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When major executives sell large numbers of shares, these sales are often very public. Generally, massive stock dumps are a sign that the executive feels the value of the company has peaked, and is likely to drop. In other words, every large sale of stock is implicitly a public announcement of lack of confidence in the company by the executive.

Legally, executives have a fiduciary duty to their companies, in that they are expected not to take actions harming the company and its value in any major way. Considering a large sale of stock by a company executive tends to lower public confidence in a company, and thus lower the value of the company, could such a sale itself be considered a breach of fiduciary duty?

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    If it could, then perhaps executives should not be allowed to have shares in the first place? Otherwise, if they're allowed to have shares when selling them is a breach of whatever, what would be the point in having if you cannot trade? Also, related: law.stackexchange.com/questions/25058/… – Greendrake Jan 5 '18 at 10:12
  • Share ownership means income through dividends. Paying key officers and employees through stock transfer is a historic means of ensuring their commitment to company success - the better the collective company overall, the greater the individual employee income. The idea of trading stock based on speculation rather than actual interest in owning the company or profiting from its work is a much more recent and far less useful endeavour. @Greendrake – Nij Jan 5 '18 at 11:35
  • There are a variety of securities law regulation of sales by corporate officers which is how these transactions are disclosed in the first place. This includes insider trading regulation and regulation of the timing and disclosure of sales. The message sent by a sale is not unambiguous, however, maybe the exec just wants to buy an expensive new house, and the exec's duty it to the corporation and its property and rights, not to public opinion. – ohwilleke Jan 5 '18 at 19:59
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Legally, executives do not have a fiduciary duty to their company - they are employees and this does not create a fiduciary relationship. However, directors do have a fiduciary duty so I will assume that is what you mean.

This duty is to the company - it is not to the shareholders individually or collectively. The market capitalisation of the company affects the shareholders, it does not affect the company in normal circumstances except indirectly. Of course, if the company is or is planning to raise or lower capital through debt or equity markets it may have a direct effect.

So long as their trading does not adversely affect the company they can do what they like.

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    Employees of corporations do have fiduciary duties to their companies, just like any other agents. See, e.g., Jet Courier Services, Inc. v. Mulei law.justia.com/cases/colorado/supreme-court/1989/87sc182-0.html And, corporate officers of companies have particularly strong fiduciary duties to their companies, often established by statute in corporate law. This is a major new alternative to suits that might otherwise have been piercing the corporate veil suits. You are correct, however, that the duty is usually only to the company. U.S. securities laws do regulate these transactions. – ohwilleke Jan 5 '18 at 19:56
  • @ohwilleke interesting- Australian law restricts fiduciary obligations only to relationships of utmost trust. Employees have a duty but it is not a fiduciary one. – Dale M Jan 5 '18 at 21:02

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