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​Blue Bell Blues

Online Exclusives Jim Pelletier, CIA Oct 08, 2019

Growing case law affirms board liability.

Investor lawsuits seeking to hold directors liable for failures in their oversight duties were bolstered in June by a case involving Blue Bell Creameries. Marchand v. Barnhill did not signal a change in law, but it did affirm a legal standard that boards that fail to make a good faith effort to oversee a material risk area breach their “duty of loyalty.”

Legalese aside, the Blue Bell case provides a compelling example for directors to examine. While legal standards set a high bar, Marchand demonstrates that, in certain circumstances, ignorance about poor risk management is not a defense against board liability. 

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Jim Pelletier, CIA

Jim Pelletier is Vice President, Portfolio Strategy, at The IIA in Lake Mary, FL.