The SEC has made it clear that it will be monitoring market activity related to the coronavirus outbreak. The agency’s Chairman and others have declared that they expect companies to be forthcoming about the impact of the pandemic on company operations and finances, and underscored the fact that the agency will be watching. On April 24, 2020, the agency announced that it had formed a COVID-19 market monitoring group. And on April 28, 2020, the agency brought what as far as I know is its first coronavirus outbreak-related enforcement action, when it filed an action against a penny stock company Praxsyn Corporation and its CEO for public claims about the company’s claims about its ability to acquire and distribute N95 face masks. A copy of the SEC’s complaint can be found here. The SEC’s April 28, 2020 press release about the enforcement action can be found here. Continue Reading SEC Files First COVID-19 Related Enforcement Action

Tim Hoeffner
Paul Ferrillo

In the following guest post, Tim Hoeffner and Paul Ferrillo of the McDermott Will & Emery law firm take a look at the Eighth Circuit’s April 10, 2020 decision in the Target Corporation securities class action lawsuit, in which the appellate court affirmed the lower court’s dismissal of the case. I would like to thank Tim and Paul for allowing me the opportunity 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 Tim and Paul’s article. Continue Reading Guest Post: Eighth Circuit on Target on Appeal

Readers know that I have been following the SEC enforcement action and the securities class action litigation arising from Tesla CEO Elon Musk’s infamous “take private” tweets. I recently noted that the court in the securities suit about the tweets ruled that the case can go forward. I am sure I am not the only one who has wondered while thinking about these events what kind of D&O insurance Tesla carries. While the question of what kind and amount of D&O insurance might be applicable to the pending claims is interesting, what may be even more interesting is that, according to a recent SEC filing, Tesla recently decided to forego D&O insurance for the current period based on an undertaking by Musk to provide the company and its board with equivalent “coverage,” as discussed below. Continue Reading In Lieu of D&O Insurance, Musk Agrees to Provide Tesla with “Coverage”

In the early stages of the coronavirus-related close-down, most colleges and universities terminated live classes, switched to online lessons, and sent their students home. In some cases, affected students have filed lawsuits against their schools, seeking to recover tuition and fees paid for classes, housing, and food. The following posts discuss the extent of the exposure that these kinds of claims represent for these institutions’ boards of directors or boards of trustees. Continue Reading Coronavirus-Related Suits Hit Higher Ed Institutions

As I have detailed in prior post on this site (most recently here), in recent months plaintiffs’ lawyers have filed a number of securities class action lawsuits against companies in cannabis-related businesses. According to an April 22, 20202 report from the Goodwin Procter law firm entitled “Update on Securities Litigation Against Cannabis Companies” (here), the number of securities suits against cannabis companies jumped significantly in 2019 compared to 2018. As discussed further below, these litigation trends have continued in 2020. Continue Reading A Closer Look at Securities Suits Against Cannabis Companies

In the latest securities suit related to the coronavirus outbreak, a plaintiff shareholder has filed a U.S. securities class action lawsuit against a Chinese real estate firm whose American Depositary Shares (ADSs) are listed on the NYSE, based on allegations that the company’s January 2020 IPO offering documents failed to disclose the impact of the outbreak on the company’s residential real estate operations in China. This latest filing is the first coronavirus-related securities lawsuit in the U.S. against a non-U.S. company. A copy of the plaintiff’s April 24, 2020 complaint can be found here. Continue Reading U.S.-Listed Chinese Real Estate Firm Hit with Coronavirus-Related Securities Suit

Francis Kean

As the coronavirus outbreak has unfolded , one of the steps that insurers have been taking in response is to try to add coronavirus or pandemic exclusions to policyholders’ go-forward policies, in some instances included with respect to D&O insurance. In the following guest post, Francis Kean takes a look at an example of this type of exclusion. Francis is a Partner, Financial Lines, at McGill and Partners. A version of this article previously was published as part of a McGill client alert. I would like to thank Francis for allowing me to publish his 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 Francis’s article. Continue Reading Guest Post: The Dangers of COVID-19 Exclusions in D&O Policies

As the coronavirus outbreak has spread, the COVID-19 disease has struck millions across the globe. The demographics and geographic distribution of the disease will make for interesting study when the current outbreak has ended, but clearly the disease has struck both the mighty and modest. The high-profile victims include the Prince of Wales and the U.K. Prime Minister. Other victims have included (and likely will continue to include) senior corporate executives. When key execs contract the disease, their companies face the question whether the executives’ illness must be disclosed.  As discussed in Judy Greenwald’s April 21, 2020 Business Insurance article (here), there are no bright line answers to this question. Continue Reading If Top Exec Has Covid-19, Does the Company Have to Disclose It?

As readers know, I have been keeping track of COVID 19-related securities class action lawsuits as they have been filed over the course of recent weeks (most recently here). One of the companies to get hit with a COVID 19 related securities suit is the pharmaceutical company Inovio; as discussed here, a plaintiff shareholder filed a securities suit against the company based on alleged statements by the company’s CEO about the company’s readiness to prepare and begin testing a coronavirus vaccine. Now the company’s board has been with a separate shareholder derivative lawsuit based on the same coronavirus-related allegations. A copy of the plaintiff’s complaint, filed on April 20, 2020, can be found here. Continue Reading Pharma Company Hit with COVID 19-Related Derivative Suit

At Noon EDT on Wednesday April 22, 2020, I will be participating in a free hour-long Business Insurance webinar with my good friends Priya Cherian Huskins of Woodruff Sawyer and Bill Passannante of the Anderson Kill law firm on the topic of D&O Risks from COVID-19. The session will be moderated by Business Insurance’s Gavin Souter. The webinar will address a number of COVID-19-related topics including present and likely future D&O claims arising out of the coronavirus outbreak; underwriting responses to the outbreak, including changes in underwriting, risk selection, capacity, and terms and conditions; and possible insurance marketplace consequences from the pandemic’s financial and economic effects. Complete information about the webinar including registration details can be found by clicking in the image above or clicking here.