Delaware
How Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A. applies in Delaware: state-specific rules, key cases, and bar exam notes for Securities Regulation.
Delaware law generally follows the precedent set by Central Bank of Denver in limiting secondary actor liability concerning aiding and abetting claims in securities fraud. The state reflects a commitment to respecting the private enforcement scheme of federal securities law while providing a robust regulatory framework.
In Delaware, to establish liability for aiding and abetting a securities fraud claim, a plaintiff must prove that the defendant had knowledge of the fraud and provided substantial assistance in effectuating it, mirroring the standards set by the Supreme Court in Central Bank.
The court held that controlling shareholders owe a fiduciary duty and can be liable under aiding and abetting if they knowingly assist in breaches of duty.
Here, the court emphasized the importance of the knowledge requirement in establishing aiding and abetting liability in breach of fiduciary duty cases.
The Delaware Supreme Court clarified the standard for director liability under the business judgment rule and its interplay with aiding and abetting principles.
Delaware's approach aligns with federal securities law, particularly the restrictive nature on aiding and abetting liability set forth in Central Bank. However, Delaware courts may offer a more flexible interpretation regarding internal corporate governance and fiduciary duties, which can influence the application of these standards in a state-specific context.
Understanding the foundational principles of aiding and abetting liability in the context of Delaware securities regulation is crucial for the bar exam, particularly in addressing questions related to fiduciary duties and corporate governance.