Understanding Breach Of Fiduciary Duty: Protecting Investor Rights In Indiana

In this article, you can discover…

• The meaning of fiduciary duty and its effect on Indiana investors.
• The evidence you’ll need to prove a breach of fiduciary duty.
• How an attorney can help you seek redress as a wronged investor.

What Is Fiduciary Duty, And How Does It Impact Investors In Indiana?

When someone owes you a fiduciary duty, they are required to act in your best interest, even when it’s not in theirs. That party must also act with utmost care, reasonableness, loyalty, honesty, and confidentiality in all aspects of the relationship, like disclosing the existence of business opportunities, and protecting sensitive information.

They must keep you, as their principal, advised of all important information. They cannot lie, omit information, or relay half-truths. The person who owes you a fiduciary duty must also keep good, accurate, complete records of all transactions performed on your behalf.

As an investor, the companies in which you invest, along with their management teams, typically owe you a fiduciary duty. In some cases, the company’s operating agreement or bylaws may modify, expand, or remove some of those duties, so a careful review of these agreements with an attorney is essential.

How Can A Breach Of Fiduciary Duty Occur In Investment Relationships?

There are countless ways that a company and its advisors can plan to take advantage of you as an investor.

For example, your partner or co-owner may use the company’s funds for their own benefit without your knowledge or consent. You may also have a broker invest your money in a way that secretly benefits them without them disclosing this to you.

Alternatively, a company’s management may act in ways that serve their interests but do not serve yours. For example, they may reject a lucrative buyout offer that would benefit you because it could also lead to a restructuring of management and threaten their jobs in the process.

All of these actions would be a breach of the fiduciary duty owed to you, and could cause the value of your investment to suffer. As a result, uncovering and obtaining proof of these breaches of fiduciary duty is essential to protecting your interests and legal rights.

Attorney Jared Schneider is an industrious, dogged business law attorney serving Indiana and Illinois. For over 10 years, he’s helped clients solve their business disputes and other legal puzzles with perspective, focus, and an eye for justice.

Have questions, or in need of quality legal representation? Reach out to Schneider Law, P.C. at (812) 561-7772 for an initial consultation today.

What Evidence Do I Need To Prove That My Fiduciary’s Actions Violated Their Duty?

While the underlying facts are often extremely complex, the legal path to proving a breach of fiduciary duty is relatively straightforward.

There must be a fiduciary relationship, which is typically evidenced by a legal contract or other type of close personal relationship founded on trust and confidence. You must also prove that a breach of that fiduciary’s duty occurred and that this breach caused damages or financial loss.

Proving the existence of a fiduciary relationship may require you to produce the contracts and legal agreements used to establish the relationship, or demonstrating through other evidence, such as emails and transaction receipts, the existing business or close personal relationships.

To prove the breach of fiduciary duty, attorneys typically use books, records, emails, letters, and other communications. Your attorney can also use discovery tools like interrogatories (written questions that must be answered under oath) and depositions (live, sworn testimony) to question the other party and uncover additional proof of a breach.

As you might expect, very few responsible parties are willing to admit that they have done anything wrong and will initially give elaborate answers as to why their actions did not constitute a breach of duty.

A knowledgeable, experienced business disputes attorney will be able to sift through this information, and compare it with the fiduciary’s records and deposition testimony to identify inconsistencies and other “holes” in their answers.

Cases are won and lost during the discovery process; a perceptive attorney will leverage the information learned in discovery to create in the other side an overwhelming urge to avoid a trial.

If Fiduciary Duty Has Been Breached, What Types Of Compensation Might I Recover?

As with many legal questions, it depends. Sometimes, a breach of fiduciary trust can be remedied with monetary damages, such as with a recovery of lost profits or commissions. In other cases, no amount of money can adequately compensate you for the breach, either because the amount is too high or too low to measure accurately.

In these situations, the court may order an “equitable remedy” that requires the fiduciary to do, or not do something. In such a situation, the court could require the fiduciary to convey a piece of real estate to you or might rule to exclude the fiduciary from the business entirely. And in rare cases of especially egregious intentional misconduct, the court could also award you punitive damages to deter other fiduciaries from acting similarly in the future. Whether the court ultimately awards money damages, an equitable remedy, or both, the court’s goal will be to place you, as a victim, in the same financial position you would have been in had the breach not occurred.

In every case, the amount of damages you may be entitled to is controlled by the documents and contracts that gave rise to the fiduciary relationship, as well as the nature of the injury, both “what” and “how much.” Asking an attorney’s help to review and help you understand those agreements before you sign them is crucial, as is seeking an attorney’s help when you suspect those contracts have been breached.

Attorney Jared Schneider is an industrious, dogged business law attorney serving Indiana and Illinois. For over 10 years, he’s helped clients solve their business disputes and other legal puzzles with perspective, focus, and an eye for justice.

Have questions, or in need of quality legal representation? Reach out to Schneider Law, P.C. at (812) 561-7772 for an initial consultation today.

How Can A Business Disputes Attorney Help Me Resolve Fiduciary Duty Case Without Going To Court?

First, allow your attorney to reach out to the other side and work toward a settlement agreement instead of having to go to trial. It is possible that the harm caused was accidental instead of intentional and that an agreement can be reached amicably.

In some cases, however, an agreement isn’t possible, and going to court is the only way to recover losses. An adept attorney will keep the lines of communication open along the way, allowing the other party ample opportunity to make restitution and settle before your case reaches a judge.

What Should I Do If I’m Unsure Whether To Let Something Go Or Seek Justice Through Business Litigation?

While the court system may not provide an ideal resolution, it’s often your best means to get redress and undo the harm that has been done to you. Using the courts to seek revenge instead of justice, however, will often go poorly. Take time out to prayerfully consider whether litigation is the right path forward.

If you decide to take legal action, consider how far you would like to take your claim. For example, most cases reach a tipping point where you and your attorney can confront the defense with enough evidence that they sit up and start asking about the possibility of settlements.

In other cases, going to trial can be your best opportunity for justice and recovering the investment you lost due to a breach of fiduciary duty. An experienced business law attorney can help you better understand the possible outcomes of your case so you can decide what type of legal action is best for you.

Still Have Questions? Ready To Get Started?

If you have questions about your investment opportunities or a potential breach of fiduciary duty by those managing your investments, an initial consultation is your next best step. Learn more by calling (812) 561-7772 today.