Every year after Labor Day, I take a step back and survey the most important current trends and developments in the world of Directors’ and Officers’ liability and insurance. This year’s review is set out below. As the following discussion shows, this is a particularly eventful time in the world of D&O.


Will the “Lull” in Securities Suit Filings in the Year’s First Half Continue?

After three consecutive years in which securities suit filings were at or near record high levels, the number of securities class action lawsuit filings declined slightly in the first six months of 2020, at least compared to the pace of filings during the 2017-2019 time period. This relative decline appears to be pandemic-related, at least in part, which raises the question whether the relatively lower filing pace in the year’s first half will continue as the year progresses. However, even if the apparent filing lull does continue, the year-end filing total will likely still be well above long-term historical annual average filing levels.


As discussed in detail here, there were 182 securities class action lawsuits filed in both federal and state courts in the first half of 2020, which, while below the 221 suits filed in the second half of 2019 and 207 suits filed in the first half of 2019, is still well above the 1997-2019 semiannual average of 112 filings.  Though well above longer-term historical semi-annual averages, the 182 filings in the year’s first half is the lowest semiannual number of securities suit filings since the second half of 2016.


The 182 first-half state and federal securities suit filings implies a year-end total number of securities class action lawsuit filings of 364, which would be well below 2019’s year-end total of 428, although still far greater than the 1997-2018 annual average number of securities suit filings of 215.


There were a number of factors contributing to the relative decline of securities suit filings in the year’s first half, including in particular the fact that filings in the months of May and June were well below the filings in the immediately preceding months, perhaps as a result of government stay-at- home orders and court closures. According to Cornerstone Research’s report on first half filings, the reduced number of filings largely is a reflection of a reduced number of merger objection lawsuits and Section 11 lawsuit filings, perhaps as a result of pandemic-caused reduction in the number of merger transactions and IPO filings in the year’s first half.


As of the date of this post, it does appear that to this point in the year’s second half that filings activity is returning to the heightened levels that prevailed during the period 2017-2019. Thus, while there were a total of only 39 federal court securities class action lawsuit filings during the months of May and June, in July and August there were a total of 55 federal court securities suit filings. It could be that by year end, the apparent lull in the year’s first half was only a temporary, short-term phenomenon.


Even if by the time we reach the end of the year it turns out that the relatively reduced filing pace seen in the first half of the year prevails for the year’s second half as well, the implied year-end total of 364 lawsuits, though below the heightened filing levels seen during 2017-2019, would be well above the year end filing totals seen during the period 2001-2016. A 2020 securities suit filing total lower than the totals in the last three years would be welcomed by the D&O insurance industry; however, a relatively lower year-end total that would still be well above historical levels is unlikely to have a significant impact on how D&O insurers perceive the level of securities litigation risk.


How Significant Will the Level of COVID-19 Related D&O Litigation Turn Out to Be?

Earlier this year, when the scale and potential impact of the coronavirus outbreak began to become apparent, many observers and commentators predicted that we could see a significant wave of COVID-19-related D&O claims. There have in fact been a number of COVID-19 related securities class action lawsuits filed so far, as well as several other types of pandemic-related D&O claims. However, the level of COVID0-19-related litigation so far has been relatively low, at least by comparison to the level of litigation seen, for example, during and after the global financial crisis. The question is whether we will see more litigation in the months ahead as the economic and financial impact of the pandemic continue to ripple through the economy.


As of September 1, 2020, there were, according to my tally, a total of 20 COVID-19-Related securities class action lawsuit filings. (My tally differs from and is slightly larger than other public tallies of the coronavirus-related litigation, as my tally is more inclusive.)


As a general matter, the cases tend to fall into one of three categories: (1) lawsuits against companies that experienced a COVID outbreak in one of its facilities (such as, for example, cruise ship lines and private prison systems); (2) lawsuits against companies that made public statements suggesting the companies could profit from the pandemic (such as vaccine development companies, as well as manufacturers of personal protective equipment or diagnostic tests); and (3) companies whose revenues or operations were disrupted by the pandemic or government shutdown orders (such as REITs and other property-related businesses).


In addition to the securities class action lawsuits, there have been other types of COVID-19 –Related D&O claims filed, including several shareholder derivative lawsuits and a small number of SEC enforcement actions. All of the companies hit with derivative suits are also involved in parallel securities litigation involving substantially the same allegations.


A total of 20 securities suits represents a substantial litigation phenomenon, and the coronavirus-related litigation was one factor in keeping first half securities suit filings relatively close to the heightened filing activity during the preceding three years. However, in the context of annual filing totals of over 400 lawsuits a year, a tally of 20 lawsuit over the course of six months is a relatively modest number. There has not, at least so far, been anything that could be described as a wave of coronavirus-related litigation.


The question at this point is the extent of the COVID-19-related litigation that may be ahead. One potential risk is that as companies reopen, struggle to attract returning customers or reinvigorate supply chains, the companies may make statements about their financial condition or prospects that later appear to have been overly optimistic. In addition, as the health crisis continues to unfold, companies that have been able to string things along so far may find themselves stretched to the point that they can no longer continue. The overall economic impact of the pandemic remains to be seen, and the toll the health crisis and economic downturn could have on businesses, especially in terms of the number of bankruptcies, is still unknown.


In short, at least so far, the coronavirus outbreak’s litigation impact has been relatively modest. How significant the litigation impact will ultimately prove to be will depend on the uncertain duration of the public health crisis, the extent of the economic impact, and the way that the economic recovery plays out. To the extent there are significant numbers of bankruptcies ahead, there could well turn out to be significant numbers of D&O claims, as well.


How Extensive Will the Board Diversity Litigation Phenomenon Turn Out to Be?

The biggest story of 2020 so far other than the pandemic has been the racial justice movement and protests that followed in the wake of the May 2020 death of George Floyd. In response to the recent protests and social unrest, there has been a renewed focus on equality and diversity issues. Among many other things, investors and activists are raising concerns about the lack of racial diversity on corporate boards. For example, in late June, a California legislator introduced a bill that would require corporations to include on their boards persons from “underrepresented communities.”


Now, in addition to these legislative efforts, activist investors seeking to advance board diversity objectives have launched a series of shareholder derivative lawsuits against the directors of several companies, accusing the boards of violating their legal duties by failing to diversify the company’s board and otherwise failing to address diversity and equality issues. These lawsuits also allege that the boards misled investors about their companies’ diversity and inclusion practices. The lawsuits typically seek a variety of remedial measures, including the addition of African American directors to the companies’ boards; the creation of a fund to promote diversity and inclusion in the defendant company’s workforce; the setting of minority hiring goals, with executive compensation tied to achievement of the objectives; and institution of periodic board diversity training.


There have now been a total of six of these board diversity lawsuits filed so far. The first five of these lawsuits – against the boards of Oracle  (about which refer here), Facebook (here), Qualcomm (here), NortonLifeLock (here), and The Gap (here)– all were filed by the same law firm and all involved California-based companies. Based on the first five filings, the board diversity litigation phenomenon looked as if it might be nothing more than the quixotic quest of a self-appointed agent of a racial justice cause. However, the sixth and most recent of these lawsuits, filed on September 1, 2020 against Danaher Corporation (here) — which is based not in California but in the District of Columbia — was filed by a different and higher profile plaintiffs’ law firm, raising the possibility that this litigation trends may become both more generalized, more extensive, and perhaps more threatening.


The need for greater African-American representation at the board level is not a new issue; commentators and observers have long noted the absence of African Americans in the board room. The obvious reason these lawsuits are being filed now is the current heightened focus on racial justice issues, which the plaintiff lawyers are well aware casts a harsh light on the lack of African-Americans in corporate leadership and puts pressure on companies and other organizations to take remedial steps.


These lawsuits have only just been filed and it remains to be seen what if anything they may accomplish. The filing of these lawsuits does show how the current racial justice movement in the U.S. not only has important implications for the social and political context for businesses in this country, but also creates dynamics – including the threat of litigation—that put pressure on businesses to reexamine past practices. At a minimum, these lawsuits demonstrate that among other things lack of board diversity may represent a D&O claim risk. There are quite a number of other companies that lack African-American directors; these companies may face the possibility that they, too, are targeted in one of these board diversity lawsuits, which by itself may motivate companies to reconsider the composition of their boards.


What Next for State Court Securities Class Action Litigation?

Following the U.S.  Supreme Court’s March 2018 Cyan decision, in which the Court affirmed that state courts retain concurrent jurisdiction for liability actions filed under The Securities Act of 1933, there was a proliferation of state court securities suits, often parallel to and duplicative of a federal court lawsuits based on the same essential allegations. There are no procedures to consolidate these parallel state court and federal court lawsuits.  As a result of these developments, companies conducting IPOs and follow-on securities offerings face the possibility of having to fight a multi-front war in the event of securities litigation relating to their securities offerings.


The problems that Cyan has created are among the factors contributing to the current hard market for D&O insurance (discussed further below). However, there have been two developments this year that go a long way toward addressing the Cyan problem.


After the Cyan decision came down, Stanford Law School Professor Joseph Grundfest proposed that companies could avoid the possibility of state court securities litigation by adopting corporate charter provisions specifying federal courts as the designated forum for ’33 Act securities suits (so-called “federal forum provisions”).


A shareholder of three companies that had adopted charter provisions of this type filed an action seeking a judicial declaration that the companies’ federal forum provisions were invalid. The Delaware Chancery Court agreed with the plaintiff, holding that the forum provisions were ineffective and invalid. However, as discussed here, in a March 2020 decision in the Salzberg v. Sciabacucchi, the Delaware Supreme Court reversed the Chancery Court ruling, holding that federal forum provisions are a valid form of “private ordering.”


One question that remained after the Delaware Supreme Court’s Sciabacucchi decision was whether courts in other jurisdictions would enforce the provisions. The answer to this question, at least with respect to California’s courts, came just this past week.


In a September 1, 2020 opinion in the California state court Restoration Robotics securities litigation (here), San Mateo County Judge Marie S. Weiner enforced the federal forum provision in the defendant company’s charter and dismissed the plaintiff’s state court securities lawsuit on the grounds that the state court had no jurisdiction over the action in light of the federal forum provision in the company’s charter.


The combination of these two judicial decisions means that there are steps that at least some companies can now take to try to avoid the possibility of parallel state and federal court litigation. Since most public companies are incorporated in Delaware, most companies have the option of adopting a federal forum provision of the type upheld in the Sciabaccuchi decision. And because the largest number of state court securities suits have been filed in California, the companies that have adopted forum provisions can hope to avoid state court securities litigation in the courts of the state where this type of lawsuit is likeliest to be filed.


In other words, the two decisions together go a long way toward solving the Cyan problem, at least for Delaware corporations that are sued in California. As Priya Huskins of Woodruff Sawyer notes in her blog post discussing the recent Restoration Robotics decision (here), these developments could have a positive impact on D&O insurance pricing.


However, even after the two important recent judicial decisions, there are still are some remaining questions concerning Cyan.


First of all, while most public companies are incorporated in Delaware, not all are. For example, a number of high tech companies are incorporated in Nevada; most REITs are incorporated in Maryland; many financial services companies are incorporated in New York. And of course the many non-U.S. companies whose securities trade on U.S. exchanges typically are incorporated under the applicable laws of their home country. These various non-Delaware companies can of course try to adopt federal forum provisions and hope that the provisions will be both recognized as valid and also enforced, but there is at this point no way for them to know for sure whether the provisions will be held to be valid under the laws of their corporate domicile.


Another question remains with respect to the enforceability of federal forum provisions in the courts of states other than California. Since the time of Cyan decision, there have been state court securities suits filed in the courts of a number of states, not just in the courts of California. For example, there have been a number of securities suits filed in New York state courts. The Restoration Robotics decision is quite detailed and it may (or may not) be treated as persuasive authority by courts of other jurisdictions; for now at least it remains to be seen whether or other jurisdictions’ courts will find federal forum provisions to be enforceable. Indeed, even within California, the ruling of state court trial judge has only persuasive not precedential authority. The question of the enforceability of federal forum provisions could continue to percolate for some time to come, even just within California. Perhaps all of these remaining issues will get sorted out eventually, but it could take some time.


In other words, while the two Cyan-related judicial developments this year are significant and go a long way toward addressing the Cyan problem, they unfortunately have not conclusively or definitively put an end to the issues, at least not yet. The best solution would be for Congress to amend Section 22 of the ’33 Act to specify that liability actions under the statute must be brought in federal court. Unfortunately, the current divided and distracted Congress seems unlikely to take up this issue.


Will Privacy Issues Become an Increasingly Important Source of D&O Claims?

As reflected in such recent legislative and regulatory initiatives as the EU’s General Data Protection Regulation and the California Consumer Privacy Act, privacy issues are increasingly important high-profile and high priority concern. Privacy issues have already been and are likely to continue to be a source of D&O claims as well. And the range of issues encompassed under the heading of privacy continues to expand, even further increasing the possibility for future D&O related litigation involving privacy concerns.


The latest D&O lawsuit arising out of privacy issues involves the Internet video teleconferencing company, Zoom. Zoom of course has been one of the companies that has seen its fortunes enhanced by the pandemic, as Zoom calls have proliferated the wake of office closures. However, Zoom also experienced a host of privacy issues as intruders managed to infiltrate a number of Zoom calls. In April 2020, Zoom was hit with a securities class action lawsuit based on allegations that the surge in Zoom platform usage following the coronavirus outbreak allegedly “revealed” allegedly undisclosed weaknesses in company’s platform’s security, and that the company’s platform had privacy and security weaknesses that were contrary to the company’s alleged representations.


Another significant source of corporate liability risk arising from privacy concerns involves the Illinois Biometric Information Privacy Act (BIPA). BIPA provides for a private right of action and as a result it has proven to be a frequent source of claims, including class action claims. (Refer here for more detailed background regarding BIPA.)


The threatening potential of BIPA claims was dramatically reinforced earlier this year when Facebook agreed to settle BIPA claims related to the company’s use of facial recognition technology for $650 million. (The company had initially agreed to pay $550 million, but the trial court judge presiding over the case rejected the initial settlement proposal as too low.)


Though there are many important things about the Facebook class action settlement beyond just its gigantic size, the settlement’s gigantic size does present its own message. The settlement clearly shows that significant risk that biometric privacy issues present for companies.


Biometric privacy issues are likely to remain a significant concern and an important corporate risk exposure going forward, for the very basic reason that the breach or disclosure of biometric data cannot be as easily remedied as are other types of data breaches; while a consumer whose credit card data is breached can cancel the old card and get a new credit card, an individual whose biometric data is breached or disclosed cannot change their biometric data.


Beyond biometric data issues, the range of issues encompassed within privacy concerns is likely to continue to expand. For example, on September 1, 2020, the California legislature passed a bill protecting the privacy of consumers’ genetic data. (The bill is currently awaiting the California governor’s signature.) The bill does not provide for a private right of action; violation of the bill’s provision is subject to civil penalties.


In addition to biometric and genetic data privacy issues, geolocation data is likely to be another source of privacy concerns.  Consumers are understandably concerned about being surveilled and monitored. There have been a number of legislative efforts in the past to try to protect geolocation data (refer, for example, here). The gathering and use of geolocation data in connection with pandemic contact tracing has also raised concerns about potential litigation and liability risks.


The increasing numbers of data privacy laws and regulations may not always directly present a risk of D&O claims, but there is a risk of claims following on in the wake of a regulatory or governmental enforcement action (just as there have long been follow-on civil actions filed in the wake of anti-corruption investigations and enforcement actions). As the range of concerns encompassed under the heading of privacy expands, so too does the possibility of data privacy-related D&O claims.


Will We See More Breach of the Duty of Oversight Claims?

Since the 1996 Delaware Chancery Court decision in Caremark, Delaware’s courts have recognized that boards of directors’ duties under Delaware law include a duty of oversight. However, though long-recognized, these kinds of claims proved challenging for plaintiffs to sustain. As the Delaware court themselves have recognized, the pleading burdens for plaintiffs seeking to assert these kinds of claims are “onerous.”


Despite the difficulty for plaintiffs in these kinds of cases to surmount pleading hurdles, the Delaware courts in two cases in 2019 – the Marchand v. Barnhill decision (discussed here) and the Clovis Oncology decision (discussed here) — found that the plaintiffs involved had sufficiently stated claims breach of the duty of oversight. The outcome in these two 2019 cases suggests at a minimum that oversight duty breach cases can be viable, and could further suggest that plaintiffs might seek to press claims on these kinds of theories, in a variety of contexts.


As it has turned out, Plaintiffs have indeed continued to pursue breach of the duty of oversight claims, and there have been two additional recent decisions in which duty of oversight claims have been sustained.


First, on April 27, 2020, in Hughes v. Hu, the latest in a series of decisions in which Delaware’s courts have sustained Caremark claims, the Delaware Chancery Court found that the plaintiff had stated a claim for breach of the duty of oversight. The Hughes decision is discussed in detail here.


The lawsuit involved Kandi Technologies Company, a Delaware corporation based in China. The company’s SEC filings showed that the company had been struggling since at least 2010 with its financial reporting and internal controls. The company later was forced to restate several years’ worth of financial statements and also to disclose that its internal staff lacked sufficient expertise for compliance with U.S. reporting requirements. As the Delaware Chancery Court later said, “despite having pledged three years earlier to get its house in order, the Company had none of these necessary competencies.”


The plaintiff alleged that the director defendants consciously failed to establish a board-level system of oversight for the Company’s financial statements and related third-party transactions, choosing instead to rely blindly on management while devoting patently inadequate time to the necessary tasks. The defendants moved to dismiss the lawsuit.


In rejecting the defendants’ arguments, Vice Chancellor Laster acknowledged that the company “had the trapping of oversight,” including the existence of an Audit Committee, a Chief Financial Officer, and internal audit department, a code of ethics, and an external auditor; however, these “trappings” were insufficient, as “the Company’s Audit Committee met sporadically, devoted inadequate time to its work, had clear notice of irregularities, and consciously turned a blind eye to their continuation.” The mere existence of mechanisms charged with oversight was inadequate to rebut the existence of a Caremark claim. The Company’s directors, Laster concluded, simply failed to make a good faith effort to put in place a reasonable, board-level system of monitoring and reporting.


On August 24, 2020, the recent decision in which Delaware’s courts have sustained a breach of the duty of oversight claim, the Delaware Court of Chancery denied a motion to dismiss in an action against the board of directors of AmerisourceBergen. The lawsuit, styled as Teamsters Local 443 Health Services & Insurance Plan v. John G. Chou, involved underlying allegations concerning the distribution of cancer medication at one of the company’s subsidiaries. The underlying proceeding ultimately resulted in the subsidiary pleading guilty to criminal charges and settling civil ones.


In denying the motion to dismiss, Vice Chancellor Glasscock found plaintiff had sufficiently alleged that the directors ignored “red flags,” including the fact that an outside law firm’s report that had concluded the subsidiary’s compliance mechanisms had gaps, about which the board’s audit committee failed to follow-on; the fact that a former executive of the subsidiary had filed a complaint under seal alleging that the subsidiary’s business was essentially an illegal operation – and though the company’s 2010 and 2011 10-Ks, signed by the directors, disclosed the suit, the board failed to take any remedial steps; and the fact that the subsidiary had received a subpoena from federal prosecutors, which was disclosed in the company’s 2012 10-K, but which was not referenced in any board or committee minutes. The court found that the plaintiff had raised sufficient allegations to suggest the possibility that the board didn’t take any action to respond to the compliance report or the 10-K disclosures.


In her analysis of the decision in an August 29, 2020 post on the Business Law Prof Blog (here), Tulane Law School Professor emphasized that Vice Chancellor Glasscock’s ruling was cautious; she highlighted the fact that Vice Chancellor Glasscock sustained the complaint solely on the basis of the plaintiff’s allegations that the board had ignored red flags of illegal activity.


Nevertheless, the four recent Delaware decisions taken collectively underscore the conclusion that under Delaware law corporate directors have a fiduciary duty to oversee their companies by creating and implementing systems of control and by monitoring the company’s management and operations, and that the failure to take these steps could result in the imposition of personal liability.


In thinking about the implications of these developments, it is worth noting that Vice Chancellor Glasscock did observe in the recent AmerisourceBergen decision that in breach of the duty of oversight cases, “the facts of the case involve corporate misconduct that has led to material suffering among customers, or to the public at large.” This proposition is evidenced by the allegations in one of the two important 2019 decisions, Marchand v. Barnhill, where the underlying facts involved a listeria outbreak at an ice cream manufacturer that resulted in multiple deaths.


These kinds of circumstances could arise in the middle of the current public health crisis, for example, if a company’s business activities were to result in a COVID-19 outbreak among customers or employees. Under those circumstances, the company’s board might well face allegations from shareholders alleging that the board had failed to oversee operations in order to prevent this foreseeable hazard. (For further discussion about the possibility of pandemic-related breach of the duty of oversight claims, refer here.)


More generally, and beyond just the possibilities that the pandemic presents, there are the larger challenges involved with the rise of event-driven litigation. These kinds of lawsuits, now being filed as securities class action lawsuits, are filed by investors after the defendant company has experienced a significant reverse in its business operations. These same kinds of circumstances might result in claims against the boards of the companies involved for alleged breaches of the duty of oversight, as well as or in addition to securities class action lawsuit based on the same circumstances.


Indeed, in at least one instance of which I am aware, different plaintiffs have filed securities suit and a breach of the duty of oversight claim involving the same circumstances – following the high-profile crashes of two of its planes, Boeing has been hit both with securities suits and, separately, a Delaware Chancery Court lawsuit alleging that its board breach its duty of oversight.


Time will of course tell, but there is a possibility that we could see more lawsuits based on allegations of the breach of the duty of oversight, particularly with respect to circumstances arising out of the coronavirus outbreak. However, the recent evidence does show that plaintiffs have recently enjoyed greater success in advancing these kinds of claims than was the case in the past.


How Long Will the Current Hard Market for D&O Insurance Last?

Even before the coronavirus outbreak this spring, D&O insurance was in a “hard market,” characterized by rising prices, restricted capacity, and, in at least some instances, narrowing policy terms and conditions. The onset of the pandemic exacerbated all of these conditions. For policyholders, the D&O insurance acquisition process has now become time-consuming, labor-intensive, and unpredictable. The question for insurers and policyholders alike about the current conditions is how long the current hard market conditions will last.


The D&O insurance market began to turn in the latter half of 2018. Years of underpricing, heightened claim frequency, deteriorating prior accident year results, and accumulating underwriting losses caused several major insurers to begin pushing for rate increases. Unfavorable legal developments, such as the Cyan decision (discussed above) contributed to the tightening. By the beginning of 2019, there was general support among insurers for the price increases, in that the insurers were not, as would have been in the case in the recent past, undercutting attempts to get increases. As 2019 progressed, the level of price increases began to accelerate. By the end of 2019, the D&O insurance market had entered a true hard market, with many carriers actively seeking to reduce their limits, shrink their exposure to certain risk classes, and re-underwrite their books of business.


The arrival of COVID-19 and the ensuing government shutdown orders exacerbated all of these market conditions. The level of price increases accelerated further, and many insurers further restricted their capacity. In addition, in many instances, insurers have sought to restrict terms and conditions. In addition, as a result of the disruption from the pandemic, new suspect classes emerged, including, for example, industry groups such as travel, hospitality, and retail. Concerns about both the public health crisis and the pandemic’s economic fallout have caused underwriters to significantly increase account level underwriting, as the underwriters attempt to determine the pandemic’s impact on applicant company’s business operations and financial condition. For D&O policyholders accustomed to years of declining prices and expeditious renewals, the current disturbed market conditions represents something of a shock.


D&O insurance is a cyclical business, and the periodic hard markets that arise eventually give way to more competitive conditions. Rising prices eventually stabilize, as insurers once again begin to compete based on prices. However, as things stand at the moment, there is nothing to suggest that this market softening process will kick in anytime soon. At least based on current indicators, the strong likelihood is that the current hard market will continue for the remainder of this year and into 2021 as well.


The first sign that the market softening phase is approaching is that new participants with fresh capital emerge and begin to have a competitive impact. In fact, a number of existing insurers have already turned to the financial markets to raise capital but in most instances these financings have been balance sheet shoring- up exercises. However, in addition, within the last several weeks, there have been new D&O insurance underwriting facilities launched, both in London and in the U.S.  These new players are only just getting started entertaining insurance submissions, and their footprint, both individually and collectively, is not yet large enough to have any significant impact on the market. However, as these new players gather momentum, as further new entrants enter the marketplace, and as existing players shift back to trying to capture market share rather than just stabilize their books, the market conditions will soften — eventually. Of course, only time will tell when all of these processes will play out.


In the meantime, the disrupted market conditions mean that now, more than ever, policyholders need the assistance of an experienced and knowledgeable adviser for their D&O insurance placement. This is a time when specialized D&O insurance expertise and deep knowledge of the insurance market are absolutely indispensable. Well-informed D&O insurance buyers will ensure that their adviser has the requisite capabilities to navigate this difficult market phase.