Respondeat Superior

AAA

DEFINITION of 'Respondeat Superior'

A legal concept in which a company and the company's management are held responsible for employees' actions. The phrase "respondeat superior" is Latin for "let the superior respond," and it prevents employers from profiting from the illegal acts of their employees while avoiding legal repercussions themselves. For respondeat superior to apply to a legal case, an employee of the company must have committed the crime for the benefit of the company, not for his or her own benefit.

INVESTOPEDIA EXPLAINS 'Respondeat Superior'

The goal of respondeat superior is to encourage company management to be knowledgeable about the laws while also making it easier to persecute different managerial layers without having to prove the intent (i.e. direct orders) to commit a crime. However, the existence of a compliance program allows many companies to claim employees who violate laws as "rogue," and deflect legal action away from management.

RELATED TERMS
  1. Accountability

    The responsibility of either an individual or department to perform ...
  2. Quality Management

    The act of overseeing all activities and tasks needed to maintain ...
  3. Risk Management

    The process of identification, analysis and either acceptance ...
  4. Prudent-Person Rule

    A legal maxim restricting the discretion in a client's account ...
  5. Compliance Department

    The department or unit within a brokerage firm, bank or financial ...
  6. Rogue Trader

    A trader who acts independently of others - and, typically, recklessly ...
RELATED FAQS
  1. How do I find a good personal bankruptcy lawyer?

    While it is not necessary to hire an attorney to file bankruptcy, the rules that govern bankruptcy can be extremely complex, ... Read Full Answer >>
  2. What are unregistered securities or stocks?

    Before securities, like stocks, bonds and notes, can be offered for sale to the public, they first must be registered with ... Read Full Answer >>
  3. How does FINRA differ from the SEC?

    With all the financial organizations out there, knowing what they all do can be as complicated as knowing where to invest. ... Read Full Answer >>
  4. Are there regulations against monopolies?

    A monopoly occurs when a single company or group owns all or nearly all of the market for a particular type of product or ... Read Full Answer >>
  5. What is the Dodd-Frank Act? How does it affect me?

    The Dodd-Frank Wall Street Reform and Consumer Protection Act is a massive piece of financial reform legislation passed by ... Read Full Answer >>
  6. Can a company be state-run and publicly traded at the same time?

    A state-run company or enterprise cannot be publicly traded in the U.S. However, it is possible to purchase shares of state-run ... Read Full Answer >>
Related Articles
  1. Professionals

    Meeting Your Fiduciary Responsibility

    Being a fiduciary comes with a certain level of responsibility. These four steps will reduce your liability when managing other people's money.
  2. Entrepreneurship

    What Is Servant Leadership?

    Robert Greenleaf developed the concept of servant leadership, and many believe it is the key to avoiding greed-based company activity.
  3. Options & Futures

    Whom Should Corporations Please?

    Companies balance the interests of owners, customers and employees. Find out who comes out on top.
  4. Options & Futures

    Trading's 6 Biggest Losers

    These "rogue traders" are famous for their billion-dollar mistakes.
  5. Mutual Funds & ETFs

    How To Start a Hedge Fund In the United States

    A general overview of how to start a hedge fund firm in the United States, including complying with state and federal regulations.
  6. Mutual Funds & ETFs

    How To Start A Hedge Fund In The UK

    Starting a new hedge fund in the United Kingdom is more complex than in the United States. We discuss UK laws and regulations for starting a new hedge fund.
  7. Mutual Funds & ETFs

    How To Start A Hedge Fund In Canada

    Would-be hedge fund managers in Canada need to understand the laws and regulations that must be followed in order to start a fund in the country.
  8. Taxes

    Is It Smart To Get Dual Citizenship?

    Does it ever make sense to be a citizen of the U.S. and somewhere else? Yes, so you can work minus a visa – not so much, if you get drafted into the army.
  9. Retirement

    Expat In America: Visas To Retire In the U.S.

    It isn't easy for non-citizens to retire in the United States unless a family member is already a citizen. But some visas will allow for longer visits
  10. Mutual Funds & ETFs

    The Impact of the Janus Market Timing Ruling

    A look at the impact of the Janus Supreme Court ruling on market timing.

You May Also Like

Hot Definitions
  1. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  2. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  3. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  4. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  5. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
  6. Tangible Net Worth

    A measure of the physical worth of a company, which does not include any value derived from intangible assets such as copyrights, ...
Trading Center