Newsletters

Section 31 or SEC Transaction Fees

Under Section 31 of the Securities Exchange Act of 1934, 15 U.S.C.S. § 78ee, the Securities and Exchange Commission recovers costs of regulating securities markets and transactions. Section 31 fees, which exceeded $1 billion in 2004, are "designed to recover the costs to the Government of the supervision and regulation of securities markets and securities professionals, and costs related to such supervision and regulation, including enforcement activities, policy and rulemaking activities, administration, legal services, and international regulatory activities." 15 U.S.C.S. § 78ee(a).

Reliance on Third-Party Advice or Information

The duty of care requires directors to act in good faith and in a manner that they reasonably believe is in the best interest of the corporation. Directors must exercise informed business judgment and be attentive to the corporation's affairs. In order to do so, directors are required to keep themselves informed of all material information that is reasonably available to them before making a business decision. Directors also must use care when performing their duties.

Copyrights, Patents, and Trademarks Defined

Copyrights, patents, and trademarks can be among the most valuable assets of a business.

Employees' Duty of Loyalty

Generally, an employee owes the duty of undivided loyalty to his or her employer. Courts take varying approaches to the issue of an employee's duty of loyalty. Some jurisdictions do not acknowledge a separate cause of action for an employee's breach of loyalty unless there is a fiduciary relationship between the employer and the employee. The claim is usually pleaded as a breach of a fiduciary duty. Some jurisdictions recognize a separate claim for an employee's breach of the duty of loyalty but also acknowledge its relationship to a fiduciary breach. A common thread in all jurisdictions is that employees who occupy a position of trust and confidence owe their employers a higher duty of loyalty than lower-level employees. The scope of the duty of loyalty depends on the particular fact circumstances and the nature of the employment relationship.

Director and Officer Liability under OSHA

Employers have a general duty under the Occupational Safety and Health Act (OSHA)1 to provide a workplace free from "recognized" hazards. A violation of this duty can lead to criminal sanctions2 in addition to civil penalties. An employer can also be exposed to liability under occupational safety and health regulations promulgated by the Secretary of the Department of Labor. Directors and high-level executive officers must act to reduce or eliminate workplace dangers or risk OSHA liability.