Paper Dragon Thieves

Developments in the law are making the corporate form more opaque and allowing the agents who animate it to escape individual accountability for their actions. The law now provides protection for agents to engage in widespread frauds that inflict massive harm on the public. This article challenges the academic orthodoxy that shareholder and director liability are enough to control agent behavior by developing a paper dragon analogy to focus on the importance of agents in corporate animation. Lack of agent accountability encourages the patterns of fraud that caused the financial crisis in which forty-five percent of the world’s wealth disappeared, and which continue to be repeated. The article reveals how making the corporate form more opaque has led to the destruction of corporate conspiracy charges for individuals and now the implosion of securities law as a method of disciplining agents. The article concludes with a call for both watching the paper dragon and the need to track the dancers who move its feet.