The Dark Knight Rises I: Corporate Shenanigans

The latest and presumably last installment in Christopher Nolan’s epic Dark Knight Trilogy, beginning with Batman Begins, continuing through The Dark Knight and now culminating in The Dark Knight Rises, came out on Friday. The reviews are generally positive, but as always, we’re more interested in how the film handles the legal side of things.

Unfortunately… there are some problems.  Major spoilers follow.

I. Wayne’s “Bankruptcy”

One of the major plot points involves Bane manipulating events such that Bruce Wayne goes bankrupt. He does this by breaking into the trading desk at a major stock exchange—the movie is delightfully schizophrenic about where it’s actually set, and there are shots from New York, Pittsburgh, Newark, London and Glasgow—and placing a bunch of trades which appear to have been authorized by Bruce Wayne himself. These trades were a series of unwise put options, though the movie never really explains what those are. To put it simply, a put option is a contract whereby two parties agree to sell something, called the “underlying,” at a fixed price at some point in the future. It’s actually a bit more complicated than that, as the “option” part suggests, but that’s about all we need to know for right now. The movie doesn’t explain whether Wayne is buying or selling with put options—you can do both—but it is entirely possible to lose a whole bunch of money in a hurry whether you’re buying or selling. All you need to do is be on the wrong end of an option that requires you to buy at a far higher price or sell at a far lower price than the market would otherwise make available.

There are, of course, some problems with this. One of the characters makes a passing suggestion that there might be something that could be done because the transactions were obviously fraudulent, but that it would take too much time. Why is never explained. Indeed, why trading did not instantly cease the second it became apparent that someone was actually storming the trading floor was never explained. The fact that someone had access to the trading desk explains how the put options could have been created in the first place, but it doesn’t explain why anyone thought for one second that they were real. An actual attack on the trading floor might well close the market for a day or two while damage is repaired and additional security installed.

Further, moving beyond securities fraud in particular and into contracts in general, there’s a strong argument that Wayne shouldn’t be held to the options he allegedly made. Mistake can be a defense to any contract. Mutual mistake arises when both parties were somehow confused about a key term of the contract, e.g., they showed up at identical addresses at different zip codes. If there was just an honest cock up, the deal’s off. Unilateral mistake, where only one party is screwing up, is harder to make stick and generally requires that the innocent party be aware of the mistake. Any time one side offers terms which are so wildly off base as to cause major financial damage or hardship, the other side might be vulnerable to a charge that they should have known something was up. The situation is very similar to that where a bunch of contractors submit a bid for a project and one of them is an order of magnitude less than the others. Odds are really, really good that he either made a math error or doesn’t understand the nature of the job, and the other side ought to be able to tell. Same for put options that are wildly off base, especially in the immediate aftermath of an attack on the trading floor. The fact that Wayne’s fingerprints are on it isn’t going to change this either. First of all, stock exchanges don’t use biometrics of that sort as far as we know. Second, Wayne has a plausible explanation for how his fingerprints were obtained (the break-in at his house by a known thief).

So really, there isn’t any obvious reason Wayne or his representatives couldn’t just refuse to honor the contracts and let the chips fall where they may. While one can potentially see how the plan to bankrupt Wayne is supposed to work, it doesn’t seem like it would.

II. Wayne and the Board of Directors

But that’s not all that happens. Bane wasn’t trying to just bankrupt Wayne personally. He was trying to take control of Wayne Enterprises. Exactly how isn’t clear, and this is where the other question comes up. Say Wayne goes bankrupt. That sucks for him, but it doesn’t necessarily mean that Wayne can be dismissed from the Board of Directors of Wayne Enterprises. Indeed, it’s not clear how his personal bankruptcy would or even could affect WE at all. Now it’s possible that the trades could have been made using Wayne’s authorization but in Wayne Enterprises’ name, but this doesn’t fix things. In that case, Wayne Enterprises might go bankrupt, but Bruce Wayne himself should be unaffected, other than the loss of whatever portion of his fortune comes from Wayne Enterprises. It’s also not clear why Wayne would be authorized to make those sorts of trades anyway. Lucius Fox is the CEO, and Wayne’s position at the company has never been adequately explained, but he’s not the CFO as far as anyone knows. Nor is he in accounting. Corporate financial transactions are usually handled by bean counters in the Finance and Accounting department, not the C-suite, and it’s not clear Wayne even has an office there.

Regardless, how all of this is supposed to add up to Wayne getting kicked off the board or Daggett being able to somehow take control of and/or buy Wayne Enterprises is simply unclear. We can see how the plan to bankrupt Wayne was supposed to work, but we don’t think it would. But we’re not even sure how this part of the plan was supposed to work.

III. Conclusion

So while a lot of the rest of the movie is pretty awesome, the parts dealing with the stock market and various corporate shenanigans isn’t merely implausible, it simply doesn’t make sense at all. It’s not as if the plan had problems but, if it worked the way it was supposed to, would achieve the desired result. Here we’re not even sure what the “plan” working the way it was supposed to would actually look like. This makes for a rather interesting reversal from The Dark Knight, in a way. In the previous movie, a character who is supposed to not be “a schemer” winds up with some of the most detailed and intricate plans in movie history. In this movie, characters who are supposed to plan for the really long game seem to basically be winging it.

Update: It looks like The Atlantic came to a similar conclusion.

44 Responses to The Dark Knight Rises I: Corporate Shenanigans

  1. In some jurisdictions, wouldn’t a director of a company going bankrupt prevent them being a director or officer of a company for a period of time? That might be how Bruce could have been removed from the board.

    Unfortunately that’s the only part that made sense to me…

    • Ryan Davidson

      As a matter of corporate practice? Maybe. I can see a corporate charter being written that way. I can also see a board of directors taking the opportunity to exercise the provisions for removing one of their own. But removing someone from a board of directors involuntarily generally takes some doing and isn’t simply a matter of asking someone to leave. Depending on how the charter is written, it may actually take a vote by the shareholders, and that could take months.

      But as a matter of corporate law? Not as far as I can see.

      What really bugs me though is the assertion that Wayne had cost the board of directors a lot of money. If he was playing with Wayne Enterprises money, Wayne himself should not be bankrupt. If he was playing with his own money, Wayne Enterprises shouldn’t have lost a dime.

      • In the UK, it *is* law that an undischarged bankrupt can’t be a company director. After going bankrupt, you’re disqualified from any directorships you currently hold, and can’t become a director again until your bankruptcy is discharged. So it’s certainly true in some jurisdictions. Although I have no idea whether that includes any states in the US!

      • In the US bankruptcy is primarily a federal law issue. The law can still vary from circuit to circuit and even district to district, though. In the case of a bankrupt corporation the Supreme Court gave a pretty clear answer: “Congress contemplated that when a trustee is appointed, he assumes control of the business, and the debtor’s directors are ‘completely ousted’.” Commodity Futures Trading Com’n v. Weintraub, 471 U.S. 343 (1985). But in this case we’re dealing with an individual (Bruce Wayne) and the answer is unclear as far as I can tell: “Weintraub notwithstanding, however, it remains uncertain whether such rights and powers of corporate governance would enter the estate if the bankruptcy debtor were one of the directors or officers of a corporation, rather than the corporate entity itself.” W. Homer Drake and Christopher S. Strickland, Chapter 11 Reorganizations § 9:1 (2011)

      • Upon further research, it does appear that there are state laws that require someone to resign upon being adjudicated as bankrupt. These are not bankruptcy laws per se but rather laws related to business organizations, which are a state law issue. For example, California Financial Code § 6152(a): “A director shall automatically cease to be a director upon becoming the subject of an order for relief in bankruptcy or upon conviction of a criminal offense involving dishonesty or a breach of trust.”

        I don’t know if such provisions are common enough that we can assume that the state in which Gotham is located (or, more properly, the state in which Wayne Enterprises is incorporated) would have one.

      • Ryan Davidson

        That’s interesting, but even a law like that one wouldn’t necessarily apply here. The term “bankruptcy” has two meanings, a general one and a technical legal one. The former basically means “This person can’t pay their debts.” The latter means “This person has officially filed for bankruptcy.” A person can be functionally bankrupt for quite some time, but anyone who’s been there can tell you that the excruciating process of avoiding creditors, robbing Peter to pay Paul, and selling off assets can go on for months or years before one actually files for bankruptcy.

        The latter sense of the word applies if and only if official paperwork has been filed with the courts. I’m no expert on UK law, but I’d bet that the provision about corporate directors only kicks in if one of them actually files for bankruptcy. Otherwise, any time a corporate director missed a payment on their credit card, the board might be reshuffled. That doesn’t seem the right result.

        So if we take that law to mean “A person who has officially filed for bankruptcy,” Wayne isn’t even technically bankrupt. Filing for bankruptcy takes time. Wayne didn’t even realize he was broke until the next day, and even if he’d called his lawyer right then and there, it’s likely he wouldn’t get something on file for at least a week or so. How much does Wayne potentially owe? How much cash does he have on hand?What sort of assets can be liquidated, and how much cash could they bring? Figuring that out is going to take time, during which he’d be “bankrupt” in the first sense of the word but not the second. This condition is fuzzy enough that it’s unlikely to trigger that kind of automatic exclusion.

        Further, his bankruptcy attorney would almost certainly pursue the sorts of defenses we describe above, e.g., trying to invalidate the trades as fraudulent and/or the kind of “mistake” of which the counter-parties should have taken notice. No, preparing someone as well-off as Bruce Wayne filing for bankruptcy is going to take days, weeks, or even months, not hours, especially given the circumstances. It’s not going to happen quick enough for him to be automatically booted from the board in less than 24 hours.

      • Ryan Davidson

        Short version: even if that applied, there’s a difference between being “broke” and being “bankrupt.” You aren’t actually bankrupt until you say you are.

    • I find the idea that Wayne would receive bankruptcy protection that fast seems pretty unlikely. Also, given how ridiculously obvious the fraud is, wouldn’t the bankruptcy court start of by refusing to honor the margin calls on the options?

      Finally, what kind of creditor says: “Well, you were fabulously wealthy yesterday and will be again in a couple of months when this whole fraud thing is fixed, but we’ll just liquidate right now!”

      • Oh, and then, why does the power go out that night? I pay my power bill on a monthly basis and if I fail to pay it, I get months before the power is actually cut. I guess the rich and famous get a pretty raw deal from the power company…

  2. Isn’t there also the matter of the gross corporate malfeasance that has occurred at Wayne Enterprises? The conversation between Bruce Wayne and Lucius Fox over why they no longer fund the Gotham City boys’ home makes it clear that the corporate reciepts at WE have been plummeting since Bruce became a shut-in. But Bruce isn’t the CEO or the only member of the board. And even if he is the majority share holder, the other board members have a fiduciary duty to the remaining shareholders (as well as to Bruce) to oversee the company properly, which could include removing Fox as CEO if he is destroying the company. Why would it matter that Bruce is a shut-in, if the people who go into the office every day to run the company are still doing just that? They should still be running the company properly, even if the company is own by someone not particularly engaged.

  3. I don’t think it changes your analysis of the problems with this scheme any, but I do think that the idea of how Bane’s plan is *supposed* to have worked is that in order to cover the debts incurred by his put options Bruce Wayne had to sell off his controlling shares in Wayne Enterprises. Presumably Bane would have done this in Wayne’s name at the same time as he planted the fraudulent put options. I think we’re also meant to assume that the program was designed to make it look as if all of these transactions occurred well before the attack on the Stock Exchange (we’re clearly in the realm of ‘computer programs are magic’ with this one), which would at least muddy the waters as far as proving fraud was concerned. Of course that still doesn’t necessarily answer the questions of how this (a) leaves Bruce Wayne effectively broke to the point where his power’s being shut off and (b) put Bane’s allies on the Board of Directors in a position to wrest control of the company, but that was how I understood the thrust of Bane’s plan.

    • Those are good points. Although, even if the trades were made to look as though they had been made before the attack, I think it still beggars belief that Bruce Wayne would have made such trades, since he has apparently never been an active manager of his own money and moreover he had been out of the loop personally and professionally for years. And why would Wayne suddenly make these trades on his own rather than through a broker? And if the trades were made to appear as though they came through Wayne’s broker, then that broker should be able to explain that he or she didn’t make the alleged trades.

      • Regardless, you can’t just show up on the trading floor and place a bunch of trades. Maybe Wayne could have been invited as part of an event, but not just anybody can walk in and start trading. You need all sorts of authorizations which Wayne would most likely not have.

    • I think this is even more magical because every trade has a counter-party. You can’t just sell a bunch of puts. Somebody has to buy them. And if they sell so many puts that it’s going to bankrupt Bruce Wayne, that means lots of institutional investors are buying the puts. Which means lots of organizations that care a lot about that sort of thing and all have heterogeneous systems have records of those trades being back-dated. Presumably, the CFO at Wayne Enterprises personally knows a bunch of these guys (they probably manage the cash account) which means that within minutes, they’re going to have an audit trail a mile long of something funny going on. The more I think about this movie the more it resembles a swiss cheese.

  4. Could it be possible that the trades at issue were selling the shares to Dagget and Bane? That would certainly give them control of the company. Of course, that means that the paper trail would lead right to Dagget.

    There are a lot of narrative problems with this one, and I think of more the more I think about it. Very few of the tactical and operational decisions by the Gotham PD, the military, and the WE executives during and after the seizure of the city are explainable by anything other than “everybody took their stupid pills on the same day.” (Why didn’t Fox et. al. get on a radio to tell the outside world about the bomb being on a timer right away? Knowing it’s going to go off anyway sooner or later changes the calculus dramatically for everybody.)

    • There’s an extra step. You don’t really own shares in a corporation unless the corporation recognizes you as the owner, particularly if you have book-entry shares, which is most common these days. (In the old days, you bought shares, and the company was told about it, and eventually you’d get a pretty piece of paper that indicated your shares. But if something happened to your piece of paper, like say a homicidal maniac in a clown suit burns your house down, no worries… the corporation still shows you as the owner of the shares and will send you a new piece of paper. When you sell the shares, the buyer takes your pretty piece of paper, sends it in to the company, and asks that a new piece of paper with THEIR name on get sent out. Book entry is the same thing, except that nobody bothers with the little pieces of paper anymore. So, the REAL way Bane’s plan would have worked is if they broke into Wayne Enterprises’ IT system, and tampered with the electronic records, plus created some mayhem wherever the paper originals are stored (or, in today’s world, at the company Wayne Enterprises hires to do all of this, plus manage DRIPs, tax filings and withholdings, and so on.) It would, however, not be at the stock exchange, for the reasons noted by our hosts in the original posting.

    • As far as Lucius going on the radio goes, Bane (or rather Talia) has the detonator, and Lucius knows that, as does everyone else. So announcing to the world that Bane’s bomb will explode by itself will probably do nothing other than cause Bane / Talia to either deny or mock this (does Lucius have any proof? Would enough people believe him even if he does?), or just shrug and say “game over, then” and blow up the bomb right then and there. Basically it would just be provoking them. Unless he could alert them in secret, but he’d still have to prove it and hope word does not get to Bane (and if he told Miranda Tate about his plan, then it will).

      • I don’t mean to go on a broadcast radio station, I meant find something like a Ham radio or CB radio for two-way communication with authorities on the mainland. There will be too many radio sets in Gotham for Bane to control

      • Even two way radios can be easy to listen in to and it does sort of depend on him somehow managing to make contact with someone on the outside first in order to start communicating with them, not to mention that they are trustworthy and believe him. The latter is a problem because the heroes actually did tell the soldiers that the bomb was going to go off anyway and nobody believed them (or wanted to), or just preferred to focus on getting the bomb and the detonator (which they thought was with Bane). He doesn’t know Miranda Tate is Talia either so he might make the mistake of telling her too.

        In practice either way it wouldn’t really change much. Fact is everyone knows a detonator exists and nobody knows who has it; the person who does in fact have it is one who is trusted by the good guys. The outside world still cannot easily act because even if they know that the bomb will go off eventually, any action might still provoke it going off now.

  5. question – i would assume that Wayne would have had measures in place to protect wayne enterprises in case of this happening? OR alternately if it was found out he was batman and using the products or R&D of wayne enterprises.

  6. I know the zoning issue was covered when you talked about Stark’s arc reactor in The Avengers but, wow, really, Lucious Fox and Bruce Wayne were able to build a nuclear reactor in Gotham City without anybody knowing about it? That beggars belief. Surely they should face charges for building something so dangerous in the first place. The same can be said of Doctor Octavius’ fusion reactor in Spiderman 2.

    Nevertheless, although this is a legal blog, I did find some problems with the science. Fusion reactors rely on the mixing of deuterium atoms which fuse into helium under high temperature and pressure and give off energy in the process. Deuterium atoms are not radioactive and they do not spontaneously explode. Indeed, an H-bomb only works because an A-bomb is used to create the high temperatures necessary for fusion to occur. A fusion reactor, in theory, would use high energy lasers to create the heat for fusion and, even then, the reactor wouldn’t work without there being enough pressure on the deuterium atoms to get them to fuse together. If you remove the fusion core from the reactor then you have inert material: it is not explosive and it it not radiative, not unless this is a “cold fusion” process that takes place spontaneously in which case you wouldn’t even need a reactor.

    Now if it weren’t a fusion reactor but an ordinary fission reactor then it would not be a “new source of energy” but then, supposedly, this would mean that the material from the reactor would be radioactive and it could be made into a bomb. In fact, this is why governments get nervous when other countries develop nuclear reactors: if you know how to build a nuclear reactor then you know how to make a bomb and you have all the materials you need. Thing is, again, it is not as simple as disconnecting the core from the reactor: assuming the reactor was online (which it wasn’t because Fox and Wayne said it wasn’t even working) then it would start to melt down as soon as it was disconnected from the reactor because the nuclear reactions would continue spontaneously but without any means of cooling the core. In other words, the core would get so hot that it would melt and leak radioactive material. This would happen pretty much right away, not several months later and it would not cause a nuclear explosion… although the pressure inside the core could get to the point where a non-nuclear explosion could occur and then that would be considered a “dirty bomb” because radioactive material would be distributed far and wide.

    A third possibility was that this was a matter / antimatter reactor like they use on Star Trek. On Star Trek they use a “containment field” which would probably mean that the antimatter particles are charged and in motion in a magnetic field. If you turn off the “containment field” then you have “decontainment” and that would result in an explosion, a big one, but it would be absolutely immediate and not several months later. Interestingly, the movie Angels and Demons had a bomb which had anti-matter in a containment field which presumably ran on batteries and when the battery ran out the bomb would automatically explode. Okay, so maybe they had the same thing here: maybe the core produced and stored anti-matter and the reactor was one big battery recharger and Fox knew that the core would explode at a certain time if it wasn’t plugged back in. That actually makes sense.

    Of course, that gets back to the original question: why build this thing in the middle of a populated area (especially in secret)?

    • Presumably the answer here is that they were doing it illegally….which is far from belief from Bruce Wayne.

  7. The actual lines in the film, to my recollection, spoke of those options “ending at midnight last night.” I don’t know much, if anything, about how these sorts of options work, but is it possible that the options were to buy, to buy a large number (on the supposed presumption that Wayne was “risking” a lot on the bet that they would plummet to ludicrously cheap), and were backed by his own stocks in Wayne Enterprises as collateral?

    If the Wayne stocks he owned were sold to pay for the very expensive stocks that did not go down to some low …no, that can’t be right. You said that put options FIX rates.

    It must have been put options to SELL Wayne Enterprises stock. That would explain bankrupting Mr. Wayne and transferring control of the company, at least.

    • James Pollock

      You’re confused, and I think I know why. You’re referring to options as if Wayne had them… that is, Wayne either had an option to buy something or had an option to sell something. This is wrong because if Wayne has these options, he also has an option NOT to buy or NOT to sell. There’s no penalty for failing to exercise an option (except, of course, that you paid for it and got no return on your investment in the option.)
      Instead, you have to imagine that someone else has an option… either to sell something at a high price to Wayne or to buy something at a low price. The problem with that being, as explained, that it’s far more likely that Wayne refuses to accept the fraudulent terms, declines to complete the trades, and has a seven-year running legal battle in the courts that he eventually wins. (of course, THAT part might bankrupt him, but it’s going to take a while.)

    • The most plausible transaction is “Wayne” selling a bunch of Put options against Wayne Enterprises at a ridiculously low price. I am no expert on financial computer systems, but I’m pretty sure there are safeguards against that. At the very least, it would reek of market manipulation and somebody from the SEC would run at top speed to investigate and rapidly discover the fraud.

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  9. One final point. The idea that Wayne would actually go bankrupt like that is absurd. At the very least, he has a petty-cash account which he does not tell his broker about. There is no way he would be wiped out that fast.

    • Not to mention real estate, art, bonds, foreign investments, other investment opportunities that I don’t know about because I don’t have billions of dollars to throw around. Even if he were to have lost 90% of his net worth (and I doubt any financial advisor would allow him to be that poorly diversified), he would still be left with, at minimum, $100,000,000.

      • James Pollock

        Not so fast. He may well have mortgaged those other assets to raise the cash he needed to buy control of Wayne Enterprises. He really could have all his eggs in one basket.

  10. That bugged me, too (along with all the stock shenanigans that didn’t add up). Bruce Wayne just *might* have all his eggs in one basket. Maybe. Though the fact that he’s a billionaire would argue against such stupidity. But Batman? Sorry, Batman would have secret accounts, stashes of gold or other precious commodities, bases, and equipment all around the world. And, honestly, his swift return to Gotham from the prison suggests just that. Nossir, Batman does NOT get caught with his pants down.

    • James Pollock

      Batman doesn’t have a source of funds (leaving aside the question of whether Batman is Bruce Wayne’s alter ego or vice versa), so although Batman is very good at seeing, and preparing for, traps ahead of time, I’m not sure Batman could cache any substantial amount of liquid assets because he has no source of substantial liquid assets… unless he’s been skimming from criminals.
      Not to mention the reception Batman’s going to get when he tries to fence the goods… it’s not like he can walk into the commodities exchange with a couple million dollars’ worth of gold, and ask for cash.

  11. Thank you! This part of the movie was driving me crazy! There’s all sorts of stopgap and compliance measures in place to prevent fraud from happening and ensuring that investors have actually authorized the trades that are being made. Wayne could probably get most of the trades cancelled and the money refunded to him relatively quickly.

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  14. I think what might have happened is the computer program sold a bunch of puts in Wayne’s name and back dated the trades prior to Baines raid on the stock market which would have caused a market crash and Wayne Enterprises to substantially decline. On the other side of the trade was John Daggett who bought the puts that Baine fraudantly sold in Bruce Wayne’s name. When Wayne Enterprise stock dropped below the exercise price of the puts Dagget obtained control when all of the stock in Wayne Enterprises that Bruce owned had to be given to Baine to make good on the puts.

  15. ****SPOILER ALERT****

    This article is great because it clearly explains some confusions I had during my first viewing of the movie. I couldn’t figure out how or why Bane’s plan to assault the stock market was supposed to work for many of the reasons you pointed out here. I watched the movie twice, back to back, in the theater on the day I went to see it, and Freddy’s comment is on point with what I eventually determined was the plan: to bankrupt Bruce Wayne only long enough for Talia al Ghul to maintain Wayne’s and Lucious Fox’s trust and take over the board. Daggett thought he’d buy the stock to take control and regardless he was expendable to Bane. Finally, remember, it was Wayne who undermineded Daggett to place Talia on the board. Daggett later tells Bane that his plan didn’t work, just before Bane kills him. Your article is very clarifying to the things I didn’t quite understand, as the plan didn’t accomplish what Daggett thought and upon a first viewing, I couldn’t understand why he thought it would. I guess he was greedy and blind to the fact that it wouldn’t work out for him, but Bane is a monster so he could have been strong armed into going along with the plan; however, I feel your claims that the plan wasn’t well-thought isn’t accurate, because Bane and Talia only cared about access to the nuclear reactor and gaining Wayne’s trust, and their plan came together so well the nuke exploded. It worked because Wayne strongly mistrusted Daggett, but believed Talia who, under her hidden identity, funded the clean energy project. I do agree that this movie was much more convoluted than the previous Dark Knight, but the idea of the film was to wrap up a trilogy and continue the story of Ra’as al Ghul, a schemer, and his legacy from Batman Begins while tying together events of Harvey Dent from the Dark Knight. I think the confusion left me more focused on these little inconsistencies than focused on the film as a whole and for that I say the Dark Knight is still my favorite film of the three.

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  17. It is relatively simple to understand, in order to become a board member, one would have to obtain a certain percentage of ownership in the company. Because Bruce risked his shares by putting futures on them lost his majority advantage along with all his money.

    • That’s not actually correct. Ownership of the company is not a requirement for membership on corporate boards. Indeed, there’s a distinction between “inside directors,” which do have a stake in the company, and “outside directors”, which don’t. But an inside director which sold his shares wouldn’t necessarily lose his seat. One is a member of the board because one has been appointed to be a member, and there generally aren’t any kind of automatic triggers that can result in one losing one’s seat.

  18. Some of the premises of the post and comments seem to assume that a) the equity of Wayne Enterprises is publicly traded and b) that Bruce Wayne has significant liquid wealth outside his ownership stake in W.E. However, didn’t we learn in Batman Begins that Wayne had via charitable trusts and the like bought back a bunch (perhaps most or all) of the public float of W.E., thus perhaps effectively taking the company back private. If that’s the case, it likely took a significant amount of Wayne’s liquid wealth and tied it back up in now-illiquid (absent an SPO) private shares. As for DKR, who bought or sold put options and on what securities or commodities and at what strike price is not explained in the movie. But all we really need for that premise to bear some plausibility is that Bane’s hack program had the options trades executed or backdated before the crash caused by the market disruption–and it only needs to work for long enough to disrupt Wayne’s liquidity [even if long term he could get wealth back by proving fraud, as Fox suggests], make him look like a bumbling rich tool (an image he spent years cultivating) and allow the corporate coup led by Daggett (really Bane and Talia) to succeed in removing Wayne from the board. If it’s a private company, the board is all the more likely to boot a reckless family director for losing shares to mystery creditors (presumably pledged as collateral/margin for the options trades). Basically, it’s all no less plausible than writing an operational exchange-disrupting program.

  19. Actually, having re-watched DKR, I must amend part of the statement. It appears at least that WE shares are still referred to as publicly traded (or at least as having a readily ascertainable market price-I suppose it could be traded among accredited investors or qualified institutional buyers with some liquidity, even if not publicly registered), whether or not the float is a majority. The rest of the reasoning above could still apply, however. The majority of shares could still be in a small number of private hands and/or voting rights could be concentrated in special shares. Wayne’s wealth (like, say, Warren Buffett’s) could still be tied up in equity-the program could also be assumed to have gotten at Wayne’s other liquid wealth, using it as margin for the bad options trades.

  20. Re Davidson’s point on inside v. outside directors: That distinction refers not to a director’s ownership stake, but to whether or not the director is also an officer (i.e. employee) of the company. So, for example, some companies divide the roles of chairman of the board and CEO/President, some do not. Some outside directors are required by the corporate organizational documents to also own an equity interest (this is the emerging trend), even though they are not officers; likewise, some organizational documents provide that sufficient equity ownership entitles the owner to be or to name a representative director(s)-thus, corporate raiders and activist investors are able in some cases to have an “inside man” on the board.

  21. I feel i need to raise an important point here. You guys are commenting on current US laws and procedures. Now, not only does every city, state and country differ on their laws, but this movie is about the fictitious city of Gotham. None of you can possibly know the laws of the city in this movie better than the writer. The laws, the people and the technology are different in TDKR than in real life. For example, the Dent Act doesn’t exist in the real world but that doesn’t mean the movie is wrong for saying it exists in the movie. So why can’t their trading laws / procedures be different than ours? In Gotham, you can hi-jack a stock exchange and make illegal trades with a thumb print, bankrupting a person for a period of time until fraud is proven. If i heard about that happening in another country, I’d say man they have some stupid laws, but I’d accept it. I wouldn’t say that’s bullshit because in the current US, that’s not how things happen.

    • First, securities law is a federal issue, and Gotham is located in the United States, whatever state it may be in. Second, the law of fraud and contracts is very similar from state to state. It is extremely unlikely that the law of whatever state Gotham is in is so different that the outcome would be different than we described. Third, unless explicitly stated otherwise (e.g. the Dent Act or the Superhero Registration Act), we assume that the law in a realistic fictional setting is the same as it is in the real world. This is similar to how, even though Superman can fly, we assume that gravity still functions normally in the DC universe. Finally, even if the law is different in the fictional universe, it’s still interesting to explore how it is different and why it might strain belief for such a fundamental part of the law to be different.

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