by Walter Stuart and Jessica Mussallem

All the recent bankruptcies and bailouts mean that courts may be taking a much more critical look at whether directors have been satisfying their fiduciary duties to companies and shareholders. The fallout from the collapse of the subprime lending market has already resulted in hundreds of lawsuits and bankruptcy cases, as well as robust reaction by federal and state regulators. The Securities and Exchange Commission is investigating the roots of the crisis, including the adequacy of corporate disclosures. The FBI has launched the Subprime Mortgage Industry Fraud Initiative. State attorneys general have brought enforcement actions against companies and boards, alleging consumer fraud and other lending misconduct. Individual cities, notably foreclosure-racked Cleveland, are turning litigious too. There are also multiple joint task forces, one of which includes the FBI's new fraud unit, the U.S. Postal Inspection Service, the U.S. Secret Service, the New York State Banking Department, the New York City Department of Investigation, and the Federal Deposit Insurance Corp.

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