On March 28, 2019, amidst much fanfare, the rideshare company Lyft went public at $72 a share, raising more than $2.2 billion. In the first trading day following the offering, the company’s share price rose 8.7 percent. However, despite the initial euphoria, Lyft’s share price then began to slump. Lyft shares closed at $58.36 on Thursday afternoon (April 18), representing a decline of nearly 20% from the company’s IPO share price. Apparently, at least one investor who purchased shares is fighting mad about the decline. On April 16, 2019 – just 13 trading days after the IPO– the shareholder filed a securities class action lawsuit against the company in California state court. A copy of the plaintiff’s complaint can be found here. An April 17, 2019 Bloomberg article about the lawsuit can be found here. Continue Reading
Cornerstone Research: Accounting-Related Securities Suit Filings and Settlements Increased in 2018
Driven by a general overall increase in the number of securities class action lawsuit filings, as well as by an increase in the number of M&A-related lawsuits involving accounting allegations, the total number of securities class action lawsuits involving accounting allegations filed in 2018 was well above historical levels, according to a newly released Cornerstone Research report. Also consistent with overall securities suit settlement patterns during the year, the value of settlements of securities suits with accounting allegations during 2018 was at second-highest level in in the last ten years. The Cornerstone Research report, entitled “Accounting Class Action Filings and Settlements: 2018 Review and Analysis,” can be found here. Cornerstone Research’s April 17, 2019 press release about the report can be found here. Continue Reading
Coverage Complications for Prior Acts Under Claims Made Insurance Policies
Theoretically, claims made insurance coverage applies to claims made during the policy period regardless of when the underlying acts took place. The claims made arrangement contrasts with the framework under an occurrence policy, where coverage applies according to when the underlying acts took place, regardless of when the claim is made. But even though claims made coverage is intended to apply to claims made during the policy period, there are sometimes claims made policy provisions that can preclude coverage for some or all of the past acts alleged. These coverage limiting provisions can under certain circumstances substantially limit the past acts coverage available under a claims made policy. Continue Reading
Say It Again: Private Companies Are Subject to the Federal Securities Laws
It is a point I have made before but it is worth saying again – private companies are not immune from scrutiny under the federal securities laws. In a series of recent enforcement actions – most notably the SEC’s March 2018 enforcement action against Theranos and two of its executives – the SEC has made of point of emphasizing that its regulatory reach extends to private companies. Last week, the SEC announced the resolution of another enforcement action against private company executives. The latest action, involving a failed Silicon Valley start-up, underscores the SEC’s readiness to pursue securities law violations by private company executives. Continue Reading
Insurance Coverage: Thinking about the Duty to Cooperate
As I noted in one of the posts in my Nuts and Bolts series about the basics of D&O insurance, the typical D&O insurance policy includes not only obligations for the insurer, but also obligations on the part policyholder as well. Among these policyholder obligations is the duty to cooperate. In most claims, the cooperation duty is not an issue, as the insurer’s requirements and the policyholder’s responses do not lead to conflicts. Unfortunately, from time to time conflicts do arise with regard to the policyholder’s cooperation duty.
In a recent insurance dispute involving the cooperation duties under a CGL policy, the Fifth Circuit held that the cooperation requirements the insurer sought to impose on the policyholder exceeded the policy’s requirements. The decision raises a number of important implications about the cooperation requirement – and about its limits. The Fifth Circuit’s February 26, 2019 opinion in Mid-Continent Casualty Company v. Petroleum Solutions, Inc. can be found here. The Barnes & Thornburg law firm’s April 8, 2019 memo about the decision can be found here. Continue Reading
Guest Post: Court Dismisses Statutory Misrepresentation Claim against Credit Union Board in Landmark Decision
In the following guest post, Deepshikha Dutt, Douglas B.B. Stewart,of and Frank E.P. Bowman of the Dentons law firm review and analyze a recent decision of the Ontario Superior Court of Justice relating to the liabilities of directors and officers under Ontario statutory law for misrepresentations in offering statements. This article is republished here with permission from Dentons. I would like to thank Deepshikha, Douglas, and Frank for allowing me to publish their article here. 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 an article. Here is Deepshikha, Douglas, and Frank’s article. Continue Reading
The Critical Issue of Private Company D&O Insurance Coverage for Competition Law Claims
One area of potential legal exposure facing corporate executives – including even executives of private companies – is the risk of liability under laws designed to protect competition, including (but definitely not limited to) state and federal antitrust laws. Claims asserting liability under these various legal provisions not only represent a significant liability exposure for corporate executives, but they also present a number of potentially significant issues when it comes to questions of coverage under the typical private company D&O insurance policy. As discussed below, a recent paper discussed a number of these issues; I discuss additional issues below, as well. Continue Reading
Plaintiffs’ Firms Ranked by Total 2018 Securities Suit Settlement Size and Number
As I have noted in a number of posts (most recently here), the size of securities class action settlements rose significantly in 2018 compared to recent years. But what do the 2018 securities class action settlements look like when broken down according to the lead plaintiffs’ firm involved in the settlement? That is the question answered in a recent report from ISS Securities Class Action Services. The April 3, 2019 report, entitled “The Top 50 of 2018” takes a look at the top 50 plaintiffs’ firms ranked by aggregate size and number of settlements can be found here. Continue Reading
Guest Post: Cyber Risk Health Factors Case Study — Technology Alone Can’t Fix Security
Paul Ferrillo
Christophe Veltsos
In the second part of a three part series, Paul Ferrillo and Christophe Veltsos explain how cyber risk assessments can provide value. Paul is a shareholder in the Greenberg Traurig law firm’s Cybersecurity, Privacy, and Crisis Management Practice. Chris 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. The first article in their series can be found here. In a forthcoming third article, the authors will address the technical tools side of cyber assessment, as opposed to people/processes/governance. 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. Continue Reading
Frankfurt and Luxembourg
Luxembourg City
The D&O Diary finished its European itinerary last week with a visit to Frankfurt for an event there, followed by a weekend stopover in Luxembourg before heading home. The pleasant weather I enjoyed earlier in the week in Switzerland abandoned me in Frankfurt, where it rained, but the nice weather reappeared just in time for my weekend visit in Luxembourg. As the pictures below reflect, the pleasant spring weather was just about ideal for my first ever visit to Luxembourg. Continue Reading
