The #MeToo movement has shaken corporate America in recent months, leading to the departures of several high-profile executives as well as sharp stock price declines at a number of firms. Investors have taken notice and taken action: Shareholders at more than a half dozen publicly traded companies have filed lawsuits since the start of 2017 alleging that corporate fiduciaries breached state law duties or violated federal securities laws in connection with sexual harassment scandals. Additional suits are likely in the coming months.
This Article examines the role of corporate and securities law in regulating and remedying workplace sexual misconduct. We specify the conditions under which corporate fiduciaries can be held liable under state law for perpetrating sexual misconduct or allowing it to occur. We also discuss the circumstances under which federal securities law requires issuers to disclose allegations against top executives and to reveal settlements of sexual misconduct claims. After building a doctrinal framework for analyzing potential liability, we consider the strategic and normative implications of using corporate and securities law to address workplace sexual misconduct. We conclude that corporate and securities law can publicize the scope and severity of sexual harassment, incentivize proactive and productive interventions by corporate fiduciaries, and punish individuals and entities that commit, conceal, and abet sexual misconduct in the workplace. But we also address the potential discursive and distributional implications of using laws designed to protect shareholders as tools to regulate sexual harassment. We end by emphasizing the promise — as well as the pitfalls — of using corporate law as a catalyst for organizational and social change.
Business Organizations Law | Law | Securities Law
Daniel Hemel & Dorothy S. Lund,
Sexual Harassment and Corporate Law,
Available at: https://scholarship.law.columbia.edu/faculty_scholarship/4006