What is a typical board response to a fiduciary breach to minimize ongoing harm?

• A. Seek injunctive relief to stop ongoing harm; pursue damages as needed; consider disgorgement of profits where appropriate.
• B. Do nothing to avoid litigation costs.
• C. Immediately criminally prosecute the fiduciary.
• D. Publicly criticize the fiduciary in a press release and take no legal action.

Answer: (A)

When a fiduciary breach threatens ongoing harm, the priority is to stop the conduct and protect the company and its shareholders, while beginning to recover what was lost. The best-and-typical board response combines remedies that halt the breach and address the damages: seek injunctive relief to stop the ongoing misconduct immediately, pursue damages for losses caused by the breach, and, where appropriate, obtain disgorgement of profits so the fiduciary cannot keep ill-gotten gains. Injunctive relief acts as a fast-acting shield to prevent further harm while litigation or enforcement unfolds. Damages compensate for actual losses suffered, and disgorgement serves as a deterrent by removing any financial benefit the fiduciary gained from the breach, aligning incentives with fiduciary duties.

Other approaches fall short because they either do not stop the harm or do not seek compensation. Doing nothing ignores the breach and allows continued damage. Criminal prosecution, while possible if laws have been violated, is a matter for authorities and not the usual board remedy to stop ongoing harm. Public criticism without legal action addresses reputation but does not prevent further harm or recover losses.