Self-dealing is the conduct of a
trustee
Trustee (or the holding of a trusteeship) is a legal term which, in its broadest sense, refers to anyone in a position of trust and so can refer to any individual who holds property, authority, or a position of trust or responsibility for the ...
,
attorney,
corporate officer
A corporation or body corporate is an individual or a group of people, such as an association or company, that has been authorized by the state to act as a single entity (a legal entity recognized by private and public law as "born out of st ...
, or other
fiduciary
A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties (legal person or group of persons). Typically, a fiduciary prudently takes care of money or other assets for another person. One party, ...
that consists of taking advantage of their position in a transaction and acting in their own interests rather than in the interests of the beneficiaries of the
trust, corporate
shareholder
A shareholder (in the United States often referred to as stockholder) of corporate stock refers to an individual or legal entity (such as another corporation, a body politic, a trust or partnership) that is registered by the corporation as the ...
s, or their clients. According to the political scientist Andrew Stark, "
self-dealing, an officeholder's official role allows her to affect one or more of her own personal interests." It is a form of
conflict of interest
A conflict of interest (COI) is a situation in which a person or organization is involved in multiple wikt:interest#Noun, interests, financial or otherwise, and serving one interest could involve working against another. Typically, this relates t ...
.
Self-dealing may involve
misappropriation or
usurpation of
corporate assets or
opportunities. Political scientists Ken Kernaghan and John Langford define self-dealing as "a situation where one takes an action in an official capacity which involves dealing with oneself in a private capacity and which confers a benefit on oneself."
Examples include "work
ngfor government and us
ngyour official position to secure a contract for a private consulting company you own" or "using your government position to get a summer job for your daughter."
Where a
fiduciary
A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties (legal person or group of persons). Typically, a fiduciary prudently takes care of money or other assets for another person. One party, ...
has engaged in self-dealing, this constitutes a breach of the fiduciary relationship. The principal of that fiduciary (the person to whom duties are owed) may sue and both recover the principal's lost profits and
disgorge the fiduciary's wrongful profits.
In the United States, repeated self-dealing by a private foundation can result in the involuntary termination of its tax-exempt status.
[Fremont-Smith, Marion (2009). ]
Governing Nonprofit Organizations: Federal and State Law and Regulation
''. Harvard University Press. p. 271.
See also
*
Emoluments clause
References
Legal ethics
Conflict of interest
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