This is another example of when a conflict of interest may expose an investment banker to liability.
Here the banker failed to make a timely disclosure to its client that it had previously pitched the buyer to make a bid for the client. The Court found that in the context of a motion to dismiss the Board may have breached its duty of care when it did not sufficiently inquire of the banker if it had any conflicts before a merger agreement the banker recommended was signed. This in turn exposed the banker to the claim that it had aided and abetted the Board’s breach of duty.
The significance of this decision may be more in the holding that the Board had a duty to rigorously check on conflicts rather than just accept an adviser’s word.