What are the precedents for addressing CEO behavior and drug use in publicly traded companies?

There are a number of precedents for addressing CEO behavior and drug use in publicly traded companies. These precedents can be found in both legal and corporate governance frameworks.

Legal Precedents

• Securities and Exchange Commission (SEC) Enforcement Actions: The SEC has a long history of taking action against CEOs who engage in misconduct that harms investors. This misconduct can include insider trading, market manipulation, and fraud. The SEC can impose a variety of sanctions on CEOs, including fines, disgorgement of profits, and even jail time.
• Civil Lawsuits: Shareholders can also sue CEOs for misconduct. These lawsuits can be brought under a variety of theories, such as breach of fiduciary duty, negligence, and securities fraud. If shareholders are successful in their lawsuits, they can recover damages from the CEO and the company.

Corporate Governance Precedents

• Board of Directors Oversight: Boards of directors have a fiduciary duty to the shareholders of the company. This means that they must act in the best interests of the shareholders. Boards can address CEO misconduct by investigating allegations, conducting hearings, and taking disciplinary action. Boards can also establish policies and procedures to prevent misconduct from occurring in the first place.
• Code of Conduct: Many publicly traded companies have a code of conduct that outlines the standards of behavior expected of their employees, including CEOs. Codes of conduct typically prohibit drug use and other forms of misconduct. Companies can enforce their codes of conduct through disciplinary procedures.

Examples of Specific Cases

There are many examples of CEOs who have been disciplined or removed from office for misconduct. Some of the most famous cases include:

• Dennis Kozlowski: Kozlowski was the CEO of Tyco International, a diversified manufacturing company. He was convicted of fraud and other crimes and sentenced to 8 to 25 years in prison.
• Mark Shkreli: Shkreli was the CEO of Turing Pharmaceuticals, which acquired the rights to a life-saving drug and increased its price by 5,000%. He was convicted of securities fraud and other crimes and sentenced to 7 years in prison.
• John Rigas: Rigas was the CEO of Adelphia Communications, a cable television company. He was convicted of fraud and other crimes and sentenced to 20 years in prison.

These are just a few examples of the many precedents for addressing CEO behavior and drug use in publicly traded companies. Companies and boards of directors should carefully consider these precedents when developing policies and procedures to prevent and address misconduct.