In numerous prior posts on this site (for example, here), I have written about the problems caused by the U.S. Supreme Court’s March 2018 decision in Cyan, Inc. v. Beaver County Employees Retirement Fund. In the following guest post, Nessim Mezrahi, cofounder and CEO of SAR, a securities class action data analytics and software company, issues a call for reform to address the “confusion” that Cyan has caused. A version of this article previously appeared on Law 360. I would like to thank Nessim 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 publish a guest post. Here is Nessim’s article. Continue Reading Guest Post: Time To Resolve Post-Cyan Securities Class Action Confusion
Plaintiffs filed federal court securities class action lawsuits at “near-record levels” during the first six months of 2019, according to a new report from Cornerstone Research. The July 31, 2019 report, entitled “Securities Class Action Filings: 2019 Midyear Assessment,” notes that the elevated filing levels continued in the year’s first half despite reduced numbers of merger objection lawsuit filings. In addition to the number of federal court filings, there were a significant number of state court securities suit filings, bringing overall filing levels close to all-time highs. The new report can be found 
The directors of companies have roles, responsibilities and potential liabilities. But who can be held liable as a director? That was the question that the Third Circuit recently answered in an interesting ruling in which the appellate court determined that board observers could not be held liable as directors or director equivalents under Section 11 for alleged registration misstatement misrepresentations. The decision raises some interesting considerations when it comes to directors and their roles. The Third Circuit’s July 23, 2019 decision can be found 
In a recent decision, the Delaware Superior Court, applying Delaware law, held that two of Pfizer’s excess D&O insurers are on the hook for their portion of costs the company incurred in defending and settling a securities class action lawsuit, despite the excess insurers’ arguments that the claim was interrelated with an earlier securities suit and that coverage was therefore precluded under their policies’ Specific Litigation Exclusion. The critical determinant in the court’s ruling may have been its decision that Delaware law governed the coverage dispute, but there are still a number of interesting elements about issue of claims relatedness. The Delaware Superior Court’s July 23, 2019 decision can be found 
On July 24, 2019, in a development that underscores the heightened significance of privacy-related issues, the Federal Trade Commission (FTC) announced that Facebook will pay a record-breaking $5 billion penalty and submit to new restrictions and a modified corporate structure. In a related development, the Securities and Exchange Commission (SEC) also announced that Facebook had agreed to a $100 million settlement to resolve the agency’s allegations that the company misled investors regarding the risk of misuse of Facebook user data. Both agency actions followed the March 2018 revelations data analytics firm Cambridge Analytica had obtained access to user data of millions of Facebook users. The FTC’s July 24, 2019 press release about the $5 billion penalty can be found 
Let’s say your client has been served with a new D&O lawsuit. Based on what you know about the events that led up to the lawsuit, you are genuinely unsure whether the claim was first made earlier, or not until the lawsuit was filed. Just to complicate things further, during the last renewal cycle, the client moved its D&O coverage from one carrier to another carrier, and some of the events in the lawsuit lead-up occurred during the prior policy period. Just notice both carriers, right? That would seem to be the prudent thing to do, especially given the uncertainty about the claims made date, right?
As a result of the U.S. Supreme Court’s March 2018 Cyan decision, in which the Court ruled that state courts retain concurrent jurisdiction over ’33 Act liability actions, companies issuing shares now face the risk of having to face parallel securities litigation in state and federal court. Among the many problems this risk poses is the possibility that, due to the differing pleading standards between state and federal court, Securities Act liability suits that would be dismissed in federal court might survive a dismissal motion in state court. New York is among the states where many post-Cyan securities suits are being filed and where differences in pleading standards might lead to a fewer state court lawsuit dismissals relative to the dismissal rate in state court. However, notwithstanding these concerns, a New York state court judge recently entered an order dismissing a post-Cyan securities suit, raising the possibility that defendants may be able to dismiss securities suits filed in New York state court after all.