The D&O Diary’s European assignment continued last week with a stop for meetings in Warsaw, Poland, a city that absolutely confounded expectations. As befits a national capital of a country with a growing economy, Warsaw (in Polish, var-SHAW-vah) is a dynamic, energetic city, and full of history and interesting architecture. It also a surprisingly green city, with a huge, beautiful river, and vast parklands. Continue Reading A Visit to Warsaw

As litigation under the Telephone Consumer Protection Act (TCPA) has proliferated in recent years, one of the recurring questions has been whether the defendants have insurance coverage for these kinds of claims. The insurance questions have in turn generated insurance coverage litigation, primarily with respect to the defendants’ CGL insurance policies, but also with respect to their D&O insurance policies as well. One closely watched recent case involved a D&O insurance dispute arising out of a TCPA claim against the Los Angeles Lakers. The district court had held that the Lakers’ D&O insurance policy did not cover the TCPA claim and the Lakers’ appealed. On August 23, 2017, in a decision that is sure to attract both attention and perhaps further skirmishing on these issues, a divided Ninth Circuit panel affirmed the district court’s holding, concluding that the invasion of privacy exclusion in the Lakers’ D&O insurance policy precluded coverage for the claim. The Ninth Circuit’s opinion can be found here.   Continue Reading Ninth Circuit Affirms That Invasion of Privacy Exclusion Precludes D&O Insurance Coverage for TCPA Claim

Most informed observers know that IPO companies are more susceptible to securities class action litigation than are more seasoned companies. IPO companies usually have short operating histories and so their post-offering performance can be unpredictable and may include unexpected developments. When IPO companies stumble out of the blocks, they can attract a securities suit just a short time after their debut. An example of this occurred earlier this year when Snap, Inc. was hit with a securities suit two months after its IPO. A more recent example of this sequence involved Blue Apron Holdings, which this past week was hit with a securities suit just seven weeks after its IPO. These cases underscore the securities litigation vulnerability of IPO companies, which in turn has important implications. Continue Reading When IPO Companies Stumble Out of the Blocks

As courts have wrestled with standing issues in a variety of kinds of cases, the central question has been whether or not under the standard the U.S. Supreme Court enunciated in the Spokeo case the plaintiff alleged an injury that is sufficiently “concrete.” The Supreme Court remanded the Spokeo case itself to the Ninth Circuit for further proceedings to determine whether the plaintiff’s allegations met the high court’s standard. On August 15, 2017, the Ninth Circuit issued its ruling in the remanded case that the injury the plaintiff alleged was sufficiently concrete to meet the Supreme Court’s test. This ruling could boost plaintiffs as they seek to resist defendants’ efforts for an early dismissal in cases in which plaintiffs are alleging a statutory violation, such as Fair Credit Reporting Act (FCRA) cases, Telephone Consumer Protection Act cases, and Truth in Lending Act cases. The Ninth Circuit’s opinion can be found here.    Continue Reading Ninth Circuit’s Standing Ruling in Remanded Spokeo Case Could Boost Plaintiffs

In the wake of President Donald Trump’s June 1, 2017 announcement that the United States will withdraw from the Paris Climate Accord, one of the things I predicted was that the administration’s action likely would trigger a host of reactions on the state, national and international stage. Among other things, I conjectured that activists facing setbacks on the political stage might try to use judicial processes to advance their agenda. Though it lacks a direct connection to the U.S.’s actions on the Paris Climate Accords, a recent Australian lawsuit confirms my suggestion that activists are increasingly likely to try to use the courts as a way to promote their objectives. Continue Reading Shareholders File Climate Change Disclosure Lawsuit in Australian Court

What factors might indicate a likelihood of financial misreporting? There might be markers in companies’ financial statements, for example, with respect to reserving practices or practices with respect to other estimated items. There may be more general indicators as well, as, for example where companies reliably hit their revenue estimates due to a rush of end of reporting period sales. According to a recent academic study, attitudes in the community where businesses are located may also affect companies’ propensity for financial misreporting.

 

In a May 30, 2017 paper entitled “Gambling Attitudes and Financial Misreporting” (here), Dale Christensen of the University of Oregon, Keith Jones of the University of Kansas, and David Kenchington of Arizona State University, companies headquartered  in areas where residents hold gambling-friendly attitudes are more likely to intentionally misreport financial information. The authors findings were summarized in an August 14, 2017 Wall Street Journal article entitled “A Roll of the Dice on Financial Misreporting” (here). Continue Reading Gambling Acceptance and Propensity for Financial Misreporting

Seventeen years ago this month, the SEC instituted Rule 10b5-1 to permit company insiders – who often hold a significant portion of their wealth in company stock – to sell their shares without incurring liability under the federal securities laws. The Rule permits insiders who have traded in company shares to rebut the inference of scienter by showing that the trades were pre-scheduled and not suspicious. Over time, questions have been raised about the ways that some company executives have tried to use the plans. As discussed in an August 10, 2017 memo by the Simpson Thacher law firm on the CLS Blue Sky Blog entitled “Combatting Securities Fraud with 10b5-1 Trading Plans” (here), “sales made under 10b5-1 plans can substantially assist a company in getting such a claim dismissed by helping to rebut the inference of scienter that normally results when plaintiffs present evidence of insider stock sales during the class period.”

 

However, as discussed further below, while the plans can provide a substantial defensive boost, there are a number of steps companies should take in order to improve the likelihood that the existence of the plan will provide the intended protection. Continue Reading Rule 10b5-1 and the Defense of Securities Fraud Claims

Peter S. Selvin

Over the last several days, I have published several posts discussing important insurance developments relating to social engineering fraud, sometimes called payment instruction fraud. In the following guest post, Peter S. Selvin of the TroyGould PC law firm takes a detailed look at one of these recent decisions, the July 2017 decision in the Southern District of New York involving Medidata (discussed here), and compares it to the subsequent American Tooling Center decision out of the Eastern District of Michigan (discussed here). A version of this article previously appeared in the San Francisco Daily Journal. I would like to thank Peter for his willingness to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors in topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is Peter’s article. Continue Reading Guest Post: Groundbreaking Cyber Insurance Decision

Jamieson Halfnight
Anne Juntunen

As many readers are aware, there have been a number of recent case decisions addressing insurance coverage issues arising out of social engineering fraud, sometimes known as payment instruction fraud. The recent round of judicial decisions includes a ruling by a Canadian court. In the following guest post, Jamieson Halfnight and Anne Juntunen of the Lerners law firm in Toronto review the recent Canadian decision and discuss it in the context of several recent rulings in the U.S. I would like to thank Jamie and Anne for their willingness to allow me to publish their 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. Jamieson and Anne’s guest post is set out below. Continue Reading Guest Post: First Canadian Cyber-Coverage Decision Joins Series of U.S. Judgments on Social Engineering Frauds