If an agent commits any torts or crimes acting within the scope of his or her authority then both the principal and agent may be held liable.
One way to overcome the principal-agent problem is to make managers owners through stock options. A principal agent are chosen to act on behalf. They can act on behalf of the managers of fund by seeking their best interest. When managers becomes stock owner it's helps to better manage the funds. Therefore, One way to overcome the principal-agent problem is to make managers owners through stock options.
To be directed in one's actions by another as part of a freely agreed upon contract in which services are exchanged for pay is exactly what it is to be an employee. This definition, in fact, is written into American labor law. So what does an agent do? An agent acts on behalf of a client and at the client's direction in exchange for monetary compensation. This exactly fits the definition of an employee, therefore an agent is an employee.
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