One phenomenon I have noted on this blog is the rise of event-driven securities class action lawsuits. Rather than being based on alleged or financial misrepresentations, as has traditionally and historically been the case in securities suits, these suits follow in the wake of and are based on adverse events in the company’s operations. A recent high-profile example of an event-driven suit is the securities class action lawsuit that was filed against Arconic in the wake of the Grenfell Tower fire last year. In the following guest post, Richard H. Zelichov, a partner at Katten Muchin Rosenman LLP specializing in defending issuers and their directors and officers in securities class actions and stockholder derivative litigation, takes a look at the event-driven litigation phenomenon and the larger rise of securities suits based on mismanagement allegations. I would like to thank Richard for his willingness to allow 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 site’s readers. Please contact me directly if you would like to submit a guest post. Here is Richard’s article.
Continue Reading Guest Post: Corporate Mismanagement Becomes Event-Driven Securities Litigation
Last week, the Wall Street Journal 
For some time now, some observers had been predicting that we would be seeing a bunch of data breach-related securities class action lawsuits, but the predicted wave never seemed to materialize. However, with a recent uptick in these kinds of cases, that could be changing. On October 8, 2018, in the latest of these kinds of lawsuits to be filed, a plaintiff shareholder filed a securities class action lawsuit against China-based Huazhu Group. As discussed below, there are a number of interesting features of this latest data breach-related securities suit.
For those of us involved in day to day D&O insurance transactions, it is a recognized fact that cannabis-related companies represent a tough class of insurance business. Different insurers take different approaches to the business, but at best it is a risk class that most carriers approach warily. There are reasons for the caution, mostly having to do with questions relating to legality across and between jurisdictions. The question of potential claims is a little less certain, as there arguably are relatively few claims examples. However, a recent securities class action lawsuit involving a Canadian-based cannabis business may provide some insight into the kinds of claims in which these kinds of companies may become involved – at least those that are publicly traded.
As I have noted in recent posts, the #MeToo movement has led to a number of D&O lawsuits as the accountability process has led not only to claims against the wrongdoers but also against the wrongdoers’ company and other company executives for turning a blind eye or failing to disclose the problems. On August 30, 2018, in the latest of these D&O claims arising out of revelations of sexual misconduct, investors filed a securities class action lawsuit against Papa John’s International, following news reports of sexual harassment at the company involving the company’s founder and former CEO and Chairman, John H. Schantter, as well as other executives at the company.
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Earlier this year when I questioned whether or not privacy-related issues 
On August 24, 2018, Northern District of California Judge Charles Breyer dismissed the securities class action lawsuit pending against Tesla. Wait. What? Wasn’t that Tesla lawsuit just filed? O.K. turns out, it wasn’t that lawsuit against Tesla that was dismissed, it was a prior lawsuit. The dismissal order was entered in 
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