The Deteriorating D&O Insurance Environment for Foreign U.S.-Listed Companies

For many years, U.S.-listed companies based outside the U.S. have enjoyed a relatively advantageous pricing environment for their D&O insurance. Because many D&O insurance underwriters based outside the U.S. used a different pricing model than their U.S. counterparts, pricing for these foreign filers was in many instances lower than the pricing available to equivalent U.S.-based companies. In recent months, however, as a result of surging claims frequency and loss costs, foreign filers’ D&O insurance costs have jumped significantly. These developments and the claims-related factors causing the changes are detailed in an interesting March 20, 2019 article by Jane Njavro of Woodruff Sawyer entitled “Why D&O Costs Are Soaring for Foreign Filers” (here). The article includes detailed statistical analysis of the relevant U.S. securities class action litigation trends. Continue Reading

Russian Telecom Company Hit with FCPA-Related Securities Suit

There is no private right of action under the Foreign Corrupt Practices Act. However, regulatory enforcement actions under the FCPA by U.S. government authorities can and often does result in massive fines and penalties. When companies subject to FCPA enforcement are compelled to pay these penalties they often then hit with follow-on civil lawsuits arising out of or based on the anti-corruption enforcement action. In the most recent example of this anti-corruption enforcement and follow-on civil litigation sequence, earlier this week a plaintiff shareholder filed a securities class action lawsuit filed against a U.S.-listed Russian telecom company that was the subject of both criminal and civil FCPA enforcement actions that recently resulted in the company’s agreement to pay substantial fines and penalties. Continue Reading

Proposed Nevada Legislation Introduces Fee-Shifting in Shareholder Litigation

A short time ago, a storm of controversy briefly emerged after a Delaware court endorsed a firm’s adoption of a fee-shifting bylaw. The controversy quieted down after the Delaware legislature adopted a statutory provision prohibiting fee-shifting bylaws. The fee-shifting provision controversy could be back, albeit this time in a different state. A Nevada legislator has introduced a bill in the state senate that would explicitly allow Nevada corporations to adopt  provisions requiring fee-shifting in unsuccessful M&A litigation, as long as the deals were approved by a shareholder majority. University of Nevada Las Vegas Law School Professor Benjamin Edwards describes the legislation in a March 18, 2019 post on the Business Law Prof Blog (here). Continue Reading

FDIC Settles PwC Colonial Bank Negligence Action for $335 Million

In the latest twist in a long-running legal saga, on March 15, 2019, the FDIC announced that it had reached a $335 million settlement of the negligence action the agency had brought against PwC in connection with the accounting firm’s audit work for the defunct Colonial Bank. The curious thing about this settlement is that it represents only a little more half of the amount that a federal district court judge awarded the FDIC as damages in a July 2018 order in the case. The FDIC’s terse March 15, 2019 press release announcing the settlement can be found here. Continue Reading

Brexit-Related Disclosure in a Time of Uncertainty and Risk

Even as the Brexit process unwinds in an ever more confounding pile of confusion, companies must continue to plan, operate, and report to their shareholders. U.S. securities regulators have already issued calls for reporting companies to provide greater details about the plans of management in the face of the risks and uncertainties surrounding the Brexit process. On March 15, 2019, William Hinman, the Director of the SEC’s Division of Corporate Finance, speaking at a securities regulation conference in London, offered a more detailed overview of the kind of disclosures he believes companies should be providing their shareholders about Brexit. Among other things, Hinman provided a useful checklist of questions companies should be asking themselves and about which companies should also be advising their investors. The text of Hinman’s March 15, 2019 speech can be found here. Continue Reading

Securities Exclusion Bars Securities Transaction Claim Coverage

In a number of recent posts (most recently here), I have emphasized the importance of the wording of the securities exclusion in private company D&O insurance policies. A recent case out of Florida underscores the importance of the securities exclusion wording and illustrates how an unusual wording can lead to the preclusion of coverage for claims that might otherwise be covered. The decision also highlights the extent of the preclusionary effect from exclusions written on a very broad basis. Middle District of Florida Judge William Jung’s January 2, 2019 decision can be found here. A March 5, 2019 Law 360 article from the Jenner & Block firm about the decision can be found here. Continue Reading

A Closer Look at 2018 IPOs

For everyone involved in the public company D&O arena, IPOs are a continuing source of interest and concern. An important part of thinking about IPO companies and their D&O risk profile in understanding what is going on in the IPO marketplace. On March 6, 2019, the Proskauer Rose law issued its annual analysis of the 2018 U.S. IPO activity. The report provides an interesting overview of the important characteristics of 2018 IPOs. The IPO report can be found here. The law firm’s March 6, 2019 press release about the report can be found here. Continue Reading

E&O Coverage Barred for Options Trading Losses

In a ruling that turned on the interpretation of a technical financial term, a federal district court concluded that the Options Trading exclusion in an investment firm’s E&O policy precluded coverage for investor claims arising out of a financial transaction gone bad. In concluding that the exclusion precluded coverage, the court applied a standard financial industry definition to interpret the meaning of a specific policy term. The court’s opinion makes for interesting reading and provides food for thought about the policy placement process generally and about the process of policy interpretation. District of Utah Judge Dale Kimball’s March 1, 2019 opinion in the case can be found here. Continue Reading

Guest Post: The Missing Link of Cybersecurity — Time for a Cyber Risk Check-Up

Paul A. Ferrillo

Christophe Veltsos

The threats to data security are substantial. Every organization faces some level of cyber risk. So how do we get better at cybersecurity? That is the question that Paul Ferrillo and Christophe Veltsos ask in the following guest post. Paul is a shareholder in the Greenberg Traurig law firm’s Cybersecurity, Privacy, and Crisis Management Practice. Chris is is a professor in the Department of Computer Information Science at Minnesota State University, Mankato where he regularly teaches Information Security and Information Warfare classes. I would like to thank Paul and Chris for their willingness to allow me to publish their article as a guest post. 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. Paul and Chris’s article is set out below. Please be sure to also see the item at the end of the post about International Women’s Day. Continue Reading

Corporate and Securities Litigation at Stanford Law School

Stanford Law School

On Tuesday, March 5, 2019, it was my distinct honor and pleasure to be one of the invited speakers at Professor Joseph Grundfest’s corporate and securities litigation class at Stanford Law School in Palo Alto, California. Along with Priya Cherian Huskins of the Woodruff Sawyer firm, I was invited to address the students on the topic of the role of D&O insurance in securities and derivative litigation. Continue Reading

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