Jack Keilty


In the following guest post, Jack Keilty, Head of Management Liability, New Dawn Risk, examines the growing problem of social engineering fraud, and considers the problems losses from this type of fraud can present from an insurance standpoint. I would like to thank Jack 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 site’s readers. Please contact me directly if you would like to submit a guest post. Here is Jack’s article.

Continue Reading Guest Post: The Social Engineering Fraud-Shaped Hole in Insurance Cover
Sarah Abrams

In the following guest post, Sarah Abrams takes a look at a recent settlement of a securities class action lawsuit in which the plaintiffs alleged that the defendant company had failed to disclose its use in its haircare products of certain banned chemicals, and then considers whether the current Make America Health Again initiatives could expose companies to future claims that they allegedly failed to disclose their continued use of banned chemicals. I would like to thank Sarah for allowing me to publish her 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 Sarah’s article.

Continue Reading Guest Post: If Looks Could Kill

Since the outset of President Trump’s efforts to conduct trade policy through an active use of tariffs, I have been concerned about the possibility of tariff-related corporate and securities litigation. Inevitably, I have been concerned, investors will say that companies tried to soft-pedal the likely impact of tariffs on the companies’ financial results. But while I have worried about the prospects for this type of litigation, I have not been able to provide an example of what I was concerned about – that is, until now. Late last week, a plaintiff shareholder filed a securities class action against industrial materials company Dow, Inc., alleging that the company made misleading statements about the impact the Trump tariffs would have on the company. A copy of the new complaint against Dow can be found here.

Background

Dow is an industrial materials company located in Michigan. According to the complaint, the company has historically touted its “industry-leading dividend.” The complaint alleges that during the class period, the company made statements reassuring that a number of adverse factors, including the impact of the Trump tariffs, would not affect the company’s financial results nor would it affect the company’s dividend.

For example, the complaint alleges that during the class period, the company said in various statement that it “was well positioned to weather macroeconomic and tariff-related headwinds while maintaining sufficient levels of financial flexibility to support the Company’s lucrative dividend.” The company also allegedly referred to its “industry-leading flexibility to navigate global trade dynamics.”

On July 24, 2025, the company when the company released its 2Q25 earnings, it announced disappointing financial results. In a call with analysts, the company’s CEO blamed the poor results on “the lower-for-longer earnings environment that our industry is facing, amplified by recent trade and tariff uncertainties.” The company also announced that same day that it was lowering its dividend. According to the complaint, the company’s share price declined nearly 18% on the news.

The Lawsuit

On August 29, 2025, a plaintiff shareholder filed a securities class action lawsuit in the Eastern District of Michigan against Dow and certain of its executives. The complaint purports to be filed on behalf of a class of investors who purchased the company’s securities between January 30, 2025, and July 23, 2025.

The complaint alleges that during the class period the defendants failed to disclose that “(i) Dow’s ability to mitigate macroeconomic and tariff-related headwinds, as well as to maintain the financial flexibility needed to support its lucrative dividend, was overstated; (ii) the true scope and severity of the foregoing headwinds’ negative impacts on Dow’s business and financial condition was understated, particularly with respect to competitive and pricing pressures, softening global sales and demand for the Company’s products, and an oversupply of products in the Company’s global markets; and (iii) as a result, Defendants’ public statements were materially false and misleading at all relevant times.”

The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The plaintiffs seek to recover damages on behalf of the plaintiff class.

Discussion

As far as I know, this lawsuit is the first securities suit to be filed related to the Trump tariffs. I suspect strongly it will not be the last. I think there will be more to follow, perhaps many more.

My concern is that when companies announce disappointing results, with the disappointment in whole or in part due to the adverse global trade conditions resulting from the impact of the tariffs, plaintiffs’ lawyers armed with hindsight will comb through prior company statements looking for optimistic comments about the company’s ability to weather the tariffs. The kinds of statements the plaintiffs’ lawyers will be looking for will touch on the company’s supply chain resilience, or its ability to source materials from lower-tariff countries, or its ability to have its suppliers or customers absorb the tariff-related costs. One particularly complicating factor has been the Trump administration’s variable and changing approach to tariffs, with increase tariffs or trade deals arising unpredictably.

The unpredictability may prove to be particularly challenging to many companies, and not just to the extent it increases the uncertainty of future results. Many companies may find the unpredictability challenging to planning and setting strategy. Some companies may find it expedient to refrain from strategic investments, in light of the uncertainty, which could in and of itself weigh on financial results. All of these conditions could be exacerbated to the extent rising prices contribute to lower consumer sentiment, as well as to lowered business expenditure. Companies reporting disappointing financial results in the months ahead may face heightened scrutiny for their prior statements about their ability to weather the global trade disarray.

The possibility of future tariff-related securities suits and other corporate litigation is definitely something to watch for in the months ahead.

Every year after Labor Day, I take a step back to survey the most important current trends and developments in the world of Directors’ and Officers’ liability and insurance. This year’s review is set out below. As the following discussion shows, this is a particularly interesting time in the world of D&O.

Continue Reading What to Watch Now in the World of D&O
Sarah Abrams

In the following guest post, Sarah Abrams, Head of Claims Baleen Specialty, a division of Bowhead Specialty, takes a look at President Trump’s recent Executive Order designed to expand the investment options available in 401(k) and other defined-contribution retirement plans, and considers the Order’s potential implications for ERISA liability and insurance. I would like to thank Sarah for allowing me to publish her article as a guest post on this site. I welcome guest post contributions 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 Sarah’s article.

Continue Reading Guest Post: Will I Ever Retire?

On August 20, 2025, in a ruling that will be of particular interest to insurance industry professionals, the Third Circuit reversed vacated a trial court’s summary judgment ruling in favor of the defendants in the securities class action lawsuit pending against Bermuda reinsurer Maiden Holding, Ltd. The decision provides interesting insight into the application of the U.S. Supreme Court’s holding in the Omnicare case, with particular reference to alleged omissions in connection with insurance company loss reserves. The Third Circuit’s August 20, 2025, opinion can be found here.

Continue Reading Insurer Loss Reserves and Securities Suit Omissions Allegations
Sarah Abrams

In the following guest post, Sarah Abrams, Head of Claims Baleen Specialty, a division of Bowhead Specialty, takes a look at recent changes in the DOJ’s Data Security Program (DSP) and discusses the D&O liability and insurance implications. I would like to thank Sarah for allowing me to publish her article as 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 Sarah’s article.

Continue Reading Guest Post: Company Data Secure? The DOJ is Checking

What are the disclosure obligations of a publicly traded company when the CEO is ill? That is the question raised in a new securities class action lawsuit filed on August 22, 2025, against C3.ai, in which the plaintiffs allege that the defendants insufficiently disclosed the seriousness of and potential impact from the illness of the company’s CEO, Thomas Siebel. The lawsuit touches on long-standing concerns about company disclosures concerning senior executives’ health. A copy of the complaint can be found here.

Background

C3 is an artificial intelligence application software company. Thomas Siebel is the company’s founder, and its CEO and Chairman. In February 2025, Siebel circulated a note internally reporting that he had “suffered a health setback.” He said that he had contracted “an autoimmune disease” that resulted in “significant vision impairment.” He also said that it would not affect his ability to continue to actively manage the business in a hands-on manner.

In a February 25, 2025, analyst conference call, Siebel was asked about his health. Among other things, he said that “I am fully engaged, managing every detail of the business every day… My health is excellent, okay? So beyond all the infirmities that I had, I just can’t see.” In this and subsequent calls, Siebel his health would not affect his ability to continue to serve as the company’s CEO.

In July 2025, the company announced that it had initiated a search for Siebel’s successor as the company’s CEO. The announcement quoted Siebel as saying that he would continue his engagement until a successor was found.

On August 8, 2025, the company announced its quarterly financial results, in which, among other things, the company quoted Siebel as saying that its sales results for the quarter “were completely inacceptable.” It quoted Siebel further as saying that this was attributable to two factors: “One: It is clear that in the short time, the reorganization with new leadership had a disruptive effect. Two: As we previously announced, I have had a number of health issues in the past six months… Dealing with these health issues prevented me from participating in the sales process as actively as I have in the past. With the benefit of hindsight, it is now apparent that my active participation in the sales process may have had a great greater impact than I previously thought.”

According to the subsequently filed securities lawsuit, the company’s share price declined more than 25% on this news.

The Lawsuit

On August 22, 2025, a plaintiff shareholder filed a securities class action lawsuit against C3.ai, Siebel, and other company executives. The complaint purports to be filed on behalf of investors who purchased the company’s securities between February 25, 2025, and August 8, 2025.

The complaint alleges that during the class period the defendants tried to reassure investors that Siebel was in sufficient health to effectively conduct his role, without any indication that his health or the necessary accommodations would jeopardize the company’s health or financial performance. The complaint further alleges that “In truth, C3 AI’s optimistic reports of growth, earning potential and anticipated margins fell short of reality as they relied far too heavily on the health and effectiveness of the Company’s CEO. Despite repeated assurances, Defendant Siegel had not sufficiently recovered from his ailments to act in the same capacity for C3 AI as he had previously.”

The plaintiffs allege that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks to recover damages on behalf of the class.

Discussion

There have been numerous past high-profile examples where a company’s disclosures about their CEOs’ health have been questoined. Readers will recall the controversy that followed the death of Steve Jobs, and the questions that followed about whether the company should have told investors earlier about his pancreatic cancer. In another example, investors also questioned Oracle’s handling of issues surrounding CEO Mark Hurd’s health, after Hurd took a medical leave and died shortly thereafter.

The situation with Siebel’s health at C3 arguably is different. This is not a case where there was a cover-up that Siebel was having health issues. Siebel himself distributed the note revealing his illness and the impact on his vision. The plaintiff’s theory in this case would seem to be not that the illness was not reported, but rather that the seriousness of and impact from Siebel’s illness was soft-pedaled, and in particular the extent to which Siebel’s health issues would impact the company’s financial performance was under-reported.

It may be that there was a lot of wishful thinking in Siebel’s messages about his health. It may also be that both he and the company underestimated what the impact from his health issues will be. Establishing falsity could be a challenge in this case; while it is true that in retrospect that the statements about Siebel’s health could be questioned, it will be hard to show that the statements were false at the time they were made. It will also be a challenge for the plaintiffs to establish that the statements were made with scienter, unless somehow positive thinking about one’s health in the face of adversity can be said to be tantamount to fraud.

As the examples above about Steve Jobs and Mark Hurd show, the questions about disclosure duties with respect to the CEO’s health are perennial concerns. For readers interesting in thinking more about these issues, I recommend the January 2020 memo from the Fenwick & West law firm, published in the Harvard Law School Forum on Corporate Governance and entitled “Best Practices for Disclosing Executive Health Issues.” The memo helpfully reviews the legal principles governing the issues and examines specific instances where companies have taken different approaches to the issue.  

By now, you have undoubtedly heard the news that a divided New York intermediate appellate court has thrown out the massive damages award in the New York Attorney General’s civil fraud lawsuit against the Trump Organization and several of its current or former executives (including the President and two of his sons). However, at the same time, the appellate court also held that the trial court had correctly found the defendants liable and correctly awarded injunctive relief. This summary of the case is technically accurate, at least in a way. However, the reality is that what happened at the intermediate appellate court is also technically much more complicated than that. In any event, the appellate court’s rulings virtually ensure that the case will now go to New York’s highest court, the New York Court of Appeals.

Continue Reading N.Y. Court Affirms Trump Civil Fraud Ruling, Vacates Massive Damages
Sarah Abrams

In the following guest post, Sarah Abrams, Head of Claims Baleen Specialty, a division of Bowhead Specialty, takes a look at the recent dismissal of a securities class action lawsuit arising out of a failed merger, and considers the implications for the dismissal, particularly with respect to securities suits involving SPAC transactions. I would like to thank Sarah for allowing me to publish her article 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 Sarah’s article.

Continue Reading Guest Post: Standing, Scienter, and SPAC Exposure