Wednesday, May 23, 2007

Enhance Fiduciary Liability of University Trustees

Jose Cabranes is a former trustee and general counsel of Yale. Candace de Russy mentioned that he came up with the following suggestion, which seems to be a good one:

>"Perhaps it is time for law-making bodies to reconsider the historic restrictions on the standing of a university’s co-owners to bring legal actions enforcing the duties of university fiduciaries. [As Cabranes explains,] [i]n most states, by law or custom, only the state attorney general may bring an action against directors of a charitable organization [to include university trustees] for breach of fiduciary duties."

Bravo. There are numerous realistic and legitimate duties that the public ought to expect university trustees to fulfill, and morally these duties to parents, students and the public are fiduciary in nature. Private parties ought to have the right to enforce these duties under the law because Attornies General are likely too busy and often too corrupt to enforce them. That they are not enforceable suggests that there has been corruption in fact vis-a-vis charitable institutions and universities.

It is time to discard out-of-date restrictions on law suits against trustees that allow academic administrators and faculties to hide behind a charitable institutional veil that permits them to waste, mismanage and even steal.

No comments: