A federal district court, applying California law, has held that the insurers must advance “potentially covered” subpoena-related expenses to the post-merger entity and that the Change in Control Exclusion did not preclude advancement. The coverage decision raises some interesting issues. And, as discussed below, it raises also raises concerns about the policy language, as well. A copy of the Northern District of California’s February 12, 2024, decision can be found here. A February 26, 2024 post on the Wiley law firm’s Executive Summary blog can be found here. Continue Reading Insurers Must Advance Subpoena-Related Expenses Despite Change in Control Exclusion

Yelena Dunaevsky
Teresa Milano

As readers of this blog well know, SPAC transactions have been a frequent target of corporate and securities lawsuits. In the following guest post, Yelena Dunaevsky, Esq., Senior Vice President at Woodruff Sawyer, Executive Editor, SPAC Notebook and Teresa Milano, Esq., Vice President at Woodruff Sawyer, take a detailed look at the SPAC litigation and enforcement activity so far, including some interesting observations about recent trends. A version of this article was previously published on the SPAC Notebook (here). I would like to thank Yelena and Teresa 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.Continue Reading Guest Post: SPACs Poised to Turn a Corner in 2024: Annual Risk Update

Because so many of you were out of the office or away from your desks last week, I am posting a reminder that, along with my colleagues Marissa Streckfuss and Chris Bertola, I will be hosting a free, one-hour seminar on The Top Ten D&O Stories of 2023 on Thursday, January 11, 2023 at 11:00

According to Renaissance Capital (here), in the heady days during the two-year period 2020 and 2021, 618 traditional U.S. IPOs were completed, raising over $220 billion. (These stats do not include SPAC IPOs). By contrast, in the period 2022-2023 YTD, there have only been 171 traditional U.S. IPOs completed, raising just $27 billion. While many market observers yearn for a return of the buoyant IPO market that prevailed two years ago, signs are that it could be a while before the IPO market takes off again. As detailed in a November 14, 2023, Wall Street Journal article about the state of the IPO market, and as discussed below, there are a host of concerns weighing on the IPO market.Continue Reading It Could be a While Before a Buoyant IPO Market Returns

Claims under Professional Liability Insurance policies and Management Liability Insurance polices are often complex and notoriously expensive to defend. As a result, these policies are usually written on a “defense inside the limits” basis, meaning that the payment of defense expenses reduces the remaining limit of liability. Certain other lines of insurance, such as, for example, general commercial liability insurance, are often written on a “defense outside the limits” basis, meaning that the defense costs are paid by the insurer and do not erode the limit of liability.

In an interesting development, the Nevada legislature has passed, and the Nevada governor has approved, a Bill that prohibits insurers from issuing policies containing a provision that reduces the limit of liability by the costs of defense. I suspect that many in the liability insurance industry are unaware of this legislation prohibiting defense- inside-the-limits liability insurance. I also suspect that, for reasons discussed below, the new legislation will generate disruption in the professional liability and management liability insurance market in Nevada when it goes into effect on October 1, 2023.Continue Reading Nevada Prohibits “Defense Inside the Limits” Liability Insurance Provisions

After California’s legislature enacted legislation requiring greater diversity on corporations with corporate offices in California in 2020, the legislation was almost immediately the subject of a court challenge. Now, in a May 15, 2023, ruling, a California federal district court has held that the statute is facially unconstitutional under the Equal Protection Clause and in light of precedent of the U.S. Supreme Court. As discussed below, the court’s decision follows an earlier ruling by a California State court that previously struck down the statute. A copy of the court’s May 15, 2023, opinion can be found here.Continue Reading Federal Court Strikes Down California Board Diversity Statute

In my post yesterday discussing the implications of Silicon Valley Bank’s failure, I discussed the likelihood that D&O claims could arise in the wake of the failure. It has not taken long for this possibility to materialize. In morning (west coast time) on Monday, March 13, 2023, a plaintiff shareholder filed a securities class action lawsuit against SVB’s parent holding company and two of its executives. As discussed below, this lawsuit is likely just the first of what undoubtedly will be many D&O lawsuits against the company and its executives. A copy of the new complaint can be found here.Continue Reading Well, That Didn’t Take Long: SVB’s Holdco and Execs Hit with Securities Suit

In a development that has an all-too-familiar feel, on Friday March 10, 2023, banking regulators closed California-based Silicon Valley Bank (SVB), in what is the second-largest banking failure in U.S. history. The closure of the country’s 16th largest bank has sent shivers through the financial sector, raising questions about other lending institutions. For those of us in the D&O insurance industry, the bank’s closure also raises unpleasant memories about past failed bank D&O claims. As discussed below, the sequence of events at SVB shows how rising interest rates represent a significant threat that could contribute to a combination of circumstances that might well lead to D&O claims. A copy of the FDIC’s March 10, 2023, press release announcing the bank’s closure and the agency’s appointment as the bank’s receiver can be found here.Continue Reading What Does the Failure of Silicon Valley Bank Mean?

In a development with interesting implications, the video gaming company Activision Blizzard has agreed to pay $35 million to settle an SEC enforcement action based on allegations that the company lacked controls and procedures to ensure that disclosures about the company’s workforce were adequate. The SEC’s allegations also pertained to alleged whistleblower violations at the company. The enforcement action, underscores the agency’s willingness to use its authority, as one law firm memo put it, to transform workplace misconduct allegations into securities law violations. The SEC’s February 3, 2023, Press Release about the settlement can be found here. The SEC’s Order relating to the allegations can be found here.Continue Reading SEC’s Brings an “S”-Related ESG Enforcement Action Based on Alleged Human Capital Control Violations

One of the perennial D&O insurance coverage issues is the question of whether or not two or more claims are or are not interrelated. Under the operation of provisions typically found in most D&O insurance policies, if two or more claims are interrelated within the meaning of the policy, they are deemed to be a single claim that was first made when the first of the claims was filed. This seemingly technical determination can have important implications because it controls whether only one or whether multiple insurance towers apply to the claims. A recent ruling in a coverage dispute in the Western District of Washington provides interesting insight into the kinds of problems relatedness disputes can present. It is also an interesting example of a case in which even though there undoubtedly were overlaps between two claims, the court ultimately determined that the claims were unrelated for D&O insurance coverage purposes. The court’s August 8, 2022 opinion in the case can be found here.
Continue Reading D&O Insurance: Two Claims Involving Pre-IPO Transactions Found Not Related