Citigroup And The Duty To Manage Risk

Law360 (April 3, 2009, 12:00 AM EDT) -- When analyzing claims that directors failed to exercise proper oversight over management, Delaware courts turn to the oft-cited opinion of former Chancellor Allen in In re Caremark Int’l Inc. Derivative Litigation.[1]

Chancellor Allen, in a "reassessment" of the traditional "red flag" standard established by the Delaware Supreme Court in Graham v. Allis-Chalmers Manufacturing Company,[2] held that boards of directors must have systems in place designed to detect potential wrongdoing.

In so ruling, the Chancellor set a high bar for plaintiffs attacking a corporation that has implemented...
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