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View Diary: A.I.G. May Sue U.S. Gov’t For $25 Billion As It Airs “Thank You, America!” TV Ad (205 comments)

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  •  Corporations MUST pursue profits by law, I think (1+ / 0-)
    Recommended by:
    SilentBrook

    but the managers of corporations are generally under a fiduciary duty to maximize profits to shareholders and can be sued if they fail to do that.  Yes, it's a stupid law, but it is a core principle behind corporations.  This is why people call them sociopaths.

    For example, Ben & Jerry's ran into trouble when it went public for trying to be all sustainable and so forth, if memory serves correctly.  California just passed a law allowing for things called "benefit corporations" which are corporations taht are allowed by law to pursue other aims than profit in addition, so that the managers can't be sued by shareholders for doing the right thing.

    Unless I'm remembering my corporate law wrong from the bar exam, this is what the general framework of the law is.

    I'd LOVE for input from someone who actually knows something about this, though.

    Hay hombres que luchan un dia, y son buenos Hay otros que luchan un año, y son mejores Hay quienes luchan muchos años, y son muy buenos. Pero hay los que luchan toda la vida. Esos son los imprescendibles.

    by Mindful Nature on Tue Jan 08, 2013 at 11:33:32 AM PST

    [ Parent ]

    •  IANAL. That said, it sounds too restrictive (1+ / 0-)
      Recommended by:
      Mindful Nature

      if the only thing allowed for a corporation is pursuit of any/all dollars, because taken to the extreme that could mandate a corporation putting money into things other than the core business if that might produce more profits than keeping the money in the core business.  For example, if a company is making 2% profit and there are bank CD's yielding 3%, the corporate board would have a duty to sink 100% of the corporate funds into the CD's because it yields a higher profit.  There would need to be some form of alternate valuation of the benefits of (in your example) sustainable practices so that Ben and Jerry's could say that their company gains x dollars for actual cash profit and y dollars for their goodwill practices which totals to z dollars of overall benefit to the company.  The Mammon worshipers would then need to prove that the y dollars aren't worth what Ben and Jerry value them at.

      This is a good reason why my company is still a sole proprietorship - I don't want to answer to anyone but myself.

      •  Mindful Nature isn't wrong and corporations (2+ / 0-)
        Recommended by:
        Mindful Nature, ColoTim

        do - from time to time - change their business models and/or products completely in order to survive.  But in this day and age the corporate boards find ways of raiding the companies of all of the assets - personally pocket that money and then move onto the next company they are going to screw up.

        What's really bogus is that it is more and more difficult for shareholders to sue for mismanagement which is another reason why this take 'em and break 'em model is working out so well for a handful of powerful executives and board members.

        But the question of suing isn't as clearcut as Mindful Nature's comment might make it seem.  A losing effort would cost the company money and that would be a harm for shareholders.  They also do not have any obligation to join that suit - they could file their own.  Greenberg is just trying to use the AIG legal resources in this pitch to get them into the lawsuit - and if they lose - the shareholders will have once again lost on another one of his bad gambles.

        •  thanks! (2+ / 0-)
          Recommended by:
          ColoTim, inclusiveheart

          I practice administrative law, dealing with agencies and the like, so I'm out of my depth!

          Hay hombres que luchan un dia, y son buenos Hay otros que luchan un año, y son mejores Hay quienes luchan muchos años, y son muy buenos. Pero hay los que luchan toda la vida. Esos son los imprescendibles.

          by Mindful Nature on Tue Jan 08, 2013 at 03:27:57 PM PST

          [ Parent ]

      •  I'm not a lawyer but I have always understood the (1+ / 0-)
        Recommended by:
        ColoTim

        law to apply to the line of business and to include only ordinary business functions; not external actions like frivolous lawsuits, which this obviously is.

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