The Tenth Anniversary Issue

tenblueI started The D&O Diary with my first blog post on May 10, 2006. Ten years later, I am about to celebrate the blog’s tenth anniversary. It has been a great ten years for me, and to celebrate the milestone, I have posted this special tenth anniversary issue. Following a brief reflection below on ten years of blogging, I have posted three lists: a list of frequently asked questions; a list of my top ten favorite noninsurance-related posts; and a list of my top ten favorite travel post pictures. In addition, to allow everyone to be a part of the celebration– and even more importantly, to ensure that everyone reads this post all the way to the end– I have also included a special Tenth Anniversary offer to readers. Continue Reading

Social Activist CEOs and Their Duties to Shareholders

salesforceI am sure many readers saw Monica Langley’s front page Wall Street Journal article earlier this week about Salesforce CEO Marc Benioff and how he uses his position to advance social causes he favors, including most recently, his efforts to combat state legislation concerning transgender bathroom use. The Journal article suggests that Benioff has launched a “new era of corporate social activism.” As the article details, Benioff’s efforts have drawn praise in some quarters, criticism in others. In a May 3, 2016 post on his eponymous blog (here), UCLA Law Professor Stephen Bainbridge raises some interesting questions about the compatibility of Benioff’s activities with traditional notions of corporate officers’ duties to shareholders. Continue Reading

Guest Post: Cyber-Liability Insurance and the Retroactive Date Exclusion

Odonnell, Stephen - Chicago - 300 DPI

Stephen O’Donnell

Cyber liability insurance is a relatively new product and many of the terms and conditions found in cyber-liability policies are as yet untested in the courts. In this guest post, Stephen O’Donnell of the Steptoe & Johnson law firm takes a look at two particular standard features of the cyber liability insurance policies, the retroactive date and policy inception date exclusions, and the potential for these exclusions to preclude coverage for the very kind of exposures that are the reasons most purchasers buy the insurance.


I would like to thank Stephen for his willingness to publish his article on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Stephen’s guest post.


Continue Reading

Private Company Management Liability Insurance Tune-Up Tips

tuneupThe private company management liability insurance environment is constantly changing. The liability environment is constantly evolving. Because of the changes in liabilities and exposures and because of the competitive nature of the insurance marketplace, the available terms and conditions are constantly changing as well. Unfortunately, all too often, some private companies simply renew their management liability insurance programs year after year, without ensuring that their policies contain the most up-to-date terms and conditions available. In order for companies assess whether their policies are current, I have listed some of the important items for companies to look for in their policies. I have added some additional comments below, as well. Continue Reading

The Yates Memo: What Impact So Far?

doj1It has now been seven months since the U.S. Department of Justice announced — in the form of a September 9, 2015 memo from Deputy Attorney General Sally Yates — that it was adopting a policy focused on individual accountability for corporate wrongdoing. The keystone of the policy embodied in the Yates memo is that for companies to receive cooperation credit, they must completely disclosure “all relevant facts about individual misconduct.”  As discussed below, the Yates memo is having an impact in a number of ways. However, according to an April 22, 2016 publication from the Clifford Chance law firm (here), the Yates memo may be having unintended consequences – it may actually be deterring companies from divulging information. Continue Reading

Despite Swiss Forum Selection Clause, U.S. Court Orders FIFA’s Insurers to Advance Insured’s Defense Expense

nystateOne of the key current concerns in the global D&O insurance marketplace involves questions of cross-border implementation of insurance policy responsibilities and requirements. This concern is usually presented as a problem for policyholders, as they must determine how their insurance might respond to claims arising outside their home jurisdictions. However, a recent decision in the Eastern District of New York and involving one of the individuals caught up in the FIFA improper payments scandal show that the problems involved with cross-border policy implementation represent a challenge for insurers, as well.


In an April 27, 2016 ruling (here), Eastern District of New York Judge Raymond J. Dearie determined that, notwithstanding a provision in FIFA’s D&O insurance policy requiring insurance disputes to be litigated in a Swiss forum, he had the authority to enter a preliminary injunction against FIFA’s insurers requiring them to advance the defense fees of Eduardo Li, one of the defendants in the FIFA criminal proceedings.    Continue Reading

Guest Post: IPO Companies, Section 11 Suits, and California State Court

californiaOne of the interesting (and challenging) quirks of the federal securities laws is that Section 22 of the ’33 Act provides concurrent state court jurisdiction for liability actions under the Act. Many courts have taken the view that legislation subsequent to the ’33 Act preempts state court jurisdiction under Section 22, as discussed here. While the courts continue to struggle with the preemption question, some plaintiffs are continuing to file ’33 Act actions in state court, particularly in California.


In the following guest post, Priya Cherian Huskins, Donna Moser, and Vysali Soundararajan of Woodruff-Sawyer & Co. take a look at these state court securities lawsuits, and in particular at the recently increased numbers of state court filings in California, as well as the practical implications. I would like to thank Priya, Donna and Vysali for their willingness to publish their article on my site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Priya, Donna, and Vysali’s guest post. Continue Reading

Yes, But WHY Are There So Many Fewer Publicly Traded Companies?

green_stock_tickerAs I have noted previously on this site, there are many fewer publicly traded companies in the United States now than there were within past decades. I have noted this phenomenon primarily within the context of observing that while the annual number of securities class action lawsuits has remained broadly stable within a range, the number of public companies has declined, suggesting that the average likelihood of any company getting hit with a securities suit has increased over  time (as discussed here). This often-overlooked observation is important, but it doesn’t address the more fundamental question of why there are so many fewer publicly traded companies than there once were. A recent academic paper documents the decline in the number of publicly traded companies and suggests several possible reasons for the decline. I have my own thoughts, as well. As discussed further below, these decline in the number of listed companies has important implications for the economy generally and for the D&O insurance marketplace in particular. Continue Reading

When Pre-IPO Companies Fail to Launch

nystateIPO activity so far this year is well off the pace compared to this time a year ago. According to Renaissance Capital, as of last Friday, there have only been 16 IPOs in 2016, compared to 45 at this point last year, representing a decline of 71%. Indeed, when cybersecurity firm Secure Works Corp. completed its IPO last Thursday, it was the first tech IPO in over four months – and its debut was less than encouraging, as the offering priced below the targeted range. In an environment like this, companies whose strategies included an IPO may find that their plan to go public is simply no longer a realistic – or even desirable – option.


Among the many consequences that may befall a company whose IPO plans are sidetracked is the possibility that it may face claims from disappointed investors who assert that the company and its senior officials should be held liable to them for their losses arising from the company’s failure to launch. As discussed below, a recently filed lawsuit underscores the susceptibility of pre-IPO companies to these kinds of claims, which in turn highlights some important D&O insurance considerations for these kinds of companies. Continue Reading

Theranos, the SEC, and the Enforcement of the Securities Laws Against Private Companies

TheranosIn a speech last month, SEC Chair Mary Jo White signaled that the agency was going to be paying closer attention to private companies, particularly so-called “unicorns” – that is, the private venture-backed start-ups with valuations over $1 billion (as I discussed in a recent post). In her speech, White highlighted the concerns that can surround companies with these kinds of lofty valuations, noting that “the concern is whether the prestige associated with reaching a sky-high valuation fast drives companies to appear more valuable than they actually are.”   It wasn’t clear at the time exactly what the agency’s scrutiny of these private companies might mean, but recent news involving the high-flying start-up company Theranos shows what White had in mind.  The developments involving Theranos, in turn, raise the question of whether other high-flying privately held companies might also face scrutiny, as well. Continue Reading