In June 2017 when the U.S. Supreme Court entered its opinion in California Public Employees Retirement System v. ANZ Securities, in which the Court affirmed the Second Circuit and held that Securities Act of 1933’s three-year statute of repose is not subject to equitable tolling, one question that was asked was whether the Court’s ruling would encourage more securities suit class members to file protective actions before the statutory period expired in order to preserve their right to opt-out of the class action.

 

Recent developments in a securities class action involving VEREIT, a real estate investment trust and successor-in-interest to the troubled American Realty Capital Properties, in which VEREIT has entered three opt-out settlements with large institutional investors totaling a whopping $217.5 million, suggest that the concerns raised following the ANZ Securities decision may be coming to pass. These developments may also portend a very complicated future for U.S. securities class action litigation, at least in the most serious cases. Alison Frankel’s October 29, 2018 post on her On the Case blog about the VEREIT opt-out settlements can be found here. Continue Reading Do Opt-Out Settlements of $217.5 Million Foreshadow the Future of Securities Litigation?  

As I have noted in prior posts (most recently here), in recent months, allegations of price fixing have given rise to follow-on securities class action lawsuit filings against generic drug companies alleged to have participated in the price-fixing. All of these kinds of cases are examples of a securities litigation trend in which securities suit filings following in the wake of underlying antitrust allegations. In the latest example of this type of lawsuit, a plaintiff shareholder has now filed a securities class action lawsuit against McKesson Corporation, asserting securities claims based on the company’s alleged involvement in a scheme to fix prices for generic drugs. As discussed below, this new lawsuit has a number of interesting features. Continue Reading Securities Lawsuit Filing Follows Generic Drug Price Fixing Allegations

In the latest example of a D&O lawsuit following in the wake of allegations of sexual misconduct, three shareholders have filed a state court derivative lawsuit in Oregon against Nike’s Board of Directors alleging that the defendants failed in their oversight duties and allowing a toxic “boys club” culture of sexual harassment and bullying to take hold. The Nike complaint shows yet again that the accountability process that has emerged as part of the #MeToo movement in many cases has involved efforts to hold company’s boards accountable for permitting misconduct or turning a blind eye. The Nike derivative complaint can be found here. Continue Reading Nike Board Hit with Sexual Misconduct-Related Derivative Suit

As I have detailed in prior posts on this blog, securities class action litigation is well-established in Australia. According to a recent report from ISS Securities Class Action Services, securities class action litigation has grown “markedly” in the last ten years, to the point that outside North America, Australia “is the jurisdiction in which a corporation is most likely to find itself defending against a class action,” and indeed other than the U.S., Australia “is pulling ahead of almost all other countries in terms of active securities class action cases before the courts.” There are however important differences between the Australian and U.S. class action systems, and some of these difference post important challenges for both the courts and for litigants – and indeed have led to calls for reform. The October 23, 2018 report, entitled “Navigating the Australian Securities Class Action Landscape,” can be found here. Continue Reading The Challenging Securities Litigation Landscape in Australia

As has been well-documented (on this site and in various other sources), securities class action frequency has soared to historically high levels in recent years. Given this development, it might reasonably be assumed that D&O insurance pricing has increased to account for the increased litigation risk. However, for a number of reasons – including the continued abundance of insurance capacity – D&O insurance pricing overall has declined. For that reason, it “should come as no surprise” that Transatlantic Reinsurance’s October 2018 analysis of the U.S. public company D&O liability insurance marketplace reveals “price inadequacy” – that is, that the “level of compensation in the market is not commensurate with the risks being taken.” The TransRe report, while technical, illustrates the currently challenging circumstances facing the D&O insurance industry. Continue Reading Losses Up, Pricing Down: A Tough Combination for D&O Insurers

Alleged deficiencies in climate change-related disclosures have been a target of advocacy groups, shareholders, and regulators. The latest example of this phenomenon is the civil lawsuit the New York Attorney General filed on Wednesday against Exxon Mobil Corporation. The NYAG alleges that the company sought to “systematically and repeatedly deceive investors” about the future impacts climate change regulation could have on the company’s assets and value. The lawsuit underscores the fact that climate change disclosures are and will remain under scrutiny and that the claims alleging insufficient or deceptive climate change-related disclosures remain a significant area of corporate liability exposure. The October 24, 2018 complaint can be found here. The NYAG’s October 24, 2018 press release about the lawsuit can be found here. Continue Reading NYAG Files Climate Change Disclosure Lawsuit Against Exxon Mobil

John Reed Stark

Most readers are undoubtedly familiar with the concept of “insider trading” – that is, the purchase or sale by company insiders of their personal holdings in company shares based on material non-public information. Readers may be less familiar with “outsider trading,” which is trading in shares of a company on the basis on material non-public information by individuals who do not qualify as insiders. 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 the SEC’s track record in this area and calls for the agency to reinforce its efforts to police outsider trading. A version of this article previously appeared on Securities Docket. I would like to thank John for his willingness to allow 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 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: The SEC’s Outsider Trading Program: The Silence is Deafening

In 1995, Congress passed the Private Securities Class Action Reform Act (PLSRA) over President Clinton’s veto in order to try to address perceived securities class action litigation abuses. According to a new report from the U.S. Chamber Institute for Legal Reform entitled “A Rising Threat: The New Class Actions Racket That Harms Investors and the Economy,” despite the PSLRA’s reforms, many of the same abuses that led to the PSLRA’s enactment have returned, and as a result the securities class action system is “spinning out of control.” According to the report, the time has come for Congress to intervene again to curb “abusive practices that enable the filing of unjustified actions.” The Institute’s October 23, 2018 report can be found here.  Continue Reading Time for Another Round of Securities Class Action Litigation Reform?

A group composed of 20 public company CEOs and leaders of institutional investors has released Commonsense Corporate Governance Principles 2.0, an updated set of corporate governance principles that are intended to provide “a basic framework for sound, long-term oriented governance.” The group includes such luminaries as Warren Buffett, the Chairman and CEO of Berkshire Hathaway, Jamie Dimon, the CEO of JPMorgan Chase, Mary Barra, the CEO of General Motors, and Ginni Rometty, the CEO of IBM. The new released document updates the group’s original principles first published in 2016. The principles as updated include some interesting guidelines for publicly traded companies and for their investors, in a number of key areas. Continue Reading Business Leaders Release Updated Corporate Governance Principles

Richard Zelichov

One phenomenon I have noted on this blog is the rise of event-driven securities class action lawsuits. Rather than being based on alleged or financial misrepresentations, as has traditionally and historically been the case in securities suits, these suits follow in the wake of and are based on adverse events in the company’s operations. A recent high-profile example of an event-driven suit is the securities class action lawsuit that was filed against Arconic in the wake of the Grenfell Tower fire last year.  In the following guest post, Richard H. Zelichov, a partner at Katten Muchin Rosenman LLP specializing in defending issuers and their directors and officers in securities class actions and stockholder derivative litigation, takes a look at the event-driven litigation phenomenon and the larger rise of securities suits based on mismanagement allegations. I would like to thank Richard for his willingness to allow 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 Richard’s article. Continue Reading Guest Post: Corporate Mismanagement Becomes Event-Driven Securities Litigation