SEC Enforcement Action: Lessons for Outside Directors from Church & Dwight Case
been fairly easy for Craigie to disclose his relationship with the Executive and still maintain his independence as a director, had he been transparent from the start.
The key lesson here for outside directors is to be open and honest in all interactions with the company, especially when completing D&O questionnaires. These questionnaires are not just a formality; they are a crucial tool for boards to assess director independence and potential conflicts of interest. Providing inaccurate or misleading information on these questionnaires can have serious consequences, as evidenced by Craigie’s case.
It’s also worth noting that confidentiality agreements are not to be taken lightly. Directors should be careful not to disclose confidential company information to unauthorized parties, as this can lead to serious breaches of trust and potentially legal action. The role of a director comes with significant responsibilities, and maintaining the trust of shareholders and the integrity of the company should always be top priorities.
In the end, the SEC enforcement action against Craigie serves as a stark reminder that honesty, transparency, and adherence to corporate governance guidelines are essential for outside directors. By learning from this case and understanding the importance of disclosing all relevant relationships and information, directors can help ensure the integrity of the companies they serve.
