PUBLICITY OF ACCOUNTS AND DIRECTORS' PURCHASES OF STOCK

Authors

A. A. Berle Jr., Of the Bar of New York City

Abstract

Two debates have been carried on in recent years, whose echoes are at present much before the attention both of the public and the courts. The older and quieter one, maintained in the law reviews and in a line of conflicting judicial decisions, concerns the duty, if any, resting on a corporate director who bought or sold shares of stock in his own corporation. The newer and more violent discussion, reverberating through the daily newspapers, the lay magazines, and the financial chronicles, has dealt with corporate accounts; whether they should be public and to what extent; and if not, how to require publicity. The writer. believes that the discussions have at length converged, both in practical application and in theory. In practical application, because secrecy of corporate accounts has all too often meant in the language of the stock exchanges, that "the management's in the market" or, in other words, that directors and officers were trading in shares of their own company. In theory, because the discussion of the liability of directors to stockholders from whom or to whom they buy or sell stock has at length narrowed down to the question of whether the trading director must disclose his knowledge of the corporate affairs to the stockholder, and if so, how, and to what extent. So that the burden of the debate now turns on disclosure of corporate affairs by the management in either case.

Recommended Citation

A. A. Berle Jr., PUBLICITY OF ACCOUNTS AND DIRECTORS' PURCHASES OF STOCK, 25 Mich. L. Rev. 827 (1927).
Available at: https://repository.law.umich.edu/mlr/vol25/iss8/2