What the Theranos Calamity Can Teach Start-ups about Governance

April 21, 2016 – Media Mention
Corporate Secretary

Richard Morris was quoted in Corporate Secretary regarding the corporate governance lessons that startup firms can learn from the SEC and Department of Justice fraud investigations. Morris explained that board members might not be held personally liable even if there is a “meltdown” and fraud by the startup because Delaware fiduciary standards allow board members to rely, to a reasonable extent, on auditors, lawyers, investment bankers and other experts to have conducted appropriate due diligence over various matters under investigation. “If they exercised their fiduciary duty of good faith and loyalty, performed their due diligence and were reasonably prudent, even if there was fraud or a complete meltdown, they would not likely be liable,” Morris said.