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Kevin LaCroix

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Kevin M. LaCroix is an attorney and Executive Vice President, RT ProExec, a division of RT Specialty. RT ProExec is an insurance intermediary focused exclusively on management liability issues.

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Julie Andrews Sound of Music
This is me disregarding Apple Music and continuing to enjoy free music streaming on the Internet

By now most of you, like me, have had Apple Music downloaded on your iPhone, with the latest iOS update. Pretty presumptuous of Apple to just stick it on our phones, don’t you think? Personally I would have preferred to have been asked first. Turns out, Apple not only wants us to buy its phones, but they also want us to pay for streaming music content as well. Just to sample Apple Music during the three-month trial period, you have to select and agree to a payment plan (either individual for $9.99 a month or family for $12.99) that kicks in after the trial period ends.

I don’t know about the rest of you, but I am not willing to pay $120 a year to listen to streaming music. (Okay, okay, $119.88.) Fortunately, we don’t have to pay anything. There are a number of good free options available. The purpose of this post is to share my notes on the free music streaming sites and, I hope, to encourage others to share their own notes with me and others as well.
Continue Reading The Phones are Alive (With the Sound of Music)

stockboardAlthough the IPO pace is off from last year’s sizzling levels, the number of companies completing IPOs on U.S. exchanges remains at heightened levels. In addition, the number of completed IPOs picked up as the year progressed, suggesting that IPO activity in the U.S. in the year’s second half will also be lively.

U.S.  IPO activity in 2014 was at the highest levels in more than a decade, when there were a total of 275 U.S. IPOs (as discussed here). According to Renaissance Capital (here), through the first six months of 2015, there have been a total of 104 completed IPOs, which is well below the 147 completed in the first half of 2014 (representing a decline of 29%). However, other than when compared with 2014, the number of U.S. IPOs completed in the first half of 2015 is the first half total since 2004.

The pace of completed IPOs has picked up as 2015 has progressed. The number of U.S. IPOs completed in June 2015 was the highest monthly total since July 2014, and the number of IPOs completed during the week ending on June 25, 2015 was the highest weekly total since October 2014, as discussed here. Moreover, the market for IPOs appears to be quite healthy as we head into the year’s second half. Seres Therapeutics, which debuted during the week ending June 25, 2015 soared 186% on its first day of trading, the highest post-IPO pop since January 2014.
Continue Reading U.S. IPO Activity Remains at Heightened Levels in Year’s First Half

brazilIn an earlier post, I noted that a significant factor driving securities litigation filings so far this year has been the rising number of U.S. securities lawsuits involving non-U.S. companies. A number of different factors are contributing to the filing of these suits, but among the factors is the increasing numbers of U.S.-listed non-U.S. companies that have been caught up in corruption investigations in their home countries.

The highest profile company among the firms involved in corruption probes is the Brazilian petroleum company, Petrobras, which has been the target of growing Operação Lava Jato (Operation Car Wash) corruption investigation in Brazil. Petrobras, whose ADSs trade on the NYSE, was hit with a class action securities lawsuit in the U.S. in December 2014 (as discussed here).

The continuing Petrobras investigation has spread to a number of other Brazilian companies. Among other things, the investigation has led to the recent arrests of two high profile executives in the construction industry in Brazil, as discussed here. The leaders of the nation’s two largest engineering and construction companies, Marcelo Odebrecht, head of Odebrecht SA, and Otavio Marques Azevedo, head of Andrade Gutierrez, were taken into custody in raids linked to the Petrobras scandal.

The investigation has now led to yet another U.S. securities class action lawsuit against yet another Brazilian company. On July 1, 2015, a plaintiff shareholder filed a securities class action lawsuit in the Southern District of New York against Braskem, S.A. and certain of its directors and officers. Braskem, which is based in Brazil, is Latin America’s largest petrochemical company.
Continue Reading Another U.S. Securities Suit Arising from Overseas Corruption Investigation

seclogoOn July 1, 2015, a divided SEC voted 3-2 to propose rules directing the securities exchanges to adopt standards requiring listed companies to adopt policies requiring the companies’ executive officers to pay back incentive-based compensation in the event the company restates its financials for the year in which the compensation was awarded. The proposed rules,…

openingbeachshotIn recognition of the Independence Day holiday in the U.S., and in what is now something of an annual tradition, I am reprising here my 2012 essay about Time and Summer, which can be found here. Have a great Fourth of July holiday. Thank you to all of my loyal readers.

gavelnewThe first half of 2015 was an active period for new securities class action lawsuit filings. The filings through the year’s first six months suggest we are on pace for the highest annual number of new filings since 2011. The heightened levels of lawsuits involving non-U.S. companies and IPO companies contributed to the uptick in securities suit filings in the year’s first half.
Continue Reading An Active First Half for Securities Class Action Litigation

GaIn  a recent post in which I discussed the “basic value proposition” of D&O insurance, I noted that among the five indispensable elements required in order for coverage under a D&O insurance policy to exist is the requirement that a Claim for an alleged Wrongful Act against an Insured Person acting in an Insured Capacity. The prerequisite that the Insured Person must have been acting in an Insured Capacity at the time of the alleged Wrongful Act arises from the fact that individuals act in a number of different capacities; it is only conduct undertaken in their capacity as an officer or director of the insured company for which the insurance policy provides coverage.

A June 22, 2015 decision by the Eleventh Circuit, applying Georgia law, provides a good illustration of how an individual might be acting in multiple capacities, and underscores the fact that the insurance under a D&O policy is only available when the insured was acting in his or her capacity as a director or officer of the insured company. The case presents some interesting policy wording lessons. A copy of the Eleventh Circuit’s opinion can be found here.
Continue Reading D&O Insurance: A Question of “Capacity”

nystateOne of the standard features of D&O insurance policy is the fraud exclusion, which these days typically provides that the exclusion is triggered only after a “final” judicial determination that the precluded conduct has occurred. But what is it that makes a determination “final”?

On June 23, 2015, in a decision that has a number of important implications, the New York (New York County) Supreme Court, Appellate Division, First Department, applying New York law, held that the imposition of a post-conviction criminal sentencing constitutes a “final judgment” that not only triggered the fraud exclusion in a D&O insurance policy but also required the convicted individual to reimburse the carrier for amounts it had already paid – even though the individual’s appeal of his criminal conviction was pending.

As discussed below, the court’s opinion has some important lessons for D&O insurance practitioners. A copy of the court’s opinion can be found here.
Continue Reading D&O Insurance: A “Final” Analysis

Cohen photoAs I noted in a recent post (here), on June 11, 2015, the Delaware legislature passed legislation prohibiting fee-shifting bylaws for Delaware stock corporations. On June 24, 2015, Delaware’s governor signed the statute into law, as discussed here. As I noted in my blog post about the legislation, though the statute has been passed, a number of questions remain about fee-shifting bylaws, including in particular what the legislation’s impact might be for bylaws purporting to shift fees in connection with federal securities litigation. As discussed here, according to Columbia Law School Professor John Coffee, as a result of the statute’s wording, there may be unanswered questions whether the statute prohibits bylaws shifting fees in connection with securities litigation.

 

In the following guest post, Neil J. Cohen, Publisher, Bank and Corporate Governance Law Reporter, takes the position that there may be arguments that the new legislation is broad enough to preclude bylaws that purport to shift fees in connection with federal securities litigation. (Please note that Neil wrote and submitted his article before the Governor has sighed the statute into law.) The “Note” at the beginning of the guest post is part of Neil’s article.

 

I would like to thank Neil for his willingness to publish his article on this site. I welcome guest post submissions from responsible authors on topics of interest to readers of this site. Please contact me directly if you would like to submit an article. Here is Neil’s guest post.

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Note: The following article discusses a Delaware bill, passed by both the Senate and House, which prohibits a Board of Directors of a stock company from implementing fee-shifting provisions for “internal corporate claims.” The author asserts that securities fraud suits can fit within that category. The article is part of a Round Table on the Delaware legislation that includes Professors J. Robert Brown and John C. Coffee. The June, 2015 issue of the Bank and Corporate Governance Law Reporter containing the entire Round Table can be downloaded here.

The Governor of Delaware is expected to sign a bill, passed by the House and Senate, which prohibit fee-shifting provisions for “internal corporate claims”. The bill also contains a prohibition of bylaws or charter provisions that designate a forum other than Delaware as the exclusive forum. That provision would prevent corporations from choosing forums that allow fee-shifting provisions.

The legislators resisted a lobbing effort by the Chamber of Commerce’s Institute for Legal Reform to insert a provision expanding the Court of Chancery’s discretionary authority to shift to include cases that “plainly should not have been brought but that do not satisfy the extremely narrow ‘bad faith’ or ‘frivolousness’ exceptions”.

Assuming the Governor signs the bill, what is the outlook for fee-shifting provisions affecting securities fraud litigation?  Will plaintiffs file for a declaratory judgment in Chancery Court or in District Court to strike the fee-shifting provisions as facially invalid under the new Delaware law? If so, the specific questions are likely to be whether the general bylaw authority under Section 109 of the law allows such provisions and, if so, whether Section 115, dealing with “internal corporate claims,” exempts them. If they are not exempt plaintiffs will be forced to overcome a high standard of proof to demonstrate they are invalid as applied.  In the author’s opinion the best argument that the fee-shifting provisions are invalid is because they are exempt as “internal corporate claims” under Section 115 of the new law.
Continue Reading Guest Post: Does Delaware Legislation Cover Fee Shifting in Securities Cases?

the dandodiaryWith this blog post, The D&O Diary is proud to launch its new look website. I hope  readers will find the cleaner, more open page design easier to read, and that the relocation of the search box and the alterations to other website functions will make the site easier for readers to use.

Though…