Tag Archives: Director and officer liability

Creditors’ Rights to Pursue Derivative Claims against Company Directors Under Delaware Law

In a detailed May 4, 2015 opinion (here), Vice Chancellor Travis Laster of the Delaware Chancery Court extensively reviewed the rights of an insolvent company’s creditors to pursue derivative claims against the company’s directors. As Francis Pileggi put it in a May 6, 2015 post on his Delaware Corporate and Commercial Litigation blog (here), Laster’s … Continue Reading

Bank Directors Facing Increased Regulatory Scrutiny, Raising Fears of Potential New Liability Exposures

Federal banking regulators have stepped up their interactions with and scrutiny of bank directors, according a recent Wall Street Journal article. The March 31, 2015 article, entitled “Regulators Intensify Scrutiny of Bank Boards” (here) details the ways in which regulators are “zeroing in on Wall Street boardrooms as part of the government’s intensified scrutiny of … Continue Reading

An Alarming Liability Award Against Not-for-Profit Organization’s Directors and Officers

A question that frequently recurs when I am speaking to directors and officers of non-profit organizations is why – given that their firms have no shareholders – they need to bother with D&O insurance. The reality is that even though officials at non-profit firms don’t have to worry about the possibility of shareholder claims, non-profit … Continue Reading

Personal Liability for Corporate Officials Under U.S. Import Laws

Import laws and custom duties are not areas of the law into which I frequently (or lightly) venture, but I delve into these topics here and now because developments in these areas have served up yet another example where individual corporate officers have been held liable personally for matters that previously had been regarded exclusively … Continue Reading

While You Were Out

I have no idea where summer went, but with the passage of Labor Day weekend there’s no denying that summer is over and that it is time to get back to work. For those of you who were fortunate enough to take some time off this summer or who maybe just found it a little … Continue Reading

On the Frontiers of Corporate Litigation and Liability: Inversion Transactions and a Proposed Duty to Warn

Among the developments dominating the business headlines in recent weeks have been two unrelated stories – the rising wave of so-called “inversion” transactions in which U.S. companies acquire foreign firms to avoid U.S. tax laws and the revelation of previously undisclosed problems with the ignition switches in certain GM cars that allegedly resulted in numerous … Continue Reading

Georgia Supreme Court Affirms, Elucidates Business Judgment Rule – and Its Limitations

A recurring issue in FDIC litigation against the former directors and officers of failed banks has been whether the business judgment rule insulates the defendants  from claims of ordinary negligence. This question has been particularly important in Georgia, where there were more bank failures than any in other state and consequently more failed bank litigation. … Continue Reading

SEC Commissioner Aguilar Addresses Cybersecurity Oversight Responsibilities of Corporate Boards

In a June 10, 2014 speech entitled “Boards of Directors, Corporate Governance and Cyber-Risks: Sharpening the Focus” delivered at the New York Stock Exchange, SEC Commissioner Luis A. Aguilar highlighted the critical importance of the involvement of boards of directors in cybersecurity oversight. In his speech, Aguilar stressed that “ensuring the adequacy of a company’s … Continue Reading

Guest Post: Cyber Security, Cyber Governance, and Cyber Insurance: What Every Public Company Director Needs to Know

  As I have frequently noted on this site (refer, for example, here), cyber security issues increasingly are a board level concern, and indeed, recent shareholder litigation has shown that investors intend to hold board members accountable when data breaches cause problems for their companies.  In the following guest article, which was previously published as a … Continue Reading

Wyndham Worldwide Board Hit with Cyber Breach-Related Derivative Lawsuit

 In what is the latest example of the potential cybersecurity-related liability of corporate boards, a shareholder for Wyndham Worldwide Corporation has initiated a derivative lawsuit against certain directors and officers of the company, as well as against the company itself as nominal defendant, related to the three data breaches the company the company and its … Continue Reading

Liability Exposures of Audit Committee Chairs

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

Antitrust Enforcement and Corporate Risk Exposure

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: The Business Judgment Rule Under Attack

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

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

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

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

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
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