In this week’s guest article, contributor Randy Waesche discusses how advisors should be aware of the fiduciary responsibilities they face when taking a seat on the board of a company they advise. As you’ll see from the real-life case study Randy presents, this can be a tenuous situation, rendering an advisor vulnerable to costly litigation and liability.
Case in point: after becoming a majority shareholder in oil and gas developer Longview Energy, investment fund Huff Energy was granted the opportunity to install two of its members onto the company’s board of directors. The sailing was smooth, until Team Huff used its control to veto a Longview management decision to lease acreage in the oil-rich Eagle Ford region of Texas. Randy fills in the details of how the deal went south and the subsequent litigation that ensued. It’s clear from Randy’s article that when the dust settled, the two board members were slapped with significant fines and probably some bad ink they’d just as soon have avoided.
Randy’s overview serves as a valuable blue print in fostering a more cautious boardroom involvement with your family enterprise clients.
D. Randolph Waesche, CFP is president and CEO of Resource Management Inc. and has been recognized by Money and Worth magazines as among the top financial planners in thecountry. He has spent 34 years as a financial consulting pioneer guiding Resource Management, Inc. to national prominence. With a specialty in family business advising, he is an active member of the Family Firm Institute and has earned FFI GEN Certificates in both Family Business Advising (CFBA) and Family Wealth Advising (CFWA). Waesche is active professionally and in the community serving on numerous committees and Boards including the Financial Planning Association (FPA) Investment Committee and is a former national board member for the Institute of Certified Financial Planners, the predecessor of the FPA. You can find Randy Wednesdays on WWL TV New Orleans during his Stretching Your Dollar segment as well as on his website www.rmiadvisors.com. Randy can be reached at firstname.lastname@example.org.
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