More legal mumbo jumbo. This is a concept that allows shareholders and/or government agencies to bring legal action against corporate bigwigs (mainly members of the Board of Directors and C-Level execs) for wrongdoing.
If Jack & Jill are the Chairman & CEO, respectively, of publicly-traded Sherpas Unlimited, Inc. (Ticker: HIL), their fiduciary duty is to maximize profits (and, therefore, shareholder value) by executing the corporate strategy of helping clients carry their belongings to the tops of mountains. If, after a traumatic fall, they decide to no longer fulfill their duties, and knowingly hire a yodeling sherpa who consistently leads clients over the edge of mountains and into injurious situations...and HIL's stock price falls off a cliff...adverse domination would allow for Jack & Jill to be held legally liable for any financial damage done to shareholders.
Also a Fifty Shades thing but, um, we won't go there.
Related or Semi-related Video
Finance: What does it mean to have fiduc...51 Views
Finance a la Shmoop! What does it mean to have fiduciary obligation? Alright well
fiduciary refers to the responsible person, who has oversight, above a given
financial transaction, or process. That is, it is the fiduciary obligation, of the
head of a corporation's Audit Committee, to be certain that the
accounting process is handled fairly, objectively, inclusively and thoroughly [boss overseeing worker]
and there are a few other ly's in there, but well you get the gist. Doesn't it
seem strange, that some companies just seem to get into the same kind of
trouble again and again. Remember the BP oil spill, well it wasn't the first time
they'd had, an accident. You know, if you can call that spill only an accident.
What kind of oversight did they have? Any? Well some companies just have a [man carrying oil barrel
corporate culture that's run by the notion, that well, whatever isn't caught
as a crime, is legal. Lots of Wall Street stock brokerages came and went this
way. Yah, remember the Wolf of Wall Street? Kind of like that. Well what is
the obligation of a responsible party when faced with ethical dilemmas? Where
does the obligation start and stop? Should fiduciaries be held to a higher
personal standard than normal people? Yah, kind of the, you know, Harvey
Weinstein effect there. Yes, No, maybe, alright. Right, all three times. [question ABCD chart]
It's definitely yes, no, or maybe.
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