US-CN Companies & Securities Law Assignment

Liability of corporate officers for securities fraud A corporation or other business entity acts only through its agents, and so a corporation's liability for securities fraud is determined by principles of agency law. In the securities context, two agency-law concepts are relevant: respondeat superior and apparent authority. Under respondeat superior , a "master'' (employer) is liable for the torts of a "servant" (employee) done while the servant is acting within the scope of employment. However, when the servant does not act for the purpose of furthering his master's goals but is on a "frolic of his own," the master is not liable. Under the concept of apparent authority , a principal is liable when an agent acting with apparent authority makes a statement on which another relies.The agent has apparent authority when, from the perspective of third parties, it appears that the corporation has vested the agent with authority to make the...