Executives helping to run businesses typically make every reasonable effort to ensure that a company grows and generates profits. They typically benefit from the company’s success. Unfortunately, some executives abuse their positions to generate additional personal profit at the expense of the company.
Shareholders, business owners and even other executives may learn that someone in a position of authority at an organization has abused their role for personal gain. Self-dealing isn’t quite as damaging as outright embezzlement, but it is still a breach of an executive’s fiduciary duty.
When there is clear evidence of self-dealing occurring, a business lawsuit may be necessary to remove an executive from their position, terminate inappropriate contracts or demand compensation for the impact of their conduct.
What might constitute self-dealing?
Self-dealing involves making business decisions for personal profit, often funneled through another business. If an executive has a small business or professional practice, self-dealing might involve awarding contracts to their own company. Other times, they might offer major projects or contracts to a company owned by a family member.
A partial ownership interest or investment in an outside organization could also prompt conduct similar to self-dealing. Whenever executives make key company decisions for their own benefit instead of for the company’s, their actions can cost the organization money. Putting personal interest ahead of the organization is a breach of fiduciary duty that may even warrant an executive’s removal from their role.
Reviewing questionable contracts or financial activity with a skilled legal team can help those who suspect a breach of fiduciary duty to take appropriate action. A business lawsuit is sometimes the best option available for addressing misconduct from those running an organization.