The Status of a Creditor as a 'Controlling Person'

The growing ingenuity of plaintiffs' counsel in security regulation matters and the current legal trend toward redistributing the burden of loss to those best able to absorb it have together reopened the frontiers of legal liability and introduced much uncertainty to areas which were once securely governed by the individualistic philosophy of the early common law. One of the liveliest and most troublesome questions to appear in this regard concerns the obligations of a creditor to protect the public from his debtor's misconduct. The nature of this problem can usefully be illustrated by the following hypothetical situation:'