Delaware Chancery Court Holds Financial Advisor Liable for Aiding and Abetting Fiduciary Duty Breaches
On March 7, 2014, Vice Chancellor Laster issued his decision in In Re Rural Metro Corporation Stockholders Litigation, holding that RBC Capital Markets, LLC was liable for aiding and abetting breaches of the duties of care and disclosure by the board of directors of Rural/Metro Corporation in connection with Rural’s acquisition by Warburg Pincus LLC in 2011. The opinion, like the Chancery Court decisions in 2011 with respect to the Del Monte Foods and El Paso Corporation acquisitions, serves as an important reminder that courts may closely examine the role and conduct of sell-side financial advisors and may determine that conflicts or potential conflicts of interest affecting a financial advisor, particularly if combined with less than vigorous board oversight and behavior, can taint an entire sale process.