As the story developed last month surrounding the spectacular collapse of auto-parts giant First Brands Group, I kept waiting for the lawsuit. The tale of the CEO’s supposed lavish personal spending, as well as the company’s massive debt and apparently missing funds, seemed scripted for a securities class action complaint. The securities suit I thought surely was coming never materialized – because, it turns out, Patrick James, the company’s founder and CEO, was also its sole equity owner. So, no shareholder suit. Which is not to say that there would never be a lawsuit.

Indeed, last week, the perhaps inevitable lawsuit did materialize, but not as a securities suit; rather, the lawsuit is in the form of an adversary proceeding against the former CEO and his affiliated entities brought by the company as debtor in its bankruptcy proceeding. And the complaint? It’s a doozy. And as discussed below, it also raises some interesting D&O insurance coverage questions as well.

Continue Reading First Brands Sues Its Founder for “Grievous Misconduct”

Last week, the U.S. Supreme Court heard oral argument in the legal case in which the claimants are challenging the constitutionality of President Trump’s tariffs. While we await the Court’s decision in the case, the tariffs remain in place, with consequences both for the global economy and for individual businesses. In the latest example of the ways in which these consequences can translate into tariff-related securities litigation, a plaintiff shareholder has sued used car retailer CarMax, alleging that the company tried to portray the quarterly sales surge that preceded the tariffs’ impact as being due to longer-term company advantages rather than tariff-motivated consumer behavior. A copy of the new CarMax complaint can be found here.

Continue Reading CarMax Hit with Tariff-Related Securities Suit
Teresa Milano
Doug Greene

Observers of securities class action litigation know that virtually every securities suit that survives dismissal ultimately settles. Very few securities suit go to trial. In the following guest post, Teresa Milano, SVP, Lockton, and Doug Green, Partner, BakerHostetler, suggest that securities litigation overall would benefit if more cases were tested on the merits. The authors provide suggestions of how the goal of merits-based case resolutions might be realized. I would like to thank Teresa and Doug 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 the authors’ article.

Continue Reading Guest Post: Changing the Mindset About Securities Class Actions
Sarah Abrams

Side A coverage under the typical D&O insurance policy provides what could be a last line of protection of individual executives in certain circumstance. In the following guest post, Sarah Abrams, Head of Claims Baleen Specialty, a division of Bowhead Specialty, analyses a recent Delaware shareholder derivative lawsuit to consider the circumstances in which Side A coverage may operate to protect corporate executives. 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 in 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: A Side: A Coverage Scenario

AI-related news dominates the business pages these days. Many companies increasingly are adapting their business processes to incorporate AI-related operations, and an growing number of companies are adjusting their business strategies to accommodate AI. While these changes present a host of opportunities, they also involve risks. A securities lawsuit recently filed against the integrated circuit (IC) design software company Synopsys shows how these kinds of AI-related risks can translate into securities litigation. In the complaint, the company is alleged to have understated the additional customization requirements that its customers’ AI-adapted operations would entail. A copy of the October 31, 2025, complaint can be found here.

Continue Reading AI-Related Securities Suit Filed Against IC Design Software Firm
Sarah Abrams

Choice of law considerations in litigation can sometimes be outcome determinative. In the following guest post, Sarah Abrams takes a look at a distinctive statutory defense that may be available to derivative litigation defendants when Massachusetts law applies and considers the D&O insurance underwriting implications. 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: Massachusetts as a Safe Harbor from Derivative Suits

One of the recurring D&O insurance coverage issues is the question of the extent of the preclusive effect of professional services exclusions. These issues can be particularly acute in connection with service businesses, as just about every activity of these businesses involves their performance of services in some way. In a recent Northern District of Ohio decision, the Court, applying Ohio law, rejected an insurer’s attempt to extend an exclusion to preclude coverage for all of the activities alleged in the underlying lawsuit, saying that such an interpretation is not only inconsistent with the underlying allegations but also would impermissibly render coverage under the policy illusory. A copy of the court’s June 24, 2025, opinion can be found here.

Continue Reading Court Rejects Overly Broad Application of Services Exclusion
Michael W. Peregrine

One of the most important elements of corporate governance is the structure of the relationship between the CEO and the Board of Directors. In the following guest post, Michael W. Peregrine of the McDermott Will & Emery law firm analyses a recent report from the National Association of Corporate Directors (NACD) suggesting an approach for companies to take to ensure a collaborative relationship between CEOs and their companies’ boards. I would like to thank Michael for allowing me to publish his 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 Michael’s article.

Continue Reading Guest Post: Important New Guidance On The Board/Management Relationship

In 2023, China introduced a number of significant revisions to its Company Law. Among other things, the revisions introduced a number corporate governance and liability reforms. According to a October 9, 2025 memo from the Hogan Lovells law firm, which can be found here, the legal reforms are among several factors contributing to “particularly sharp increases” in the number of D&O claims in China. According to the memo, these developments present D&O insurers with both “challenges and opportunities.”

Continue Reading China’s Legal Reforms Fuel Increase in D&O Claims, Interest in D&O Insurance
Sarah Abrams

 Among the many concerns arising from the increasing prevalence of cryptocurrency are the problems and risks associated with the fact that the liquidity and value of cryptocurrencies fluctuate over time. To illustrate the kinds of liability risks this fluctuation can lead to, Sarah Abrams, Head of Claims Baleen Specialty, a division of Bowhead Specialty, reviews a recent set of circumstances in which Stoli Group USA, LLC sought to settle a secured debt liability by payment of another kind of alternative asset with fluctuating valuation – in this case, 35,000 barrels of unfinished bourbon. Sarah considers the potential implications from the Stoli case for companies with crypto treasury assets. 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: Shot of Crypto