15. Marcus the president and chief executive officer of Proteus, Inc. One day he
ID: 452607 • Letter: 1
Question
15. Marcus the president and chief executive officer of Proteus, Inc. One day he was contacted by the CEO of Chronos Corporation, who asked Marcus if Proteus would be interested in buying some of the outstanding shares of Chronos. Proteus is a huge conglomerate that has contemplated acquiring Chronos for some time, but Marcus told Chronos' CEO that Proteus is not interested. Marcus told the CEO, however, that Titan, Inc., was willing to buy the shares. Marcus is the major shareholder of Titan. Chronos sold the shares to Titan. A year later, Titan sold its Chronos shares to a mutual fund company making a substantial profit on the transaction. When Proteus's directors discovered Titan's purchase and sale of the Chronos shares, they sued Marcus on behalf of the corporation. Which of the following is correct? A. Marcus has exceeded his authority to act for the corporation B. Marcus has done nothing wrong C. Marcus is liable to Proteus for the lost profit on the Chronos shares since he is guilty of self- dealing D. Marcus has usurped a corporate opportunity 16. ____________ applies when a professional misstates a material fact and recklessly or grossly negligently fails to ascertain the truth of the statement. A. scienter B. gross negligence C. negligence D. constructive fraud E. None of the above answers apply.
Explanation / Answer
15. D. Marcus has usurped a corporate opportunity and is guilty under the Corporate Oppoerunity Doctrine. Particularly because Proteus was interested and financial of buying Chronos shares
16. D. constructive fraud . Court recognise the act of misstating material fact and recklessly or grossly negligently failing to ascertain the truth of statement as constructive fraud.
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