Recently, Roger Blough, former Chairman of the Board of the United States Steel Corporation and now a practicing attorney with a large New York law firm, listed ten guiding principles for vitalizing the role of the corporate director.1 The profile of what he termed the "working director" included admonitions to avoid conflicting interests and to keep fully informed of corporate affairs.2 Many corporate counsel have also compiled guidelines for their firms' directors, usually expressed pointedly in terms of "do's" and "don'ts" specifically aimed at avoiding personal liability in the performance of their duties as directors. The impetus for these guidelines, of course, is the increase of litigation in which directors and officers are individually named as defendants in actions based on the federal securities laws. It is axiomatic that the legal climate for business executives has changed radically in recent years. Personal liability is no longer well buffered by the relative explicitness of common law fraud, the shield of the business judgment rule, or the generally short reach of state laws. Standards defined in terms of negligence, due diligence, reasonable investigation, and a sometimes rather liberal interpretation of scienter have greatly increased directors' and officers' vulnerability.
"A Functional Role Approach to Analyzing Director Standards of Conduct under Federal Securities Law,"
University of Dayton Law Review: Vol. 1:
2, Article 3.
Available at: https://ecommons.udayton.edu/udlr/vol1/iss2/3