4 ms·

You can pierce the corporate veil if there is willfull and intentional fraud. Doesn't always happen, but it's possible.

• bwilliams18 10y ago
  And what, compensate people with the stock of the company that was found to be willfully and intentionally defrauding them?
  • dragonwriter 10y ago
    No, compensate people with the money of the stockholders. That's what piercing the veil means: culpable stockholders assets are no longer protected from liability.
    • gohrt 10y ago
      piercing the veil usually applies to manager-owners, like S-corps. If I invest in a corporation and the managers do something horrible, the managers could potentially be reached through the veil, but not the stockholders -- their only involvement was handing over money, so they had no wrongdoing. Now, investors who are also decision-makers on the Board or maangement, that's another story.
    • PeterisP 10y ago
      It requires that the particular stockholders be actually culpable and involved in the fraud - fraud done by non-owning management would not allow to capture funds of non-managing investors.
    • bwilliams18 10y ago
      What I'm saying is the culpable stockholders (Holmes being the primary one) have few assets.