Legal Liability of Audit Committee Members in U.S. Shareholder Derivative Cases : Lessons Learned From Recent Litigation

This study focuses on U.S. shareholder derivative cases in which Audit Committee members were defendants. Three grounds for Audit Committee liability were alleged in those cases: (1) violation of the Fiduciary Duties of Care, Loyalty or Good Faith, which may include failure to provide proper oversight; (2) violation of the Securities Exchange Act (SEA) by issuing an untrue statement regarding the sale of a security; and (3) violation of the SEA because Audit Committee members may be considered to be control persons