News

The Newly Uncovered Link Between Depression And Sexual Harassment

A new survey shows a correlation between depression and sexual harassment. We examine the harm to employers. Read More

Customer Violence: The Other Workplace Violence Risk

A customer kidnaps a store employee from his car and then murders him. Read about the importance of providing employees with safe break locations. Read More

How Sexual Harassment Creates Risk For Directors And Officers From Shareholders

Shareholders sue an employer for securities fraud and breach of fiduciary duty for allowing managers to commit sexual harassment. Learn about this risk. Read More

print   email   Share

How Sexual Harassment Creates Risk For Directors And Officers From Shareholders

The world's largest retailer of diamond jewelry, headquartered in Akron, Ohio, faces a lawsuit for securities fraud for allegedly making "false or misleading statements about the severity of sexual harassment claims against the company."

The defendants include the organization, its former CEO, and several other company officials. This latest lawsuit is just one in a series of suits against the organization after a Washington Post article revealed court documents, accusing the organization of "widespread" sexual harassment. The CEO named in the lawsuit resigned in July, citing "health concerns."

The allegations are that CEO and other executives were allowed to commit sexual harassment against women, and the organization disseminated false statements about the harassment during arbitration. The lawsuit also alleges the defendants engaged in "abuse of control, gross mismanagement and unjust enrichment." "Signet Jewelers faces new shareholder lawsuit," www.ohio.com (Sep. 1, 2017).


Commentary

Officers have a fiduciary duty to the organization and to the shareholders to make appropriate managerial decisions. Acting within the law, such as refraining from allowing, or engaging in, sexual harassment is expected. When management’s indiscretions cost shareholders value—and in this case, the organization’s stock price fell after the Washington Post article was published—then directors and officers will face liability for breach of fiduciary duty.

In the allegations, the CEO and executives are accused of promulgating an atmosphere of sexual harassment. It is also alleged that executives made false statements during arbitration.

Intentional wrongful acts, like promoting sexual harassment, increase liability from shareholders, especially when stock prices drop. The price drop itself is the harm, but the liability flows from not openly disclosing the risk from the sexual harassment allegations that caused the stock price to drop.

Finally, your opinion is important to us. Please complete the opinion survey:

Sign In

Are you a new user?

Register here

Retrieve password