D&O insurance provides coverage for individuals to the extent they are acting in their capacities as directors and officers of their companies. The policies do not provide coverage when the individuals are acting in other capacities. A recent decision from a New Jersey appellate court highlights the coverage questions that can arise when individuals are alleged to be acting in multiple capacities. The court concluded that coverage was entirely precluded for an individual who was acting multiple capacities. As discussed below, the decision raises interesting questions.

Continue Reading D&O Insurance Coverage Precluded for Individual Acting in Dual Capacities
Nelson Kefauver
Kilauren McShea

In the following guest post, Nelson Kefauver and Kilauren McShea review the considerations they believe in-house counsel should take into account in connection with their professional liability insurance arrangements. Nelson is the Head of Profin, North America and Kilauren McShea is the President of Management Liability at Intact Insurance. I would like to thank Nelson and Kilauren for allowing me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is Nelson and Kilauren’s article.

Continue Reading Guest Post: Key Factors General Counsel Should Weigh Before Choosing Malpractice Coverage
Lawrence Fine

As discussed here, in its April 2024 decision in Macquarie Infrastructure Corp. v. Moab Partners, the U.S. Supreme Court held that a failure to disclose information required by Item 303 of Regulation S-K cannot support a private claim under Rule 10b-5 in the absence of an otherwise-misleading statement. The upshot is that so-called “pure omissions” cases are not actionable, meaning that omissions are only actionable if they make an affirmative statement materially misleading. In the following guest post, Larry Fine, Management Liability Coverage Leader for WTW, takes a closer look at the Macquarie decision and considers its implications, particularly with respect to future cases based on alleged omissions. A version of this article was previously published as a WTW client alert. I would like to thank Larry 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 site’s readers. Please contact me directly if you would like to submit a guest post. Here is Larry’s article.

Continue Reading Guest Post: The Additional Pro-Defense Benefits of the Macquarie Decision

In my recent review of the 1H24 securities class action litigation filings (here), I noted that SPAC-related securities suits were less of a factor in the overall number of suit filings during the year’s first six months than they had been in recent years. However, even though the peak of the SPAC frenzy was several years ago now, SPAC-related securities suits are continuing to be filed. The latest example is the SPAC-related securities suit filed late last week against SeaStar Medical Holding Corporation, which is the product of a 2022 SPAC merger. The new lawsuit has several interesting features, as discussed below. A copy of the July 5, 2024, complaint in the lawsuit can be found here.

Continue Reading Medical Device Company Hit with SPAC-Related Securities Lawsuit

In an action the SEC’s two Republican Commissioners sharply criticized in a separately-issued statement, the SEC has filed settled charges against business communications services provider R.R. Donnelly & Sons (RRD) relating to the company’s disclosure and accounting controls in connection with cybersecurity incidents the company suffered in late 2021. The company, which the SEC credited for its cooperation and remedial measures, agreed to pay a $2.125 million civil penalty and voluntarily adopted corrective processes and procedures. The settled action provides strong indications of the measures and controls the agency expects reporting companies to adopt and implement with respect to cybersecurity.

Continue Reading SEC Files Settled Charges Based on Alleged Cybersecurity-Related Control Deficiencies

In a recent decision, an intermediate California appellate court affirmed a trial court’s holding that the professional services exclusion in a healthcare records software provider’s D&O insurance policy precludes coverage for the company’s $118.6 million settlement with the U.S. Department of Justice (DOJ) of kickback payment allegations. As discussed below, the appellate court’s decision raises questions about the appropriate wording for professional services exclusions in D&O insurance policies. A copy of the court’s June 21, 2024, opinion can be found here. Geoffrey Fehling’s July 2, 2024, post in the Hunton Andrews Kurth law firm’s Legal Updates blog about the court’s decision can be found here.

Continue Reading Professional Services Exclusion Bars D&O Coverage for $118 Million DOJ Settlement
Sarah Abrams

As I noted in a post at the time (here), last Thursday, the U.S. Supreme Court issued its decision in SEC v. Jarkesy, striking down the SEC’s use of in-house courts in enforcement actions seeking monetary penalties. Then on Friday, the Court issued its decision in Loper Bright Enterprises v. Raimondo, in which the court wiped out the so-called Chevron doctrine, in which courts deferred to agency interpretations of ambiguous statutes. In the following guest post, Sarah Abrams, Head of Claims, Baleen Specialty, a division of Bowhead Specialty Underwriters, takes a look at these two decisions and examines some of the decisions’ implications from a D&O insurance perspective. I would like to thank Sarah for allowing me to publish her article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is Sarah’s article.

Continue Reading Guest Post: Regulatory Coverage Impact on D&O Insurers Post-US Supreme Court Decisions in Jarkesy and Loper

The number of federal court securities class action lawsuit filings in the year’s first half reflected a filing pace that projects year-end numbers ahead of last year’s full-year totals.

Continue Reading 1H24 Securities Suit Filings Project YE Totals Ahead of Last Year’s Pace

The United States Supreme Court has held that that, in light of the Seventh Amendment’s right to a jury trial, the SEC must pursue enforcement actions seeking civil penalties in a jury trial proceeding in federal court rather than in an action before an administrative law judge. The Court’s 6-3 ruling could have significant consequences for the many SEC enforcement actions now pending in the agency’s administrative tribunals, as well as for the agency’s pursuit of future enforcement actions. The Court’s ruling could also have important implications for other federal agencies’ use of administrative tribunals as well. A copy of the Court’s June 27, 2024, opinion in SEC v. Jarkesy can be found here.

Continue Reading Supreme Court Strikes Down SEC’s Use of Administrative Law Judges in Civil Penalty Actions