Largely as a result of the number of suits filed against smaller companies, the number of securities class action lawsuits filed in 2015 increased for the third year in a row, to the highest level since 2008, according to a new report from PwC. The April 2016 report, entitled “Small Companies, Big Targets: 2015 Securities Litigation Study,” can be found here. The numbers in the PwC report differ slightly from the figures reported in previously released annual securities class action litigation studies by Cornerstone Research (here) and NERA Economic Consulting (here), but the reports are directionally consistent. My own analysis of the 2015 securities litigation filings can be found here.
Continue Reading PwC Report: Surge of Suits Involving Smaller Companies Drove 2015 Securities Suit Filing Increase
Guest Post: Grading Global Boards of Directors on Cybersecurity
In the following guest post, Paul Ferrillo of the Weil Gotshal law firm and Christophe Veltsos, CISSP, CISA, and CIPP, and an Associate Professor at Minnesota State University, Mankato, take a look at a recent NASDAQ survey of corporate officials in multiple countries on the topic of cybersecurity accountability. As Paul and Christophe detail, there is reason to be concerned about the apparent lack of cybersecurity literacy, awareness and risk assessments among corporate officials surveyed. The authors also take a look at the steps companies can take to address these concerns.
I would like to thank Paul and Christophe for their willingness to publish their 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 Paul and Chrisophe’s guest post.
Continue Reading Guest Post: Grading Global Boards of Directors on Cybersecurity
The Growing Risk of Payment Instruction Fraud and Related Insurance Coverage Problems
There recently has been a “dramatic rise” in the incidence of business e-mail compromise (BEC) scams, according to an April 4, 2016 alert from the Federal Bureau of Investigation (here). In these schemes, which are also often referred to as “social engineering fraud” or “payment instruction fraud,” scammers using official seeming email communications induce company employees to transfer company funds to the imposters’ account. According to the FBI, during the period October 2013 through February 2016, law enforcement agencies have received reports of this type of fraud involving 17,642 victims. Complaints involving these kinds of fraudulent schemes have arisen in every U.S. state and 79 different countries and amount to over $2.3 billion losses. As discussed below, these types of schemes are not only a growing concern, but they are increasingly the source of insurance coverage disputes, as well.
Continue Reading The Growing Risk of Payment Instruction Fraud and Related Insurance Coverage Problems
Guest Post: Supreme Court Upholds Class Certification in Tyson Foods
On March 22, 2016, the U.S. Supreme Court held in Tyson Foods, Inc. v. Bouaphakeo (here) that claimants asserting Fair Labor Standards Act claims on half of a class of Tyson Foods employees could rely on statistical evidence to support their assertion that common issues of fact or law predominated among class members. In the following guest post, Noelle Reed and Daniel Mayerfeld of the Skadden Arps law firm take a closer look at the Supreme Court’s opinion and suggest that the decision may be a reflection of distinct circumstances involved in the Tyson Foods case, that the circumstances are highly unlikely to arise in securities cases, and therefore that the decision is unlikely to have a significant impact on securities cases. I would like to thank Noelle and Daniel for their willingness to publish their article 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 Noelle’s and Daniel’s guest post.
Continue Reading Guest Post: Supreme Court Upholds Class Certification in Tyson Foods
Guest Post: Court Holds Insured vs. Insured Exclusion Unambiguous, Precluding Coverage
As I have frequently noted on this blog, most recently here, the question of whether or not the Insured vs. Insured applies to preclude coverage is a frequently recurring D&O insurance coverage issue. In the following guest post, Peter Webster of the Carlton Fields law firm takes a look at a recent Florida intermediate appellate court decision interpreting and applying a D&O insurance policy’s Insured vs. Insured exclusion. Peter and his Carlton Fields colleague Patricia Thompson represented the insurer in the proceeding. I would like to thank Peter 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 this site’s readers. Please contact me directly if you would like to submit a guest post. Here is Peter’s guest post.
Continue Reading Guest Post: Court Holds Insured vs. Insured Exclusion Unambiguous, Precluding Coverage
SEC Warning: It Is Watching Private Companies
The Securities and Exchange Commission is primarily concerned with public companies and the securities markets in which the shares of public companies trade. However, in a series of recent speeches and presentations as part of what the agency had called the “Silicon Valley Initiative,” the agency made it clear that it is increasingly concerned with private and pre-IPO companies as well, particularly so-called “unicorns” – that is, the private start-up firms with valuations greater than $1 billion. SEC Chairman Mary Jo White highlighted these concerns in a March 31, 2016 speech at the Rock Center for Corporate Governance at Stanford Law School, a copy of which can be found here.
As summarized in an April 4, 2016 memo from the Fenwick & West law firm about the SEC’s Silicon Valley Initiative, “the SEC is closely watching the conduct of private companies as well as emerging platforms that trade in private company securities, and will bring enforcement cases as needed to protect investors.” The agency’s recent presentations and SEC Chair White’s speech, the memo said, underscored that “the SEC expects even private companies to embrace and demonstrate sound corporate governance.”
As discussed below, these pronouncements from the SEC raise troublesome questions about what has in the past been viewed as a clear demarcation between the potential liability exposures for private and public companies.
Continue Reading SEC Warning: It Is Watching Private Companies
Guest Post: Managing Gatekeeper Anxiety
In the following guest post, Michael W. Peregrine, a partner at the McDermott, Will & Emery law firm, take a look at regulators’ new “gatekeeper” expectations that now face corporate directors. This article is reprinted with permission from Corporate Board Member, First Quarter, 2016. I would like to thank Michael 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 this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Michael’s guest post.
Continue Reading Guest Post: Managing Gatekeeper Anxiety
California Court Rules Retailer’s Website Violates ADA Accessibility Requirements
In a March 21, 2016 ruling (here), a California state court judge has held that a retailer violated the American s with Disabilities Act because its website was not accessible to a visually-impaired plaintiff. According to a March 29, 2016 post on the Seyfarth Shaw law firm’s ADA Title III blog (here), with this ruling, the California court became “the first in the nation” to rule that a website violated the ADA’s public accommodation accessibility requirements. As discussed below, the ruling could herald an increase of ADA litigation involving website accessibility.
Continue Reading California Court Rules Retailer’s Website Violates ADA Accessibility Requirements
Insured vs. Insured Exclusion Bars Coverage for Liquidation Trust’s Claim Against Bankrupt Firm’s Execs
Many issues become complicated in the bankruptcy context. That is certainly true of D&O insurance coverage issues. A recent coverage decision out of the Western District of Michigan illustrates this point. In a March 31, 2016 opinion (here), Judge Janet Neff, applying Michigan law, held that the relevant D&O insurance policies’ Insured vs. Insured exclusion precluded coverage for a claim that was first transferred by a bankrupt company to a Liquidation Trust and then asserted by the Liquidation Trust against the company’s former directors and officers.
Continue Reading Insured vs. Insured Exclusion Bars Coverage for Liquidation Trust’s Claim Against Bankrupt Firm’s Execs
Book Review: Building Art – The Life and Work of Frank Gehry
During a March 2015 trip to Paris, I visited the city’s newest art museum, the Fondation Louis Vuitton (pictured below), which had opened the preceding November. The museum is located in the Bois de Boulogne, and is housed in a dramatic building designed by the famed American architect, Frank Gehry. The glass, wood and stone structure is built in the shape of sailboat sails inflated by the wind.
The building itself is a challenge for the art inside. The building is so massive and its style so flamboyant that the art inside is almost overwhelmed. The overall effect is that the art feels almost insignificant and ephemeral. At the time of my visit, this effect seemed discordant to me. On further reflection, however, I have decided that this effect is a tribute to the building’s power – the building itself is a work of art, one arguably more fully realized that the art objects it contains.
Continue Reading Book Review: Building Art – The Life and Work of Frank Gehry