Directors and compliance oversight liability

Jeffrey M. Kaplan (jkaplan@kaplanwalker.com) is a Partner with Kaplan & Walker LLP in Princeton, NJ.

How useful to promoting compliance is the threat of personal liability to directors for failing to oversee their respective companies’ compliance programs? Earlier this year, in a post in the Harvard Law School Corporate Governance Forum,[1] Donald C. Langevoort of the Georgetown University Law Center reviewed the case law under the famous Caremark decision.[2] He found the law itself was not particularly strong, but expressed confidence that board members were nonetheless sufficiently motivated to do the right thing, due mainly to:

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