Ascend Communications (ASND) Message Board

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Technology Stocks : Ascend Communications (ASND)

ASND 197.10

+0.1%

1:24 PM EST

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To: getgo234 who wrote (26583)	12/6/1997 2:36:00 AM
From: Sowbug	of 61433

Probably not personally liable -- something called the "business judgment rule" says that an officer/director/fiduciary can't be held personally liable for acts falling within his/her discretion, as long as they do in fact exercise their discretion (i.e., don't act capriciously). E.g., you're CEO, you make a really, really bad decision ("Let's price our product at ten times our competitors' prices to give the appearance of quality!") that makes the company tank. The business judgment rule means that the shareholders can vote you out, but they PROBABLY can't sue you. Moreover, most big companies carry insurance for their execs to protect them against costs of defense/judgments. So ASND execs would say "In our business judgment, we decided that it was best to do the things alleged in the complaint," and they're personally off the hook. But your questions are probably irrelevant. I don't think these hare-brained shareholder derivative suits have any reasonable chance of succeeding. Anyone know of one that has? Sowbug, Esq. (insert disclaimer here)

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