For Directors, Blurred Loyalties

Corporate boards are run on the principle of fiduciary duty, and that principle has been taking a beating lately.

Enron and its progeny have assured that corporate governance has been hot topic on Wall Street over the last six months. The zeitgeist spiked again this week when Tyco(TYC Quote) sued former director Frank Walsh for accepting a $20 million fee from now ousted CEO Dennis Kozlowski to broker the company's acquisition of CIT Group. Kozlowski himself has been accused of evading sales tax on art, which the Tyco board might have lent him the money to buy.

The New York Stock Exchange and Nasdaq proposed tightening their listing requirements earlier this month to encourage better corporate governance. But the body of law governing directors' fiduciary obligations, or their legal duties to shareholders, probably won't fundamentally change, experts said. ...