Francis Kean

In the following guest post, Francis Kean, Executive Director FINEX Willis Towers Watson, reviews some interesting recent historical academic research on directors’ duties and the business judgment rule in the U.K.  A version of this article previously was published on the Willis Towers Watson Wire blog (here). I would like to thank Francis 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 thig 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 Truth about Directors’ Duties in the UK and the Business Judgment Rule

One idea circulating since the U.S. Supreme Court held in Cyan that state court Section 11 actions are not removable to federal court is that companies could avoid state court actions by adopting a federal forum bylaw or charter provision. Indeed, a number of companies recently have adopted these provisions prior to going public. Late last year, a shareholder of several IPO companies filed an action in Delaware Chancery Court seeking a judicial declaration that the companies’ Federal Forum Provisions are invalid. On December 19, 2018, Vice Chancellor Travis Laster issued a memorandum opinion agreeing with the plaintiff and holding that under Delaware law, Federal Forum Provisions are invalid and ineffective. A copy of Laster’s opinion can be found here. Continue Reading Delaware Court Holds Charter Provision Designating a Federal Forum for Section 11 Claims is Invalid

As I have noted in several recent posts, plaintiffs’ lawyers seem to have a renewed interest in trying to pursue securities class action lawsuits against companies that have experienced a data breach. Just to cite one recent example, as discussed here, within a day of Marriott’s recent high-profile announcement of a data breach involving its Starwood unit’s customer database, plaintiffs’ lawyers filed a securities class action lawsuit against the company. While plaintiffs’ lawyers may be drawn to these data breach cases, the cases may or may not prove to be successful for them. For example, in a recent ruling in the data breach-related securities class action lawsuit filed against PayPal late last year, the court granted the defendants’ motion to dismiss. The ruling highlights many of the problems plaintiffs’ lawyers will have in trying to pursue these kinds of cases. Northern District of California Judge Edward Chen’s December 13, 2018 ruling in the case can be found here. Continue Reading Dismissal Motion Granted in PayPal Data Breach-Related Securities Suit

John Reed Stark

On November 29, 2018, the SEC announced that it had settled charges with boxer Floyd Mayweather Jr. and music producer DJ Khaled for failing to disclose payments they received for promoting investments in Initial Coin Offerings (ICOs). In the following guest post, John Reed Stark, the President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement, takes a look at the SEC’s actions against Mayweather and Khaled and identifies some important takeaways from the SEC’s orders. I would like to thank John for his willingness to allow me to publish his 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 John’s article. Continue Reading Guest Post: Five Hidden Takeaways from the Khaled and Mayweather SEC Orders

It is not uncommon for companies to add third parties as additional named insureds to their D&O insurance policies. Most of the time that doesn’t cause any problems. However, serious problems can arise in a subsequent claim if a company’s interests and the interests of the additional named insured conflict. At a minimum, in the event of a serious claim, the company and the third party can clash as they compete for the finite proceeds of the insurance policy. In a recent coverage decision, the Delaware Superior Court, applying Delaware law, held that AR Capital, an additional named insured under the D&O insurance program of VEREIT, was entitled to have its costs of defending the underlying claims advanced under the program. The Court’s December 12, 2018 ruling, which can be found here, provides an interesting perspective on additional named insured issues. Continue Reading D&O Insurance: Additional Named Insured Entitled to Defense Cost Advancement

In several recent conversations, I have been asked whether I thought that the whole #MeToo movement might have more or less played out, and that we might not be seeing as many, or even any, more D&O claims based on underlying allegations of sexual misconduct. In response, I said that I didn’t think the phenomenon had played out but I did suggest that I thought that the phenomenon might be shifting and that the kinds of underlying allegations would change. Although it does not represent exactly the kind of thing I had in mind, a new securities class action lawsuit filed against Teladoc Health and based on alleged misconduct of one of its senior executives does at least represent a variant on the kinds of D&O claims following in the wake of allegations of sexual misconduct. Continue Reading Securities Lawsuit Filed Based on Reports of Alleged Inappropriate Office Relationship

The high-profile November 18, 2018 arrest in Japan of Carlos Ghosn, the Chairman and former CEO of Nissan (and of several other car companies) on charges of misleading the Japanese government and investors about his compensation made the front pages of the world’s papers. Continuing revelations, including the recent indictment of Ghosn and other company executive, continue to roil the company. On December 11, 2018, an institutional investor and holder of U.S.-traded Nissan ADR’s initiated a securities class action lawsuit against the company. The lawsuit is interesting in and of itself but also with respect to how it reflects several recent securities litigation filing trends. Continue Reading Nissan Chairman’s Arrest and Pay Disclosure Leads to U.S. Securities Suit

One of the things that has happened in the wake of revelations of high-profile sexual misconduct as part of the #MeToo movement has been the rise of D&O litigation following after the revelations. However, this type of sexual misconduct follow-on litigation didn’t start with the rise of the #MeToo movement. Even before the #MeToo movement there were D&O lawsuits arising from sexual misconduct allegations. One of these earlier cases involved the retail jewelry chain Signet Jewelers. On November 26, 2018, Southern District of New York Judge Colleen McMahaon denied the defendants’ motion to dismiss in the case, in a ruling that may provide an interesting perspective on the many subsequent #MeToo follow on lawsuits. The November 26, 2018 opinion in the case can be found here. Continue Reading Dismissal Motion Denied in Sexual Misconduct-Related Securities Suit

In November, when the SEC released its annual enforcement activity report, the report showed that during the fiscal year that ended on September 30, 2018 both the volume of the agency’s enforcement activity and the level of financial recoveries increased compared to the prior fiscal year. The agency’s report did not separate out its enforcement activity involving public companies. However, a new report from the NYU Pollack Center for Law & Business and Cornerstone Research breaks out the enforcement numbers for public companies. The new report show that SEC enforcement actions against public companies and subsidiaries “jumped substantially” in the second half of FY 2018, reversing a decline in filings that began in the second half of 2017 and continued through the first half of 2018. Continue Reading SEC Enforcement Activity Against Public Companies Surges in FY 2018’s Second Half

John Reed Stark

Lost amidst all of the turmoil surrounding the dramatic swings in the value of digital currencies is that the original idea for these digital assets is that  they might actually be used as exchange media, in place of traditional currencies. Whether or not someone might use cryptocurrency to, say, buy a cup of coffee at Starbuck’s, Ohio residents, at least, may now use bitcoin to pay their state taxes. In the following guest post, John Reed Stark, President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement, takes a look at Ohio’s recent bitcoin move and reviews what it might mean – for Ohio, and in general. A version of this article previously was published on CybersecurityDocket.com. I would like to thank John for allowing me to publish his guest 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 John’s article. Continue Reading Guest Post: Ohio Now Accepts Bitcoin for Tax Payments; No Problem, Right?