Jun. 11 at 3:17 AM
$VISM 2. Is This Illegal? (The Fiduciary Loophole)In a major, multi-billion dollar company listed on the NYSE or NASDAQ, a transaction where the CEO siphons 60% of corporate intake to his personal LLC would trigger immediate shareholder lawsuits, board revolts, and SEC scrutiny for a breach of the duty of loyalty [1.54, 1.63].However, in the Wild West of the Over-The-Counter (OTC) micro-cap markets, insiders bypass this via "Related Party Disclosures."As long as the company buries the terms within their Form 8-K filings or press releases, they can claim the transaction was "fully disclosed" to the public [1.42, 1.54].They shield themselves under the Business Judgment Rule, arguing that Visium had
$0 in revenue and needed Paul Taylor's private tech to survive, justifying the predatory 60% fee [1.44, 1.54]. It is highly unethical and devastating to retail investors, but structurally insulated from immediate legal shutdown.