care. • Is the shareholder correct? The requirements below must be met for your paper to be accepted and graded: • Write between 500 – 750 words (approximately 2 – 3 pages) using Microsoft Word.• Attempt APA style, see example below.• Use font size 12 and 1” margins.• Include cover page and reference page.• At least 60% of your paper must be original content/writing.• No more than 40% of your content/information may come from references.• Use at least two references from outside the course material, preferably from EBSCOhost. Text book, lectures, and other materials in the course may be used, but are not counted toward the two reference requirement.
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Business: Fiduciary Duties
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Fiduciary Duties: The Case of Jimmy and Johnny
The corporate officers, managers and directors often possess the authority to make decisions in the organizations. These decisions are governed by the fiduciary duties towards the company shareholders, limited liability company members and the partners (Day, 2009). In the modern competitive and volatile marketplace, there is increased scrutiny of the decisions made by the managers, directors and corporate officers. Like in the case of Jimmy and Johnny, the decisions saw an inflated investment that added no value, which raises the questions of fiduciary duties of the parties involved in the decision-making process. The shareholder who sued Jimmy for violation of fiduciary duty of loyalty was correct. In addition, his step to sue the directors of the News Corp. was equally……………………………………..……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….
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