1. Pritchard & Baird was a reinsurance broker. A reinsurancebroker arranges contracts between insurance companies so thatcompanies that have sold large policies may sell participations inthese policies to other companies in order to share the risks.Pritchard & Baird was controlled for many years by CharlesPritchard, who died in December 2013 Prior to his death, he broughthis two sons, Charles, Jr. and William, into the business. The pairassumed an increasingly dominant role in the affairs of thebusiness during the elder Charles’s later years. Starting in 2010,Charles, Jr. and William began to withdraw from the corporateaccount ever-increasing sums that were designated as “loans” on thebalance sheet. These “loans,” however, represented a significantmisappropriation of funds belonging to the corporation’s clients.By late 2015, Charles, Jr. and William had plunged the corporationinto hopeless bankruptcy. A total of $12,333,514.47 in “loans” hadaccumulated by October of that year. Mrs. Lillian Pritchard, thewidow of the elder Charles, was a member of the corporation’s boardof directors until her resignation in December 2015, the day beforethe corporation filed for bankruptcy. Francis, as trustee in thebankruptcy proceeding, brought suit against United Jersey Bank, theadministrator of the estate of Charles, Sr. He also charged thatLillian Pritchard, as a director of the corporation, was personallyliable for the misappropriated funds on the basis of negligence indischarging her duties as director. Is Francis correct?

2. Muller, a shareholder of SCM, brought an action against SCMover his unsuccessful negotiations to purchase some of SCM’s assetsoverseas. He then formed a shareholder committee to challenge theposition of SCM’s management in that suit. To conduct a proxybattle for management control at the next election of directors,the committee sought to obtain the list of shareholders who wouldbe eligible to vote. At the time, however, no member of thecommittee had owned stock in SCM for the six-month period requiredto gain access to such information. Then Lopez, a former SCMexecutive and a shareholder for more than one year, joined thecommittee and demanded to be allowed to inspect the minutes of SCMshareholder proceedings and to gain access to the currentshareholder list. His stated reason for making the demand was tosolicit proxies in support of the committee’s nominees forpositions as directors. Lopez brought this action after SCMrejected his demand. Will Lopez succeed?

3. Wilshire, while serving as an officer of Riffe Oil Company,received a secret commission for work he did on behalf of acompeting corporation. Can Riffe Oil recover these secret profitsand, in addition, recover the compensation Riffe Oil paid toWilshire during the period that he acted on behalf of thecompetitor? If Riffe refuses to take any action, is there any thingthat can be done by other interested parties? Explain fully.