Every year after Labor Day, I take a step back to 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 interesting time in the world of D&O.
There have recently been a number of Delaware court decisions relating to the Duty of Oversight. In the following guest post, Frederick M Zauderer, Esq., Senior Vice President, Head of Complex Claims – North American Liability at AXIS Capital Holdings, Ltd., Joseph P. Monteleone, Esq., Partner at Weber Gallagher, and Alvin H. Fenichel, CPA, Senior Advisor at H.S. Grace & Company, Inc., take a look at the recent Delaware Duty of Oversight decisions and consider their implications. A version of this article previously was published on the Association of Corporate Counsel (ACC) Docket site (here). I would like to thank the authors for allowing me to publish their article 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 Guest Post: Board Oversight Duties: Recent Adventures in the Delaware Chancery
As I have noted in prior posts, conflicting political views about ESG-related issues have put corporate executives in the crosshairs, a dilemma that has caused some companies to try to avoid ESG issues altogether – a phenomenon that has been described as “greenhushing.” Among other concerns troubling corporate officials about the entire ESG debate is that some politicians have publicly raised the possibility that the act of taking ESG considerations into account in decision-making could itself constitute a breach of fiduciary duty.
Continue Reading Disney, Fiduciary Duties, Business Judgment, and Corporate ESG-Related Actions
Corporate directors and managers have broad responsibilities to oversee their company’s operations. Among the most important items for these executives to monitor are the company’s operational and capital cash flows. In following guest post, H. Stephen Grace, Jr., Suzanne H. Gilbert, S. Lawrence Prendergast, and Joseph P. Montelone, the importance of corporate executives’ oversight of cash flows cannot be overstated – it is, the authors suggest, “the most critical indicator of a company’s ability to survive.” Steve Grace is President and Founder of H.S. Grace & Company, Inc.,; Suzanne Gilbert is a veteran corporate executive with over 30 years of experience with the Interpublic Group of Companies (IPG); Larry Prendergast is Chairman of the Turrell Fund and serves on the advisory boards of several investment funds, including JPMorgan; and Joe Monteleone is a Partner at the Weber Gallagher Simpson Stapleton Fires & Newby LLP law firm. A version of this article previously was published on ABA’s Business Law Today site (here). 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 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 Guest Post: Monitoring Cash Flows: The Board, the CLO, and the CFO
As I have chronicled on this blog (most recently, here), a wave of litigation has followed in the wake of the SPAC boom in late 2020 and early 2021. Since January 1, 2021, over 60 SPAC-related securities class actions have been filed, and there has also been a number of Delaware state court breach of fiduciary duty lawsuits, as well. Although many of these suits have only just been filed and therefore have not yet been subjected to judicial scrutiny, there have been several dismissal motion rulings in a number of these cases. A May 2023 memo from the Jones Day law firm entitled “SPAC Litigation: A Review of Recent Developments” (here) reviews the state of play in the various judicial rulings so far in the SPAC-related cases. As the memo notes, “many high-profile suits have recently survived motions to dismiss (at least in part), and at least one has been resolved through a significant settlement.”
In the following guest post, John Orr, Lawrence Fine, and Angus Duncan summarize the findings from the latest WTW Directors’ and Officers’ Liability Survey. John is WTW’s D&O Liability Product Leader; Larry is WTW’s Management Liability Coverage Leader; and Angus Duncan is a Global D&O Coverage Specialist for WTW. 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 like to submit a guest post. Here is the author’s article.
Continue Reading Guest Post: What has You Worried? Notes from WTW’s 2023 D&O Survey
In the following guest post, Mark Sutton and Leah Barratt take a look at the proposed Economic Crime and Corporate Transparency Bill, a piece of legislation currently pending in the U.K. Mark is a Partner and Leah is a Senior Associate in the Clyde & Co. law firm. A version of the article previously was published on the Clyde & Co. website. I would like to thank Mark and Leah for allowing me to publish their article on this site. I welcome guest post submissions from responsible authors on topics of interest to readers of this blog. Please contact me directly if you would like to submit a guest post. Here is Mark and Leah’s article.
Continue Reading Guest Post: Failure to Prevent Fraud – the New Company Exposure
Earlier this year, when Vice Chancellor Lori Will sustained the plaintiff’s SPAC-related Delaware State Court direct breach of fiduciary duty action against the motion to dismiss of the former directors of Gig Capital3 (Gig3), there was some speculation that the court’s ruling would lead to a “deluge” of similar lawsuits. While no onslaught of new lawsuits has yet materialized, there was (as I noted in a recent post, here) a SPAC-related Delaware state court direct breach of fiduciary duty action filed late last week against the board of Adara Acquisition Corp. Now, a shareholder plaintiff has filed an additional SPAC-related Delaware State Court direct breach of fiduciary duty action, against the board of Trident Acquisition Corp. in connection with the SPAC’s merger with AutoLotto, to form Lottery.com. As discussed below, the allegations against Trident’s board (as well as its sponsor and its financial underwriting advisor) more closely resemble those alleged in the Gig3 case, underscoring the possibility that plaintiffs’ attorneys may well seek to pursue the state court breach of fiduciary duty claim on similar theories. A copy of the April 3, 2023 complaint against the Trident board can be found here.
Continue Reading Shareholders Sue Former SPAC Execs in Delaware Direct Fiduciary Duty Breach Action
Though SPAC-related lawsuits were among the most important factors contributing to securities class action litigation filing volume in 2022, SPAC-related litigation has not yet been as significant of a factor so far in 2023. But while there have been relatively few SPAC related securities suits filed this year, there has been SPAC-related Delaware state court breach of fiduciary duty litigation. In the latest example of this Delaware state court litigation activity, plaintiff shareholders recently filed a Delaware Chancery Court lawsuit against the directors of a SPAC; the post-merger de-SPAC company, as successor in interest in the SPAC; and the SPAC’s sponsor, alleging that the defendants breached their fiduciary duties in connection with the merger. A copy of the plaintiff’s March 31, 2023, complaint can be found here.
The collapse of Silicon Valley Bank is one of those singular events, charged with implications and fraught with dangerous possibilities, but that is also still so recent that it is difficult to discern what it ultimately will mean. Earlier this week, in an excellent webinar presented by the Rock Center for Corporate Governance at the