The insurance available under a D&O insurance policy does not protect insured individuals for all of their activities; rather, the policy protects the individuals only for their actions undertaken in their capacities as officer or directors of the insured organization. The policy does not protect the individuals for actions undertaken in their personal capacity or for actions undertaken as a result of their involvement with entities other than the insured organization.
A recent decision out of the District of North Dakota and applying North Dakota law illustrates the coverage-determinative importance of the question of capacity. In an October 3, 2017 opinion (here), District of North Dakota Judge Daniel Hovland held that because the allegations against the individual who was seeking coverage did not involve alleged actions undertaken in an insured capacity, the individual was not entitled to coverage under the policy. The ruling underscores the importance of capacity issues and also highlights how challenging these issues can sometimes be when individuals are acting in multiple capacities. Continue Reading D&O Insurance and Insured Capacity
Shareholder derivative lawsuits are notoriously difficult for claimants. In order to pursue a derivative suit, a shareholder plaintiff must overcome numerous procedural and pleading hurdles. Even when cases survive the initial obstacles, the ultimate outcome often consists of little more than the payment of the plaintiff’s attorney’s fees with slight benefit to the company in whose name the claim was ostensibly was pursued. In light of these considerations, UCLA law professor Stephen Bainbridge has a modest proposal: Eliminate derivative litigation altogether. In a brief October 3, 2017 post on his ProfessorBainbridge.com blog (
In the current litigation environment, employers face an ongoing threat of claims brought by employees alleging violations of wage and hour laws, often filed as class actions. These kinds of lawsuits can be expensive to defend and to resolve. In general, management liability insurers try to avoid providing coverage for these kinds of claims, except for very limited amounts of defense cost coverage. A recent district court decision holding that the management liability insurance policy of the women’s clothing retailer Talbots did not cover a wage and hour class action lawsuit pending against the company illustrates the barriers policyholders face in attempting to secure coverage for these kinds of claims. Both the policy language at issue and the outcome of the Talbots insurance coverage dispute arguably are unremarkable. However, the outcome does raise questions about whether there might be ways for policyholders at least to obtain effective defense cost coverage for these kinds of claims. 
The SEC’s disclosure that its EDGAR system had been had hacked was big news last week, as was the accompanying disclosure that the information accessed may have been used for improper trading. In the following guest post, John Reed Stark takes a look at the interesting and important legal issues that might arise if the authorities were to try to pursue claims against persons trying to trade on the information stolen from the SEC. John is President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement. 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 guest post. 
For almost the entire time that there have even been federal securities laws, the U.S. Supreme Court only rarely and infrequently agreed to take up cases arising securities cases. Until recently, years would pass between the times that securities cases appeared on the Supreme Court’s docket. For some reason, beginning around the middle of the last decade, the Court has become increasingly willing to take up securities cases. The U.S. Supreme Court’s 2017-2018 term, which commences on Monday, is no exception to this recent trend. There are three important securities cases on the Court’s docket for the upcoming term, and these cases could have, both individually and collectively, a significant impact on many securities law cases and on securities litigation in general. 
The difficulty with pure “claims made and reported” coverage – where the claim must both be made and reported during the policy period in order for coverage to be triggered – is that it can lead to harsh outcomes, as I have noted in 
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In an insurance coverage dispute arising out of the