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Larry Catá Backer

Using the Sandusky Scandal as a Case Study: Due Diligence Requirements of Corporate Board Members in Profit and Non-Profit Organizations. Larry Catá Backer

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Larry Catá Backer

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  1. Using the Sandusky Scandal as a Case Study: Due Diligence Requirements of Corporate Board Members in Profit and Non-Profit Organizations Larry Catá Backer W. Richard and Mary Eshelman Faculty Scholar & Professor of Law, Professor of International Affairs 2012-13 Chair University Faculty Senate, Pennsylvania State University Remarks to the Berks County Bench-Bar Conference April 17, 2013 Reading Pennsylvania

  2. Introduction and Context Jerry Sandusky Curley and Schultz Spanier and Paterno Board of Trustees Freeh Group Report NAACP

  3. Fiduciary Duty Overview • Substantive Standard • Liability Standard • Business Judgment Rule • Rule of non interference • Rule of process • Entire fairness • Ratification

  4. Governing the University • Faculty Control • Oxford • Direct State Control • Continental Europe; Asia • “Lay” Boards • U.S. • Who appoints (looking for shareholder substitutes) • Shared Governance

  5. Diligence Obligations of the Board • Recent cases • American • West Virginia • Illinois • Legal Framework • Model Non Profit Business Corporation Act

  6. Core Issues • Blindness to Risk • Board awareness of risk • Obligation to inform the board • Whistleblowing • Loyalty—Conflict of Interest • Ethics • Relational Conflict • Severance and Benefits • accountability

  7. Application to Penn State

  8. Questions? Thanks!!

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