The financial crisis generated a great deal of litigation, much involving the directors and officers of companies affected by the crisis. As the crisis recedes further into the past and as the litigation it generated winds down, it is worth taking a look at what happened to determine what can be learned from the litigation. In the following guest post, Dennis Klein of the Hughes Hubbard & Reed law firm provides an overview of what he views as the takeaways for corporate directors and officers from the financial crisis D&O litigation. A longer version of this article will appear in the April 2016 issue of The Review of Banking and Financial Services. I would like to thank Dennis for his willingness to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to readers of this site. Please contact me directly if you would like to submit a guest post. Here is Dennis’s guest post.
Continue Reading Guest Post: Seven Lessons Learned from D&O Litigation During the Financial Crisis
On Thursday, January 21, 2016, I will be participating as the speaker in a 
In my 
It was an eventful year in the world of directors’ and officers’ liability in 2015. Many of the year’s key events significantly changed the D&O liability environment, while other developments during the year could alter the D&O insurance marketplace itself. Many of 2015’s developments have important implications for 2016 – and possibly for years to come. The list of the Top Ten D&O Stories of 2015 is set out below with an eye toward these future possibilities.
It will not come as news to anyone that corporate directors face the possibility of direct personal liability for their actions or omissions in the capacities as directors. However, the scope of these individuals’ potential liability exposures can and does change. As a result of recent legal developments, at least two new areas of potential liability exposure for corporate directors have emerged. As discussed below, a recent federal district court decision suggests that directors can be held personally liable under both the Sarbanes-Oxley Act and the Dodd-Frank Act for whistleblower retaliation, and a recent California legislative enactment provides that corporate directors can be held personally liable for violations of the state’s wage and hour laws.
In the world of corporate governance, there are a number of common presumptions about board structure and practices. However, according to a recent paper, many of these presumptions may in fact represent corporate governance “myths.” In their September 30, 2015 paper entitled “Seven Myths of Boards of Directors” (
From time to time, the SEC reiterates its view of the critical gatekeeper role companies’ outside directors play in safeguarding investors’ interests. Nevertheless, it has been relatively rare for SEC to pursue enforcement actions against outside directors based on an alleged failure to fulfill that role. But while these actions are rare, the agency does periodically bring enforcement actions against directors whom the agency contends shirked their duties.
One of the vestiges of the global financial crisis is that company directors and officers now face more scrutiny than ever. This scrutiny, in turn, has led to a greater liability exposure for corporate officials, as well. This increased scrutiny and amplified liability exposure applies not only in the U.S., but in other countries, including, in particular, in Europe, according to a recent report. The report, issued earlier this week by the 
When the U.S. Department of Justice