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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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Barry Buchman
Michael Scanlon

As I have noted in prior posts on this site (most recently here), the so-called “bump up” exclusion in D&O insurance policies is a frequent source of coverage litigation between D&O insurance policyholders and their insurers. The “bump up” exclusion precludes coverage for increased amounts participants in an M&A transaction agree to pay in the transaction in order to settle a M&A-related lawsuit. In the following guests post, Barry Buchman and Michael Scanlon take a look at the issues that can arise in disputes over the application of the “bump up” exclusion and consider the practical consequences. Barry is partner and Michael is counsel in the insurance recovery group at the Haynes and Boone law firm. I would like to thank Barry and Michael 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.
Continue Reading Guest Post: Avoiding Bumps in the Road to Coverage: Limitations on the “Bump-Up Exclusion”

As I have noted on this site (most recently here), electric vehicle companies that have merged with publicly traded SPACs have become a favored target for plaintiffs’ securities lawyers. In the latest example of this phenomenon, on December 23, 2021, a plaintiff shareholder filed a securities class action lawsuit against the EV company Faraday Future Intelligent Electric, Inc., which merged with a SPAC on July 21, 2021. Like many of the EV companies that have been sued, Faraday Future’s stock price dropped after it was the subject of a short seller report. A copy of the complaint against Faraday Future can be found here.
Continue Reading And Again: Another Post-SPAC Merger EV Company Hit with Securities Suit

In an opinion written in unusually direct language, a federal district court has denied the motion to dismiss in a coronavirus-related securities class action lawsuit filed against a vaccine development company. However, the motion to dismiss was granted with leave to amend as to the vaccine company’s major outside shareholder. The significant context of the pandemic itself and the swirl of media coverage surrounding it proved to be a significant factor in the court’s denial of the motion to dismiss as to the company defendants. The court’s December 22, 2021 opinion in the Vaxart securities litigation can be found here.
Continue Reading Coronavirus-Related Securities Suit Against Vaccine Company Survives Dismissal Motion

In the latest securities class action lawsuit to be filed against a post-SPAC-merger electric vehicle company, a plaintiff shareholder has filed a securities suit against the EV company Arrival SA, following the company’s announcement in November 2021 of a slowdown in its production schedule and of the company’s need to raise additional capital. As discussed below, the new lawsuit against Arrival has several characteristics in common with other SPAC-related securities suits that have been filed this year. A copy of the complaint that was filed against Arrival on December 22, 2021 can be found here.
Continue Reading Yet Another Post-SPAC-Merger Electric Vehicle Company Hit with Securities Suit

As I monitored the coronavirus-related securities litigation as it has been filed since March 2020, I had observed that the cases generally fell into one of three categories: cases involving companies that had experienced a coronavirus outbreak in their facilities; companies that had claimed that they would be able to profit from the pandemic; and companies whose operations or finances were disrupted by the pandemic. Over the last several weeks, I have observed a new coronavirus-related variant, a fourth category of cases involving companies that had prospered at the outset because of pandemic restrictions, but whose fortunes ebbed as pandemic restrictions eased. Now, two more of these “fourth category” variant cases have been filed, one involving Docusign and one involving Chegg, as detailed below.
Continue Reading Two New Cases of the Latest Coronavirus-Related Securities Suit Variant Filed

Nikola, the electric vehicle company that became a publicly traded company through a June 3, 2020 merger with a SPAC, has reached an agreement to pay $125 million to settle proceedings the SEC brought against the company relating to misrepresentations its former CEO Trevor Milton and the company made about the company’s EV production capabilities. In the settlement, the company neither admitted nor denied the SEC’s allegations. The SEC’s December 21, 2021 press release about the settlement can be found here. The SEC’s December 21, 2021 order instituting cease and desist proceedings against Nikola can be found here. The company’s December 21, 2021 press release about the settlement can be found here.
Continue Reading Nikola Settles SEC Proceedings for $125 Million

As readers will recall, in a September 7, 2021 opinion, Delaware Vice Chancellor Morgan T. Zurn largely denied the defendants’ motion to dismiss in the Boeing Max 737 Shareholder Derivative Litigation. Two months later, the parties in the action settled the case for $237.5 million. In the following guest post, Suzanne H. Gilbert, H. Stephen Grace Jr., and S. Lawrence Prendergast examine Vice Chancellor Zurn’s Boeing opinion and consider its implications for directors’ board responsibilities. Suzanne H. Gilbert is a member of the Board of Advisors of Grace & Co. Consultancy, Inc.; H. Stephen Grace Jr., Ph.D., is President of H.S. Grace & Company, Inc.; and S. Lawrence Prendergast is a member of the Board of Advisors of Grace & Co. Consultancy, Inc. and is Chairman of the Turrell Fund. A version of this article previously was published in the American Bar Association’s Business Law Today. 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. The authors’ article follows.
Continue Reading Guest Post: Boeing and the Ongoing Evolution of Director Responsibilities

As I noted at the time, earlier this year SEC Chair Gary Gensler spoke publicly about the need for revisions to Rule 10b5-1, the regulatory provision that allows corporate executives, subject to certain requirements, to trade in their holdings of their companies’ securities. Rule 10b5-1 has long been criticized because of perceived abuses. On December 15, 2021, the SEC released proposed revisions to the Rule. Among other things, the proposed revisions strengthen the requirements to access the affirmative defenses afforded under the Rule, and also enhance disclosure requirements for companies whose executives enter into trading plans pursuant to the Rule. The proposed changes are subject to a 45-day comment period after the proposed amendments are published in the Federal Register.
Continue Reading SEC Proposes Amendments to Rule 10b5-1 Trading Plan Provisions

In the latest example of the kind of SPAC-related litigation that has been such a big part of the securities class action litigation filings this year, space infrastructure company Redwire Corporation, which merged with a publicly traded SPAC in September 2021, was hit with a securities class action lawsuit after the company delayed filing its third-quarter financial results. A copy of the December 17, 2021 complaint can be found here.
Continue Reading SPAC-Related Securities Suit Filed Against Space Gear Company

Editor’s Note: Today’s Sunday Arts installment excerpts a post from my very earliest days of blogging. The May 25, 2006 post (here) appeared in a separate and now defunct blog called And Furthermore that I then maintained in parallel with what was then and remains now my principal blog, The D&O Diary.

One of the more interesting stories in the financial pages these days is the news surrounding the options backdating probes. As the options backdating story has continued to unfold, some have questioned whether or not there is actually anything wrong with options backdating. For example, the wsj.com law blog has a May 23, 2006 video post containing a debate between a business school prof and a CNBC reporter on the topic. Options backdating is obviously not harmless — the revelation of options backdating has already proven damaging to at least some of the companies caught up in the probe as they have had to restate their past financials to reflect their true compensation costs. But even beyond the restatement threat, there is a particular reason why the options backdating story has gained momentum in a way that stories about executives’ use of corporate aircraft or gold-plated pensions have not.
Continue Reading Sunday Arts: Cheating at Cards