Posts in Public Policy

Chancery Rejects Breach of Fiduciary Duty Claim Based On Diversified Investor Model

McRitchie v. Zuckerberg, et al., C.A. No. 2022-0890-JTL (Del. Ch. April 30, 2024)
Delaware follows the "single-firm model,” meaning that a director of a corporation owes duties to the stockholders as investors in that corporation. The plaintiffs here brought claims based on a different theory—the "diversified investor model," wherein directors owe duties to the corporation and its stockholders as diversified equity investors. Under this model, rational investors are seen as having diversified investments, and their returns are maximized when the economy as a whole improves. Thus, to comply with their fiduciary duties under this model, directors must manage the corporation based on what would be best for the economy as a whole rather than what would be best for the firm.  More ›

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