Delaware courts have spent the last several years wrestling with one of the hardest questions in corporate governance law: at what point does a board’s failure to prevent corporate misconduct stop being ordinary bad management and start being an actual breach of the fiduciary duty of loyalty? That question sits at the center of Caremark doctrine, and a run of recent decisions, involving Teligent, Regions Financial, and Boeing, gives boards, senior executives, and compliance officers real, current guidance on where that line actually falls in 2026. This is Part 1 of a two-part series. Here, we look at what Teligent and Regions Financial teach about escalation, investigation, and response. Part 2 will cover the pivotal 2026 Boeing decision and what it means for the doctrine going forward.

A Quick Refresher on What Caremark Actually Requires

Caremark liability flows from the duty of loyalty and its underlying obligation of good faith, and it has never been a simple negligence standard. A plaintiff can establish bad faith one of two ways: showing that fiduciaries utterly failed to implement any reporting or oversight system at all, or showing that fiduciaries implemented such a system but then consciously failed to monitor it or act on the risks it surfaced. That second category, commonly called a “red flags” theory, is where the vast majority of meaningful litigation now happens. The critical word in both formulations is bad faith. Negligence, an underperforming compliance program, poor judgment, even a serious corporate crisis, none of that alone establishes Caremark liability. That distinction has only become more important as the doctrine has matured.

Teligent Shows What Happens When Officer-Level Oversight Breaks Down

The Delaware Court of Chancery’s decision in Giuliano v. Grenfell-Gardner, decided in September 2025, involved Teligent, a pharmaceutical manufacturer whose entire business depended on FDA compliance. Teligent ran into serious manufacturing and regulatory problems, and the complaint alleged that both directors and officers failed to build and maintain adequate systems for monitoring that compliance, then failed to respond as the regulatory problems piled up.

The procedural posture here is unusual and worth understanding: after Teligent entered bankruptcy, its plan administrator pursued these claims directly through the company’s successor, which meant the plaintiff didn’t have to clear the usual derivative demand hurdle and had full access to the company’s internal books, records, and communications. With that access, the court denied dismissal against the directors and two officers, while dismissing the claims against the CFO specifically.

Teligent matters for three reasons. It reinforces that identifying mission-critical regulatory risk is central to Caremark analysis, and for a pharmaceutical manufacturer, FDA compliance isn’t a peripheral concern, it’s foundational to the ability to operate at all. It also confirms that officer-level Caremark obligations, established in the McDonald’s decision, are being applied in practice: officers who own areas carrying significant legal and regulatory risk can’t simply assume oversight is exclusively the board’s job. And it underscores that a compliance system only has value if material information actually moves upward to the people responsible for acting on it. The litigation remains active, with the court declining in August 2026 to allow an early summary judgment motion because the factual record still needs further development, which makes this a case worth continuing to watch.

Regions Financial: The Investigation Isn’t the Finish Line

Brewer v. Turner offers a different but equally important lesson. The case grew out of Regions Financial’s overdraft fee practices. In 2019, the company’s former general counsel sent the board a draft whistleblower complaint alleging, among other things, that he’d been terminated partly for raising concerns about allegedly illegal practices used to inflate consumer overdraft fees. The board responded by hiring an attorney to investigate. But Regions didn’t actually stop the challenged practices until 2021, and the Consumer Financial Protection Bureau later investigated and reached a 2022 consent order under which Regions paid $191 million in fines and consumer redress, while denying wrongdoing.

A stockholder brought derivative Caremark claims, and in September 2025 the Court of Chancery allowed the red-flags theory to proceed against directors who served during the relevant period, finding the plaintiff had adequately pleaded particularized facts supporting a substantial likelihood of liability. The Delaware Supreme Court declined to hear an interlocutory appeal in December 2025, a procedural rather than substantive ruling, but one that leaves the Chancery decision and the underlying litigation in place.

The real lesson in Brewer isn’t that receiving a whistleblower complaint automatically creates liability, and it isn’t that hiring an investigator automatically eliminates it either. The question that actually matters is what happens after the investigation: did the board genuinely understand the substance of the allegations, oversee an appropriate investigation, evaluate what it found, ensure real remediation happened, and document that entire process. An investigation that becomes a procedural box-checking exercise, disconnected from any actual response to continuing misconduct, doesn’t satisfy Caremark’s good-faith requirement. For chief compliance officers and general counsel, this case is a clear reminder that escalation is only half of an effective compliance system. Response is the other half, and it’s the half that actually gets tested in litigation.

Part 2 of this series takes up the 2026 Boeing decision, which supplies the essential counterweight to these two cases: what happens when a board’s oversight efforts are genuinely robust, and a serious incident happens anyway.