Trevor Milton, the founder, former Chairman, and largest shareholder of electric vehicle company Nikola Corporation, has been indicted by a federal grand jury in Manhattan. The indictment, which alleges that Milton “engaged in a scheme to defraud investors” by making “deceptive, false, and misleading claims” about “nearly all aspects” of the company’s business, presents criminal charges against Milton for two counts of securities fraud and one count of wire fraud. Milton has also been named as a defendant by the SEC in a separate civil enforcement action accusing Milton of securities fraud. A copy of the indictment can be found here. The S.D.N.Y. U.S. Attorney’s office July 29, 2021 press release about the indictment can be found here. The SEC’s Jcomplaint against Milton can be found here. The SEC’s July 21, 2021 press release about the complaint can be found here.
Continue Reading Nikola Founder Indicted for Securities Fraud, Hit with SEC Enforcement Suit
New Executive Order Means Increased Regulatory Action and Increased Follow-on D&O Claims Risk
From the outset, it has been clear that certain issues are going to be top-of-the-agenda items for the Biden Administration, including, for example, climate change, diversity and inclusion, and cybersecurity. In a July 9, 2021 Executive Order (here), the White House made it clear that competition is also going to be a priority as well. The President’s Executive Order sets out a broad range of initiatives that will impact a wide array of industries across the American economy. As discussed below, the new Executive Order has important implications for companies and their executives; among other things, the initiatives proposed in the order could lead to heightened D&O claims risk and exposure.
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Delaware Court Rejects D&O Insurers’ Uninsurability Defense
The D&O insurance coverage decisions are coming out of the Delaware courts so fast and furious these days that it is getting hard to keep up. Just days before the Delaware Supreme Court issued its high-profile opinion in the Dole Foods case (which I discussed in yesterday’s post), the Delaware Superior Court issued an opinion in the Sycamore Partners case. As may come as no surprise to many industry observers, is favorable to policyholders. The Superior Court held in the Sycamore Partners case that Delaware law applies to the question whether disgorgement or restitution of ill-gotten gains is uninsurable, and held further that as Delaware has no public policy that would prohibit the insurance, the so-called uninsurability defense does not preclude coverage for the amounts. While I have been critical of several recent Delaware court insurance coverage decisions, I have fewer concerns about the Sycamore Partners decision, as discussed below. A copy of the Superior Court’s February 26, 2021 decision can be found here.
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Guest Post: 2020 Year in Review – Securities Litigation
2020 was an eventful year in the world of corporate and securities litigation. In the following guest post, attorneys from the Haynes and Boone LLP law firm take a look at the most important corporate securities litigation developments from 2020. A version of this article previously was published as a Haynes and Boone client alert. 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 site’s readers. Please contact me directly if you would like to submit a guest post. Here is the authors’ article.
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ICYMI, The “Top Ten Stories in D&O In 2020” Webinar Recording Now Available
In case you missed last week’s “Top Ten Stories in D&O of 2020” webinar that I participated in with my colleague Marissa Streckfus, the recording is now available. You can watch the full hour-long presentation here.
Zendesk Data Breach-Related Securities Lawsuit Dismissed
Although some cybersecurity incident-related securities lawsuits have proven to be successful for plaintiffs (refer, for example, here), many of these lawsuits have not gotten very far. The latest data breach-related securities lawsuit to hit the skids is suit filed last year against Zendesk. As discussed below, on November 9, 2020, Northern District of California Judge Charles Breyer granted the defendants’ motion to dismiss in the Zendesk lawsuit. A copy of Judge Breyer’s order can be found here.
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Corruption Allegations Lead to Serious Follow-On Securities Suit Filings
Corruption and bribery enforcement actions and criminal prosecutions have long been a source of follow-on civil actions, including in particular securities class action lawsuits, as I have noted in numerous prior posts on this site. Two recent securities class action lawsuit filings underscore the significance of this follow-on securities suit filing phenomenon and also highlight the seriousness that many of these kinds of claims can involve.
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Guest Post: Delaware Court Weighs In on the CID Coverage Debate
Regular readers of this blog know that a recurring D&O insurance coverage issue is a question of whether or not the D&O policy provides coverage for various types of regulatory and prosecutorial investigations. In the following guest post, Syed Ahmad and Andrea DeField take a look at a recent Delaware Superior Court decision in which the court held that the D&O policy at issue provides coverage for costs incurred in responding to a civil investigative demand (CID). Syed is a partner and Andrea is an associate at the Hunton Andrews Kurth LLP law firm. I would like to thank Syed and Andrea for allowing me to publish their article 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 Syed and Andrea’s article.
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EEOC Charges Overall Down, But Sexual Harassment Charges Increased
The number of workplace discrimination charges filed with the U.S. Equal Employment Opportunity Commission during Fiscal Year 2018 (which ended September 30, 2018) declined to the lowest level since FY 2006, according the EEOC’s recent statistical release. But while the number of charges overall are down, the number of sexual harassment charges increased, as did the number of sexual harassment lawsuits the agency filed. The increase in sexual harassment actions seems to suggest a greater awareness of these issues in the wake of the #MeToo movement. The EEOC’s enforcement and litigation statistics can be found here. The EEOC’s April 10, 2019 press release about the 2018 FY statistics can be found here.
Continue Reading EEOC Charges Overall Down, But Sexual Harassment Charges Increased
Guest Post: Six Avoidable Problems Directors Can Have With Their D&O Insurance
In the following guest post, Paul Ferrillo, a partner in the law firm Greenberg Traurig LLP in New York City, takes a look a six recurring problems that directors can have with their D&O insurance and how to avoid them. I would like to thank Paul for allowing 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 blog’s readers. Please contact me directly if you would like to submit an article. Here is Paul’s article.
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