At this point late in the year, it is looking increasingly likely that 2022 will be a down year in terms of the number of securities class action lawsuit filings relative both to recent years and even relative to long term historical norms. However, an important (and arguably somewhat surprising) part of the securities suits that were filed this year is the significant number of COVID-related securities suits filed this year. I say “surprising” because it seems unexpected well into the third year that plaintiffs’ lawyers would be continuing to file these suits. In the latest example of these kinds of suits, earlier this week a plaintiff shareholder filed a securities class action lawsuit against the pharmaceutical company Veru, Inc. related to the company’s disclosures concerning its efforts to develop a COVID-related therapy drug. A copy of the December 5, 2022 complaint filed against Veru can be found here.
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Irish Court Lifts Corporate Veil to Hold Directors Liable
One of the fundamental principles of corporate law – in the U.S., as well as in other countries – is that a corporate entity has a legal existence separate and apart from its shareholders, officers, and directors, and that the individuals cannot be held personally liable for the debts and obligations of the company. However, in a recent extraordinary and noteworthy decision, the Irish High Court, applying Irish law, pierced the corporate veil in finding two Irish directors and two shadow directors personally liable in connection with a multinational fraud scheme. As discussed below, the decision underscores the importance of directors’ duties and their obligations to be informed about their companies’ operations. A copy of the Court’s October 28, 2022 decision can be found here.
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Florida’s Politicians: Don’t Say ESG
On December 1, 2022, in a press release full of statements critical of the investment firm BlackRock and its CEO, Larry Fink, Jimmy Patronis, the Chief Financial Officer of Florida, announced that the Florida Treasury would begin divesting $2 billion of Florida state assets currently under management by BlackRock. The statement makes it clear that the Florida official is making the move because of his opposition to the investment firm’s activist positions, especially with respect to ESG issues. This development is the latest step in the process of the increasing politicization of ESG , a pattern that puts companies into the cross-fire as they contend with competing ESG expectations. The Florida CFO’s press December 1, 2022 press release can be found here.
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Guest Post: Dell Agrees to $1 Billion Shareholder Suit Settlement
Computer technology company Dell Technologies, Inc. recently announced that it had entered a $1 billion settlement in shareholder litigation relating to the company’s disputed 2018 stock swap transaction. In the following guest post Jeff Lubitz, Managing Director, ISS Securities Class Action Services, and Jarett Sena, Director of Litigation Analysis, ISS Securities Class Action Services, take a closer look at the Dell settlement and also put the massive settlement into context with other shareholder lawsuit settlements. A version of this article previously was published as an ISS Securities Class Action Services client alert. I would like to thank Jeff and Jarett 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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Guest Post: Price Impact, the Speed of Information, and Securities Class Certification
Since the U.S. Supreme Court’s 2014 decision in Halliburton II, the lower courts have wrestled with questions on how to address the “price impact” of corrective disclosures. In the following guest post, Matthew L. Mustokoff and Margaret E. Mazzeo, partners at the Kessler Topaz Meltzer & Check LLP law firm, examine several critical unanswered questions concerning price impact. I would like to thank Matt and Margaret 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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Book Review: Directors’ Liability and Indemnification (Fourth Edition)
During most of my career working on D&O liability issues, if we were talking about D&O claims, we were talking about developments in the U.S. In recent years, this generalization is increasingly untrue; starting with the global financial crisis now more than a decade ago, investors, regulators, and others throughout the world have sought to hold companies and their directors and officers accountable. The topic of D&O claims is no longer (and has not been for a while) just about the U.S. Indeed, as I have noted elsewhere on this site, the global rise of collective investor actions may be one of the most important stories in the D&O liability arena. With the global rise in directors’ and officers’ liability actions has come a series of questions about the availability of indemnification and insurance for the targeted individuals in their home countries or in the countries where the claims are pending, questions that often may be challenging to try to answer.
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Prior Antitrust Action Held Interrelated with Later Securities Suit
One of the perennial D&O insurance coverage issues has to do with whether a later claim made during the policy period is interrelated with an earlier claim made prior to the policy period, and whether the later claim therefore is deemed under the policy to have been made prior to the policy periods. These issues were front and center in a recent coverage dispute in which the door manufacturer Jeld-Wen argued that earlier antitrust liability actions were not interrelated with the later securities class actions. In an interesting November 18, 2022 opinion by Western District of North Carolina Judge Max O. Cogburn, Jr., applying North Carolina law, held that the antitrust and securities actions were interrelated; that the securities claim was deemed first made prior to the policy period of the excess insurer’s policy; and therefore that the settlement of the securities claim was not covered by the policy at issue. A copy of Judge Cogburn’s opinion can be found here.
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Regulators’ Take On ESG Investing
As readers of this blog well know, ESG is one of the hot topics in the investment and financial world these days. ESG is also very much on the mind of regulators as well, as two recent developments show. First, on November 22, 2022, the U.S. Department of Labor issued updated rules expressly allowing plan fiduciaries to consider ESG factors when they select retirement fund investments and exercise shareholder rights, such as proxy voting. Second, the SEC, acting through its Division of Enforcement’s Climate and ESG Task Force, brought a settled enforcement action against Goldman Sachs Asset Management for policies and procedures shortcomings at funds marketed as ESG investments. These developments underscore the challenges companies, investment funds, and others face as they navigate the complex ESG landscape.
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Guest Post: Focus on ESG: The German Supply Chain Due Diligence Act
This past summer, the German legislature passed the Supply Chain Act, in order to require German businesses to comply with due diligence obligations to improve compliance with human rights and material standards within supply chains. In the following guest post, Frank Hülsberg, a Chartered Accountant and Tax Advisor in Düsseldorf, Partner Advisory and Member of the Executive Board at Grant Thornton AG Wirtschaftsprüfungsgesellschaft in Germany, and Burkhard Fassbach, a Senior Manager in the Governance, Risk, Compliance & Technology department at Grant Thornton in Frankfurt, review the Act’s requirements and consider its implications. I would like to thank Frank and Burkhard for allowing me to publish this 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 Frank and Burkhard’s article.
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Guest Post: SolarWinds Agrees to $26 Million Payout Over Massive Data Breach
As I have noted in numerous posts on this site (most recently here), plaintiffs’ lawyers seem drawn to filing D&O claims against companies that have experience cybersecurity incidents. But as I have also noted, the plaintiffs’ lawyers’ track record in these cases is not particularly good. However, as discussed in the following guest post by Jarett Sena, Director of Litigation Analysis, ISS Securities Class Action Services, the cybersecurity-related securities class action lawsuit pending against SolarWinds recently resulted in a significant and noteworthy settlement. This article previously was published on ISS Securities Services’ ISS Insights. I would like to thank Jarett and ISS Securities Class Action Services for allowing me to publish this 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 Jarett’s article.
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