As discussed at length here, in January 2020, the U.S. District Court for the Central District of California ruled that the U.S. securities class action lawsuit brought against Toshiba by investors who had purchased the company’s unsponsored Level I American Depository Receipts (ADRs) in the U.S. can proceed. As discussed in the following guest post from the Norton Rose Fulbright law firm and AIG, this ruling has important implications for non-U.S. companies whose ADRs trade in the U.S., as well as for companies contemplating issuing ADRs in the U.S. For more background on the risk of securities class actions and public companies via ADRs please see AIG’s earlier white paper on the subject. I would like to thank Norton Rose Fulbright and AIG 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 memo follows below. Continue Reading Guest Post: Post-Toshiba U.S. Securities Litigation Risk for Non-U.S. Companies

As the policy definition of the term “Claim” has expanded in recent years, the range of incidents and procedures for which the policyholder must provide notice to the insurer has also grown. Among the recent expansions has been the inclusion in many policies of a “subpoena” within the meaning of the term “Claim.” As a result, a policyholder’s failure to notify its insurer of a “subpoena” could imperil coverage for a later related lawsuit. However, as a federal district court recently held, applying New York law, the notice requirement is not triggered if the prior “subpoena” does not meet the professional liability insurance policy’s definition of  the term “claim,” and, the court further held that the failure to notify the insurer of the subpoena did not preclude coverage for a later suit. The court’s decision sheds interesting light on a number of frequently recurring coverage issues. Continue Reading Not Providing Notice of Subpoena That Wasn’t a Claim Doesn’t Bar Coverage for Later Lawsuit

Over the last few days, as updates about the spread of the coronavirus have dominated the news cycle and roiled financial markets, I have had a number of conversations about whether the emerging coronavirus outbreak could result in D&O claims. There is no doubt that if a building fire, a plane crash, or an oil spill can result in D&O claims, the impacts on any given company arising from a global pandemic might at least as a theoretical matter also result in a D&O claim. As discussed below, there are a number of ways in which circumstances surrounding the evolving coronavirus health crisis might result in D&O claims. Continue Reading The Risk of Coronavirus-Related D&O Claims?

A deceased small business owner’s widow sued the business’s two other co-owners for breach of fiduciary duty for failing to apply a life insurance payout to the company to buy out her deceased husband’s shares. The two co-owners submitted the claim to their company’s management liability insurer, which denied coverage for the claim, relying in part on the policy’s contractual liability exclusion. The two co-owners sued the insurer seeking coverage. The district court granted summary judgment for the insurer. On February 19, 2020, the Eighth Circuit, applying Kansas law, affirmed the district court in an opinion that, as discussed below, raises some interesting issues. The Eighth Circuit’s opinion can be found here. Continue Reading No Contract Claims Asserted, Yet Contractual Liability Exclusion Precludes D&O Insurance Coverage

Tiago Duarte-Silva
Assen Koev

In order to obtain class certification, the 10b-5 action plaintiff must show that the defendant company’s shares trade in an efficient market. In order for a court to determine whether the company’s shares trade in an efficient market, it must consider the five “Cammer factors,” of which one is whether the company has a sufficient number of analysts following its stock. In the following guest post,  Tiago Duarte-Silva, Vice President, Charles River Associates, and Assen Koev, Principal, Charles River Associates, take a look at this Cammer analyst factor and what it may tell us about 10b-5 actions. A version of this article previously was published by Charles River Associates as a newsletter. I would like to thank Tiago and Assen 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 Tiago’s and Assen’s article. Continue Reading Guest Post: The Cammer Analyst Factor in Securities Class Actions

There were slightly fewer securities class action lawsuits and for fewer total dollars in 2019 compared to 2018, but the median settlement amount was unchanged in 2019 from the year prior, according to the annual securities suit settlement report from Cornerstone Research. The report, which is entitled “Securities Class Action Settlements: 2019 Review and Analysis,” states that the $11.5 million median securities class action settlement in 2019 was 34 percent higher than the 2010-2018 median. The report can be found here. Cornerstone Research’s February 26, 2020 press release about the report can be found here. Continue Reading Total and Average Securities Settlements Down, Median Settlements Unchanged

Times SquareOn Tuesday and Wednesday this week, The D&O Diary was at the annual PLUS D&O Symposium at the Marriott Marquis in Times Square in New York. It was another successful conference — and indeed given the state of the D&O marketplace, there was certainly a lot to talk about this year. Continue Reading 2020 PLUS D&O Symposium in New York

In the following guest post, Jay Knight, Taylor Wirth and Chris Johnson of the Bass, Berry & Sims law firm review the key developments at the Securities and Exchange Commission (SEC) during 2019, and consider what to expect in the months ahead. I would like to thank the authors for allowing me to publish their article as a guest post on my 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: 7 Key SEC Developments in 2019

Social engineering fraud, or as it is sometimes called, business instruction fraud, has unfortunately become all too common. In many instances, the defrauded companies’ losses are huge. In a recent insurance coverage dispute, the social engineering fraud loss involved was not as large as some of the others have been. Unfortunately, and notwithstanding the relatively small size of the loss, the court concluded that coverage for the company’s loss was precluded by the “voluntary parting” exclusion in its crime policy. As discussed below, there are still some lessons to be drawn from this case. Eastern District of Virginia Judge John A. Gibney, Jr.’s February 20, 2020 opinion in the case can be found here. Continue Reading “Voluntary Parting” Exclusion Precludes Coverage for Social Engineering Fraud Loss

Like many others, I look forward to Warren Buffett’s annual letter to Berkshire Hathaway shareholders, and like many others, I read his annual letter closely, looking for any investment insights I can glean as well for Buffett’s now-famous homespun brand of wisdom and humor. Although Buffett latest letter to Berkshire shareholders – which was published Saturday morning – does offer readers a little under each of these headings, I think many reading Buffet’s latest letter might have come away a little disappointed, as I discuss further below. Buffett’s 2019 letter to Berkshire shareholders, published on February 22, 2020, can be found here. (Full disclosure: I own BRK.B shares, although not as many as I wish I did.) Continue Reading A Closer Look at Warren Buffett’s Annual Letter to Berkshire Shareholders