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Ellen
Ellen, Lawyer
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The directors of Global Investment Company made a "bad" business

Resolved Question:

The directors of Global Investment Company made a "bad" business decision in 2006, by relying on the advice of financial experts and lawyers and accountants, who all thought the real estate market would continue to rise for years and years; and thus the directors invested heavily in mortgage backed securities instead of conservative gold and gold stocks and Treasury bonds. Of course, when the recession came, Global Investment Company lost a great deal of money for its shareholder investors. The shareholders then sued the directors for negligence. The directors are best protected legally by:
Answer

The comparative negligence doctrine because the shareholders likely were sophisticated investors who should have known that "what goes up, must come down."

The assumption of the risk doctrine since everyone knows that the stock market is a risky venture.

The Business Judgment Rule even though the decision turned out to be a "bad" business one.

The doctrine of strict liability for ultra-hazardous activities since it was common knowledge at the time that people were being granted mortgages with no down-payment and no verifiable evidence of income, assets, or employment.
Submitted: 5 years ago.
Category: Homework
Expert:  Ellen replied 5 years ago.
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