The D&O Diary

The D&O Diary

A PERIODIC JOURNAL CONTAINING ITEMS OF INTEREST FROM THE WORLD OF DIRECTORS & OFFICERS LIABILITY, WITH OCCASIONAL COMMENTARY

Category Archives: Director and Officer Liability

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Liability Exposures of Audit Committee Chairs

Posted in Director and Officer Liability
One frequently asked question is whether members of a corporate board’s audit committee face heightened liability exposures. Two recent SEC enforcement actions seem to underscore that audit committee chairs do face liability exposures. Though both cases involve somewhat unusual circumstances, they seem to suggest that the “gatekeepers” on which SEC has said it will be … Continue Reading

Cornerstone Releases 2013 Study of M&A Lawsuit Settlements

Posted in Director and Officer Liability
Only two percent of M&A lawsuit that settled in 2013 involved a monetary payment to shareholders, according to the latest report on M&A lawsuit settlements from Cornerstone Research. The report, entitled “Settlements in Shareholder Litigation Involving Mergers and Acquisitions: Review of 2013 M&A Litigation” (here), is the second part of a two-part series on M&A … Continue Reading

Antitrust Enforcement and Corporate Risk Exposure

Posted in Director and Officer Liability
As a result of heightened regulatory scrutiny and changing enforcement priorities around the world, “cartel enforcement is a hot topic in boardroom,” according to a March 29, 2014 Economist magazine article entitled “Just One More Fix” (here). According to the article, antitrust enforcement authorities are getting “better at detecting cartels and bolder in punishing them.” … Continue Reading

Guest Post: BSA/AML Enforcement Trends and D&O Liability

Posted in Director and Officer Liability
In the following guest post, Christopher Laursen, Senior Vice President and Chair, Financial Institutions and Bank Practice at NERA Economic Consulting, takes a look at the current enforcement trends involving the Bank Secrecy Act and the Anti-Money Laundering regulations. I welcome guest submissions from responsible persons on topics of interest to readers of this blog. If … Continue Reading

Cornerstone Research Releases 2013 M&A Litigation Study

Posted in Director and Officer Liability
Mergers and acquisition activity continued to attract litigation in connection with virtually every transaction during 2013, and for the first time during 2013 the litigation filing rates for smaller transactions was as great as for larger transactions, according to a study recently released by Cornerstone Research. The study, entitled “Shareholder Litigation Involving Mergers and Acquisitions: … Continue Reading

Thinking About the Dewey & LeBeouf Criminal Indictment and Law Firm Management Liability Insurance

Posted in Director and Officer Liability, Uncategorized
The indictment last week of the top officials from the collapsed Dewey &  LeBouef law firm is merely the latest development in the long-running sequence of events following the law firm’s demise. The indictment (and the accompanying SEC enforcement action) paints a vivid picture of the desperate efforts of the law firm’s top officials to … Continue Reading

Growing Global Threats of Economic Crime

Posted in Director and Officer Liability
More companies – both inside the U.S. and globally – are experiencing economic crimes, and as companies expand their international operations and their reliance on the Internet and mobile technologies, economic crime increasingly has become a “borderless threat,” according to PricewaterhouseCoopers’ recent survey of global companies. The survey report, entitled “Global Economic Crime Survey 2014,” … Continue Reading

Target Directors and Officers Hit with Derivative Suits Based on Data Breach

Posted in Cyber Liability, Director and Officer Liability
  I have frequently noted that among the many exposures a company experiencing a data breach could encounter is the possibility of a shareholder suit alleging that the company’s board breached their fiduciary duties by failing to take sufficient steps to protect the company from a breach and its consequences. This possibility has now been … Continue Reading

Guest Post: The Business Judgment Rule Under Attack

Posted in Director and Officer Liability
In many jurisdictions, corporate officials sued for their actions undertaken in their corporate capacity may be able to defend themselves in reliance on the “business judgment rule.” This rule is designed to prevent courts from second-guessing the decisions of directors and officers. The defense has become particularly important in connection with the extensive litigation the … Continue Reading

Guest Post: Here We Go Again? Financial Institutions Face Heightened Regulatory Scrutiny Over Forex and Other Unregulated Rates

Posted in Director and Officer Liability
The global financial services industry is still reeling from the regulatory investigations surrounding the Libor scandal. Nevertheless, it seems that yet another scandal may be about to envelop the industry. In the following guest blog post Eric C. Scheiner and Jennifer Quinn Broda1]of the Sedgwick law firm take a look at what looks like will … Continue Reading

Top Ten D&O Stories of 2013

Posted in Director and Officer Liability
The world of directors and officers liability has long been characterized by rapid change. But even given these well-established dynamics, 2013 was a particularly eventful year, with several different developments that could impact the D&O arena for years to come. The list of the Top Ten D&O Stories of 2013 is set out below with … Continue Reading

The Responsible Corporate Officer Doctrine Gets an Administrative Extension

Posted in Director and Officer Liability
One of the more troublesome trends in recent years has been the increasing willingness of lawmakers and regulators to try to impose liability on corporate officials without regard for the requirements of the corporate form and even without reference to whether the officials are culpable in any way. (Refer here for my most recent discussion … Continue Reading

Goldman Sachs Must Advance Criminal Defense Fees of Former Employee Accused of Stealing Computer Code from the Company

Posted in Director and Officer Liability
In an October 22, 2013 opinion (here) that underscores the important distinction between indemnification and advancement and that highlights the sometimes surprising extent to which corporate officials are entitled to advancement of their attorneys’ fees when claims are filed against them, District of New Jersey Judge Kevin McNulty held that Goldman Sachs must advance the … Continue Reading

PLUS Professional Liability Regional Symposium in Zurich, October 9-10, 2013

Posted in Director and Officer Liability
I want to make sure that all readers – particularly those based outside the U.S. — are aware of an upcoming Professional Liability Underwriting Society (PLUS) event.   On October 9-10, 2013, PLUS will be sponsoring an educational and networking event in Zurich. The Professional Liability Regional Symposium will address a wide range of issues … Continue Reading

Notes from Around the Web and Around the World

Posted in Director and Officer Liability
Canadian Courts May Attract Securities Claims, But Claimants Still Must Show They Belong There: Much has been written (on this site and elsewhere) about the possibility that Canada might become a destination for would-be securities plaintiffs. That perspective gained an apparent boost in March 2012, when the Ontario Court of Appeals held that the liability regime … Continue Reading

UK Ministry Proposes Expanding Director Liability.

Posted in Director and Officer Liability, International D & O
As part of its scheme to improve corporate transparency and director accountability, a UK government ministry has proposed what UK Business Secretary Vince Cable calls “tough measures” to “give the public greater confidence that irresponsible directors will face consequences for their actions.” These proposals, if adopted, could significantly increase UK corporate directors’ liability exposures in … Continue Reading

When the Business Judgment Rule Isn’t Available to Protect Directors

Posted in Director and Officer Liability, Failed Banks
A recurring issue in the litigation the FDIC has filed against the directors and officers of failed banks is the question of whether or not officers – as opposed to directors – can rely on the business judgment rule as a defense under applicable state law. A July 8, 2013 decision by Judge Dean Pregerson applying … Continue Reading

More About Arbitration Clauses in Corporate By-Laws

Posted in Director and Officer Liability
In a recent post about the latest U.S. Supreme Court decision supporting arbitration, I speculated that the next step might be arbitration clauses in corporate bylaws, requiring shareholders to arbitrate shareholder claims. In response to my post, several readers alerted me that these issues had already been raised in a case involving CommonWealth REIT, though … Continue Reading