In what is, according to the SEC itself, the second-largest whistleblower award in the history of the agency’s whistleblower program, the SEC has awarded two joint whistleblowers a bounty of over $50 million. The agency’s order making the award is heavily redacted, in order to protect the whistleblowers’ identities, so it is hard to tell very much about the circumstances surrounding the award. But the award is the latest in what has been a recent flurry of very large whistleblower awards by the agency. The SEC’s April 15, 2021 press release announcing the award can be found here. The April 15, 2021 award order can be found here.
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SPAC-Related Securities Suit Survives Dismissal Motion
As I have noted in recent blog posts, there have already been several securities class action lawsuits filed this year related to the current wave of SPAC activity. These recently filed lawsuits have only just been filed and have not yet made their way to the dispositive motion stage. However, there are also other earlier-filed SPAC-related lawsuits pending, involving SPAC-related transactions that preceded the current SPAC wave. One of these earlier filed securities lawsuits involves Alta Mesa Resources, a company that collapsed within the first year after it was formed in a 2018 merger with a SPAC. On April 14, 2021, Southern District of Texas Judge George C. Hanks, Jr. denied the defendants’ motion to dismiss in the Alta Mesa case, in a ruling that may be of interest in relation to the numerous more-recently filed SPAC-related lawsuits. A copy of the order denying the defendants’ motion to dismiss can be found here.
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Tracking Two Emerging Securities Litigation Trends: SPACs and Supply Chain Disruption
Electric vehicle battery company Romeo Power, which became a publicly traded company through a December 2020 merger with a SPAC, has been hit with a securities class action lawsuit following a share price decline after its announcement of a disruption in its supply chain. The new lawsuit is interesting both because of the SPAC angle and because it resulted from supply chain issues. The new lawsuit against Romeo Power was, in fact, one of two securities suits filed last week arising out of supply chain disruption. As discussed below, supply chain disruption could represent an emerging new area of corporate and securities litigation exposure. I also discuss below the fact that the new lawsuit involves yet another de-SPAC company in the electric vehicle industry
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Guest Post: UK Sarbanes Oxley?
In a March 2021 paper entitled “Restoring trust in audit and corporate governance” (here), the UK government set out a number of proposed reforms in order to try to increase trust in corporate governance, including, among other things, proposed new company reporting requirements. In the following guest post, Andrew Milne discusses the potential implications for UK directors from the reform proposals under consideration. Andrew is a Senior Associate at the CMS law firm, and a co-author of the UK Chapter in Directors’ Liability and Indemnification. I would like to thank Andrew 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 a guest post. Here is Andrew’s article.
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Book Review: Directors & Officers Liability Insurance Deskbook (Fifth Edition)
As everyone involved in D&O insurance claims knows, there are a number of frequently recurring coverage issues. But while many coverage issues often recur, the applicable legal principles continue to develop and change. There are resources (such as, for example, this blog) where important developments can be tracked, but sometimes what is called for is a single resource that collects the relevant developments in a single place. Fortunately for D&O insurance practitioners, there is resource that does just that. It is the “Directors & Officers Liability Insurance Deskbook” (about which refer here), an American Bar Association publication written by attorneys from the Clyde & Co. law firm and edited by Martin J. O’Leary of Clyde & Co. The book’s recently published Fifth Edition is a timely update. Every D&O liability insurance practitioner and indeed anyone looking for a quick and ready resource on D&O liability insurance coverage issues will welcome this updated edition.
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Trouble Brewing in SPAC-Land?
As has been extensively noted on this site and elsewhere, the sheer level of SPAC-related action has been the one of the top business stories of the last few months. However, as I noted earlier this week, there have already been some distant early warning signs of possible problems on the SPAC horizon. Further developments this week suggest there could be growing trouble in SPAC-land. As discussed below, a newly released statement by the SEC about SPAC accounting potentially could cool off the hot market for SPACs, and a statement of intent by a leading plaintiffs’ firm raises the possibility of further SPAC-related litigation.
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COVID-19-Related Securities Suit Against Norwegian Cruise Lines Dismissed
One of the very first coronavirus-related securities class action lawsuits to be filed at the outset of the pandemic in the U.S was the securities suit filed against Norwegian Cruise Line Holdings. The Norwegian Cruise Line lawsuit is now the latest of the coronavirus-related securities suits to be dismissed. In an April 10, 2021 opinion with a number of interesting features discussed below, Southern District of Florida Judge Robert N. Scola, Jr. granted the company’s motion to dismiss with prejudice. A copy of Judge Scola’s opinion can be found here.
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All SPACs, All the Time
If things these days for the rest of you are the way they are for me, then all of you are basically finding out that SPACs are taking over your life. All SPACs, all the time. Wall to wall SPACs. At one level, this development should come as no surprise, as the sheer volume of SPAC activity is nothing short of astonishing. According to SPACInsider (here), since January 1, 2020, there have been a total of 554 SPAC IPOs completed – 308 in the three and a half months of 2021 alone. A further 261 SPAC IPO Registrations are currently pending. A staggering 435 post-IPO SPACs are currently in the process of trying to identify merger partners. Along with this wave of financial activity has come an accompanying flow of SPAC-related news and information. I have identified below just a few of the many SPAC-related items that crossed my desk in the last week; the selected items underscore the opportunities and risks involved in the SPAC-crazy world that we all now inhabit. And as also noted below, there could be some hints of a slowdown as well.
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Accounting-Related Securities Suit Filings and Settlements Increased in 2020
Even though the overall number of federal court securities class action lawsuit filings decrease in 2020 relative to 2019, the number of securities suits involving accounting allegations increased slightly, according to a new report from Cornerstone Research. The report, which is entitled “Accounting Class Action Filings and Settlements: 2020 Review and Analysis” also notes that the number of and value of settlements of accounting-related securities suits increased in 2020, as well. The April 7, 2021 report can be found here. Cornerstone Research’s April 7, 2021 press release about the report can be found here.
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Guest Post: Are SPACs Crossing the Pond? Implications for D&O Insurers
SPAC transactions have been a massive phenomenon in the U.S. for the last 18 months, and now it appears that the financial trend may be catching on overseas as well. In the following guest post, Jane Childs, Luke Mooney, Aiden M. McCormack and Martin Penn of the DLA Piper law firm take at look at the possibilities for the SPAC trends to spread to the U.K. A version of this article previously was published as a DLA Piper client memo. 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 authors’ article.
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