In a development that some may find more than a little bit ironic, U.K.-based litigation finance firm Burford Capital has been hit with a securities class action lawsuit following a drop in its share price after a short seller published a report questioning the company’s financial reporting. Burford has denied the short seller’s allegations and has also raised interesting questions about trading in its securities at the time of the research report’s release. A copy of the August 21, 2019 complaint filed against the company and certain of its executives can be found here. Continue Reading
Ninth Circuit Certifies Consent to Settlement Question to Arizona Supreme Court
In an interesting development in a long-running legal battle in which for-profit education company Apollo Education Group is seeking D&O insurance coverage for its $13.125 million settlement of an options backdating-related securities class action lawsuit, the Ninth Circuit has certified to the Arizona Supreme Court the question of the standard of law to be applied to the insurance policy’s consent to settlement provisions. The Arizona Court’s response to the certified question potentially could have important implications for the meaning and application of similar provisions in other D&O insurance policies. The Ninth Circuit’s August 15, 2019 opinion certifying the question to the Arizona court can be found here. Continue Reading
Oracle Board Special Litigation Committee Recommends Shareholder’s Derivative Claims Proceed
It is not uncommon for corporate boards facing shareholder derivative litigation to appoint a special litigation committee to investigate the allegations that the plaintiff shareholder raised in the suit. However, in an unusual development in the shareholder derivative lawsuit pending in Delaware against directors and officers of Oracle, the company’s board’s special litigation committee (SLC) has advised the court that the committee of three independent directors believes it is in the company’s best interest to allow the lead plaintiff (rather than the committee itself) to proceed with the claims on behalf of Oracle. Alison Frankel’s August 19, 2019 post on her On the Case blog discussing the Oracle derivative lawsuit and the SLC’s letter to the court can be found here. Continue Reading
Guest Post: Is Amazon Liable for the Capital One Hack?
John Reed Stark
The Capital One data hack has attracted a great deal of attention, not least because of the size and extent of the breach, but also because the hacker apparently managed to steal data from The Cloud. In the following guest post, John Reed Stark, President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement, takes a closer look at this aspect of the Capital One data breach and asked whether Amazon, the cloud service provider, can be held liable for the hack? Stark takes a close look at the technology involved and analyzes the potential liability issues between Capital One, on the one hand, and Amazon, on the other. A version of this article originally appeared on Securities Docket. My thanks to John 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 blog’s readers. Please contact me directly if you would like to submit a guest post. Here is John’s article. Continue Reading
Are We Entering a New Class Actions Era in the UK?
Class actions are of course well-established in the United States, but class action litigation has never been as well-developed in the UK. Among a number of reasons for this arguably is the lack of an “opt-out” class action procedure in the UK. However, as detailed in an interesting July 2019 memo by Colin Hutton of the CMS law firm entitled “Opt-Out Class Actions in the UK: Are We Entering a New Era in Litigation?” (here), several recent developments suggest that there may be “gradual but significant changes that may well alter the litigation culture in the UK permanently.” Continue Reading
Guest Post: Modern Slavery Report Recommends Tougher Disclosure Rules for U.K. Companies
Francis Kean
One of the more interesting 21st century corporate disclosure developments has been the increased expectation by legislators and regulators that companies should examine their supply chains in order to determine whether chain participants are engaged in illegal or improper activities, and then report on their examination to investors and to regulators. One U.S. example of these kinds of disclosure developments is the Dodd-Frank Act conflicts minerals disclosure requirements. At the beginning of this year another example of supply chain disclosure requirements went into effect in Australia, with the effectiveness on January 1, 2019 of the Australian law regarding modern slavery. As discussed in the following guest post from Francis Kean, the U.K.’s modern slavery disclosure law his been in effect for four years. In his guest post, Francis takes a look at the U.K. experience under this law. Francis is Executive Director FINEX Willis Towers Watson. A version of this article was previously published on the Willis Towers Watson website. I would like to thank Francis 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 blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Francis’s article. Continue Reading
Cybersecurity Whistleblower Claim under the False Claims Act Settled
In addition to all of the other risks, liabilities and exposures arising from cybersecurity concerns, you can now add the possibility of a whistleblower action for cybersecurity fraud. According to a July 31, 2019 press release from counsel for the whistleblower involved (here), Cisco Systems has agreed to an $8.6 million settlement in what the press release claims is the “first cybersecurity whistleblower case ever successfully litigated under the False Claims Act.” Cisco has agreed to pay the amount to settle allegations that the company knowingly sold vulnerable and defective video surveillance software to federal, state, and local government agencies, exposing the systems to unauthorized access. As discussed below, this development even further expands the range of concerns companies must take into account when assessing their cybersecurity exposures. An August 12, 2019 memo from the Jones Day law firm about the settlement and its implications can be found here. Continue Reading
Bribery-Related Securities Suit Based on Acquired Company’s Pre-Merger Activities
As I have frequently noted on this site (most recently here), plaintiffs’ lawyers often attempt to fashion a securities lawsuit out of on revelations of corporate activities involving alleged violations of anti-bribery laws. A securities class action lawsuit filed this week represents the latest example of this phenomenon. In this instance, the allegedly improper conduct involved activities of an acquired company that reportedly took place prior to the merger. As discussed below, this latest example of the bribery-related securities lawsuits involves several interesting variations on the pattern of these kinds of follow-on securities suits. Continue Reading
Guest Post: Working Hard or Making Work? Plaintiffs’ Attorneys Fees in Securities Fraud Class Actions
In the following guest post, Stephen J. Choi, Jessica M. Erikson, and Adam C. Pritchard take a look at the plaintiffs’ attorney fee awards in “mega-settlements” in securities class action lawsuits. The authors ask the question whether the lawyers who lead these cases and negotiate the settlements are appropriately rewarded for their efforts. Choi is the Murray and Kathleen Bring Professor of Law at New York University School of Law. Erickson is Professor of Law & Associate Dean for Faculty Development at University of Richmond School of Law. Pritchard is the Frances and George Skestos Professor of Law at University of Michigan Law School. My thanks to 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 like to submit a guest post. Here is the authors’ article. Continue Reading
The Fed Has a Message for Banks about D&O Insurance
Federal Reserve Building, Washington, D.C.
The Federal Reserve wants bank directors and senior executives to know that while their D&O insurance policies are “an important risk mitigation tool,” their policies could contain exclusions that could “potentially limit coverage” and leave them without insurance in the event of a claim. In a July 23, 2019 letter (here), the Fed informed banks and other financial institutions of the risks associated with exclusionary provisions in D&O insurance policies and urged board members and senior executives to “understand fully the protections and limitations” that the D&O insurance policies provide. As discussed below, the Fed’s guidance is good advice for directors and senior executives of any organization, not just for banks. An August 3, 2019 post on the Willis Towers Watson blog about the Fed letter can be found here. Continue Reading
