In a series of rulings that culminated in the January 2016 decision in the Trulia case, the Delaware courts evinced their hostility to the disclosure-only settlements that so often characterize the resolution of merger objection lawsuits. Since that time claimants have been filing the merger objection suits in courts outside Delaware. The question has been whether the other courts where the merger objection cases are now being filed would follow Delaware’s strict Trulia standard when reviewing disclosure-only settlements. In a ruling late last week, an intermediate appellate court in Florida expressly adopted Delaware’s Trulia standard. The Florida ruling does raise hopes that other courts might follow as well, which in turn could help stem the tide of proliferating merger objection litigation. The Florida District Court of Appeal, Second District’s July 13, 2018 decision in the Quality Distribution case can be found here. Continue Reading
6th Circ.: Crime Policy’s Computer Fraud Section Covers Email Scheme Losses
In the second policyholder-favorable federal appellate court decision on the issue in a matter of days, the Sixth Circuit has held that the Computer Fraud provisions of a commercial crime policy cover a company’s losses from an email payment instruction fraud scheme. Just last week, the Second Circuit ruled in the Medidata case that Computer Fraud coverage applied to losses incurred in a similar email scam. However, the Sixth Circuit’s decision may be even more helpful for policyholders as, unlike the Second Circuit’s decision, the policyholder-favorable ruling is not as dependent on very specific factual determinations about the way the fraudster manipulated the harmed company’s email program. The Sixth Circuit’s July 13, 2018 decision in the American Tooling Center (ATC) opinion can be found here. Continue Reading
More About Climate Change Disclosure
As I have previously noted on this site, climate change-related disclosure is a hot button issue for certain activist investors and non-governmental organization. A series of recent actions underscores the extent to which some groups are attempting to escalate these disclosure issues, with significant impact. As described below, a number of companies have joined collaborative efforts to advance climate change disclosure initiatives within their industries. These developments have relevance not only for companies’ disclosures to investors, but they may also have liability implications as well. Continue Reading
The Growing Costs of Merger Objection Litigation
As most readers are aware, litigation involving objection to mergers and acquisitions transactions has been proliferating in recent years, to the point that virtually every deal draws at least one lawsuit. While many of these actions are nuisance lawsuits, they are not without their costs. Indeed, according to one recent study, the costs to defend and settle these suits are growing. Continue Reading
Guest Post: ICO-Related Claims and Insurance Coverage: Questions You Should be Asking
Among the most interesting and significant recent developments on the financial landscape has been the rise of cryptocurrencies and ICOs. As these digital assets have proliferated, they have created a host of regulatory and legal issues. These issues in turn have presented related insurance issues. In the following guest post, John McCarrick, Sedgwick Jeanite, and Michael Goldwasser of the White & Williams law firm take a look at the claims and insurance coverage issues that ICOs present. I would like to thank the authors 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 blog’s readers. Please contact me directly if you would to submit a guest post. Here is the authors’ article. Continue Reading
California Enacts Sweeping Privacy Legislation
Earlier this year, after Facebook was sued in a securities class action following news that it had given access to personal user information to Cambridge Analytica, I questioned whether privacy issues might represent the next big corporate liability exposure. Among other things, in making this suggestion, I was taking into consideration that fact that the EU’s General Data Protection Regulation (GDPR) was about to go into effect. More recent developments confirm my view that privacy issues likely will represent an area of specific and growing concern and potential liability for companies, their management, and their boards. Continue Reading
Second Circuit: Computer Fraud Coverage Section Covers Fraudulent Email Funds Transfer
In a much anticipated decision, on July 6, 2018 the Second Circuit, applying New York law, affirmed a district court ruling that the computer fraud provisions of a commercial crime coverage section covered the losses Medidata incurred when the company’s employees transferred funds in response to a spoofed email. The appellate court’s opinion could prove valuable for other policyholders seeking to establish that their crime policies provide coverage for losses incurred as a result of social engineering fraud (also known as payment instruction fraud). The Second Circuit’s July 6, 2018 opinion can be found here. Continue Reading
SEC Corporate Finance Director Provides Guidance on Digital Assets
As digital assets and cryptocurrencies have become an increasingly important part of the current financial landscape, market participants and their advisors have struggled with to answer the question whether or not the tokens and coins represent “securities” subject to the requirements of the federal securities laws. In a remarkably direct speech on June 14, 2018, SEC Director of Corporate Finance William Hinman provided some helpful guidance on the SEC’s approach to these digital assets. Among other important things in his speech, Hinman shared his view that Bitcoin and Ether are not “securities” under the U.S. securities laws. He also emphasized that all of the circumstances involving a digital asset, including in particular the way in which it was sold, will determine whether or not the asset is a security. The text of Hinman’s speech at the Yahoo Finance All Markets Summit can be found here. Continue Reading
Supreme Court’s SEC ALJ Decision Leaves Many Unanswered Questions
In a June 21, 2018 decision, the U.S. Supreme Court held that the SEC’s administrative law judges (ALJs) are not merely “employees” but rather are “officers” who must be appointed to their position by the “Heads of Departments” under the Constitution’s Appointments Clause. The Court’s decision at one level represents a rather straightforward application of the Court’s existing case law regarding ALJs. However, the decision raises a number of troublesome issues for the SEC, and leaves a number of other important questions unanswered. The decision also raises a number of questions for other agencies as well. The ultimate questions in the wake of Lucia v. Securities and Exchange Commission may be whether and to what extent the SEC (and even perhaps other agencies) will continue to use administrative processes to pursue enforcement action. The Court’s opinion in the case can be found here. Continue Reading
Of Time and Summer, Once Again
In recognition of the Independence Day holiday in the U.S., and in what is now an annual tradition, I reprise here my 2012 essay about Time and Summer, which can be found here. Have a great Fourth of July holiday. Thank you to all of my loyal readers.
