Legal Question in Business Law in New Jersey

Conflict of Interest - Kind of Like Insider Trading

COMPANY A= our company. COMPANY B=acquired company. COMPANY C=heavy financial supporter of COMPANY B; on COMPANY A's Board; involved in the acquisition decision described below.

COMPANY D=heavy financial supporter of COMPANY B; on COMPANY A's Board; involved in the acquisition decision described below.

Our CEO is a former employee of COMPANY C, with which we can assume he is still heavily invested in. COMPANY A acquired COMPANY B about 3 years. Since the acquisition, more control & decision making of COMPANY A has been turned over to the employees of COMPANY B.

Many of COMPANY B’s employees have become Senior & C-Level Executives of COMPANY A. Employees of COMPANY A weren't considered for these positions. To ensure that COMPANY B's, & its supporters, financial interests are not negatively impacted & our CEO's pockets continue to be lined with money, COMPANY A acquiring COMPANY B & then turning control over to COMPANY B employees was the best-case scenario.

Is there a case behind this? Is it illegal for the Board of Director’s of a company to setup the Executives of a company they sit on to gain on their invested funds? Or is it because COMPANY A is a not-for-profit organization that these laws do not apply?


Asked on 10/18/07, 12:00 am

1 Answer from Attorneys
Robert Davies The Davies Law Firm, P.A.

Re: Conflict of Interest - Kind of Like Insider Trading

You have tried to describe this, but it is still unclear. You seem to be an employee of a company who acquired another company, and the employees and officers of that acquired company are being moved into officer positions in your company.

I have no idea if there is anything wrong in what you are describing. It would take some investigation and analysis to answer your question.

Call me if you would like to have me assist you. this is a very interesting mess, no doubt about that. it does not seem right, but I have no opinion whether it is wrongful or not, without much more information.

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Answered on 10/18/07, 1:12 pm


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