Evelyn Cruz Sroufe was extensively quoted in “Tesla Case Highlights Legal Risk for Controlled Company Boards,” an article in Agenda Week*, regarding business judgment rule in the decision-making authority of boards.

Securities experts say the combined facts specific to the decision in Tesla are likely to be rare. But it does represent the next development for plaintiffs in attempting to hold directors in controlled companies accountable, according to Evelyn Cruz Sroufe.

The issues in the Tesla case stem from a recent Delaware ruling. The 2015 Delaware Supreme Court decision in Corwin v. KKR Financial Holdings determined that the business judgment rule, as opposed to the more exacting entire fairness standard, applies to deals approved by a “fully informed, uncoerced majority of the disinterested stockholders.” The case against Tesla highlights plaintiffs’ “evolution of how to get around Corwin,” Evelyn explains.

*Subscription based publication.