Duty of Oversight (Caremark Duties)

3/18/2024 pdw

The duty of oversight is a subset of the duty of loyalty and requires directors and officers to maintain information systems to monitor the company's operations and to respond to red flags raised by those systems. Claims for violating the duty of oversight are typically referred to as Caremark claims.

These claims come in two types, which we'll define more formally later. But at a high level, "information systems claims" allege the fiduciary has utterly refused to monitor the company's critical risks. "Red flags claims" allege the fiduciary is consciously disregarding signs that there's a problem afoot. For each duty of oversight claim, it's usually best to analyze these two subclaims.

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