Francis Kean
Noona Barlow

On this site, I try to keep my readers up to date on the latest developments in the world of directors’ and officers’ liability and insurance. Every now and then, it is worth taking a step back and asking the basic questions, such as, what should directors know about their D&O insurance? The following guest post, written by Francis Kean and Noona Barlow, Partners in the Financial Lines team at McGill and Partners, in conjunction with Airmic, answer some of the basic questions. This Guide was originally published by Airmic to coincide with its 2021 annual conference and is available on its website. The article’s authors are based in the UK and so the article is written from a UK perspective, but many of the article’s insights are largely applicable in the US as well. I would like to thank the authors and Airmic for allowing me to publish this article as a guest post 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 the authors’ article.
Continue Reading Guest Post: Boardroom Guide to D&O Insurance

ninthcircuitFor purposes of determining the scienter of a corporate entity defendant under the federal securities laws, a company’s executives’ knowledge generally is imputed to company. There is an exception to these general principles – the “adverse interest exception” – which provides that an executive’s knowledge will not be imputed to the company if the executive acted for his or her own purposes and contrary to the interests of the company. There is also an exception to the exception, which provides further that a rogue executive’s knowledge will nevertheless be imputed to the company when an innocent third-party has relied on the executive’s representations made with apparent authority.

In an October 23, 2015 opinion (here), the Ninth Circuit applied these principles to reverse the district court’s dismissal of the ChinaCast Education Corp. securities class action lawsuit, holding that the knowledge of the company’s CEO, who had embezzled funds and mislead investors through omissions and false statements, could be imputed to the company for purposes of innocent third-party investors’ claims.
Continue Reading Ninth Circuit: Embezzler Executive’s Knowledge Can Be Imputed to Company in Innocent Third Party-Filed Securities Suit

The typical D&O insurance policy precludes coverage for loss arising from fraudulent misconduct. But when an insured has been convicted of fraud, whose coverage is precluded? In the second case in recent days to address the consequences for the insured entity of the criminal conviction of one of the entity’s principals, Judge James L. Graham