Claims made policies provide coverage for claims first made during the policy period, but only if the insurer is provided with timely notice of claim. Most claims made policies allow policyholders to provide insurers with a notice of circumstances that may give rise to a claim in the future, in order to make the date of the notice of circumstances as the claims made date for any future claims. A recent Sixth Circuit considered a situation in which a policyholder attempted to provide notice of circumstances, even though, the court later concluded, a claim had already been made. The appellate court concluded that because the policyholder’s notice omitted the circumstance the court considered to represent a claim, the attempted notice was insufficient to provide notice of the actual claim. The court’s decisions raises questions about policyholder’s notice obligations under the policy. The Sixth Circuit’s July 10, 2018 decision can be found here. Continue Reading
Educational Services Company Hit With Data Breach-Related Securities Suit
One of the most-watched corporate and securities litigation trends in recent years has been the incidence of D&O claims after companies experience data breaches. Although there have been a number of high profile claims along the way, the volume of data breach-related D&O claims has never quite lived up to the hype. Just the same, these kinds of claims have continued to be filed. The most recent case is a securities class action lawsuit that has now been filed against educational services company Chegg, Inc., after its recent announcement of a data breach involving customer data. The Chegg lawsuit, filed on September 27, 2018 in the Northern District of California, can be found here. Continue Reading
N.Y. Appellate Court: Coverage Precluded for Disgorgement “Penalty”
In the latest development in nearly decade-long legal battle, a New York intermediate appellate court has held in light of the U.S. Supreme Court’s 2017 decision in Kokesh v. SEC that amounts Bear Stearns paid under an SEC disgorgement order represent a “penalty” for which coverage is precluded under the bank’s insurance policy. This ruling, which overturned a trial court order holding that the disgorgement amount was covered, represents a substantial reversal of fortune for the claimants in this long-running and high-profile insurance coverage dispute. While further proceedings in the case seem likely, the ruling nevertheless represents a setback for policyholders seeking to establish insurance coverage for disgorgement amounts. The intermediate appellate court’s September 20, 2018 opinion can be found here. Continue Reading
Guest Post: The SEC/Musk/Tesla Settlement: The Dawning of a New Era of SEC Internet Enforcement
John Reed Stark
As I detailed in a post at the time (here), on Thursday last week, the SEC filed a securities fraud enforcement action against Tesla Chairman and CEO Elon Musk in connection with his now infamous tweets, in which he said he had “secured” funding to take the company private at a substantial premium over the company’s then-current share price. On Saturday, September 29, 2018, the SEC announced in a press release (here) that it had reached a settlement of the action with Musk, as well as in a separate action against Tesla filed simultaneously with the settlement. 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 enforcement actions and settlements with Musk and Tesla and provides his insight about what these developments may signify as far as the SEC’s enforcement posture regarding communications on the Internet. A version of this article originally appeared on the Securities Docket. I would like to thank John 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 this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is John’s article. Continue Reading
SEC Files Securities Fraud Suit Against Elon Musk Over Take-Private Tweets
Elon Musk’s August 7, 2018 Tweets, in which he had “secured” funding to take Tesla private at a substantial premium over the then-current share price, have already produced a storm of controversy and a series of securities class action lawsuits against him and the company. The Tesla CEO’s now-infamous Tweets have now also led to a SEC enforcement action against him, in which the agency alleges that Musk’s statements in the Tweets were “false and/or misleading” because “he did not have an adequate basis in fact for making these assertions.” The agency seeks injunctive relief, disgorgement, civil penalties, and a bar prohibiting Musk from serving as an officer or director of any public company. The SEC’s complaint against Musk can be found here. The SEC’s September 27, 2018 press release about the enforcement action can be found here. Continue Reading
Plaintiff’s Sexual Assault Complaint Asserts Claims Against Michigan State’s Board of Trustees
Stories of alleged sexual misconduct have dominated recent headlines. Allegations of sexual assault raised against Supreme Court Brett Kavanagh have been the lead story all week, and there has also been extensive coverage of the criminal sentencing of Bill Cosby for sexual assault. These stories arise as part of a broader series of revelations of sexual misconduct involving media figures, politicians, and corporate executives.
In the midst of this depressing litany one of the most disturbing sets of disclosures has been the revelations of the sexual misconduct involving former Michigan State University and U.S. Olympic gymnastics team physician Larry Nassar. Allegations relating to Nassar are back in the news again because of a new lawsuit a former MSU athlete has filed. The plaintiff’s allegations raise a number of issues. As discussed below, the new complaint contains extensive allegations against MSU’s Board of Trustees, underscoring how the allegations raised in the current wave of sexual misconduct allegations can lead to claims against organization’s directors and officers. Continue Reading
Tenth Circuit: Later Lawsuit Interrelated with Earlier SEC Investigation
As I have noted in earlier posts, questions of whether or not two sets of circumstances are interrelated for purposes of determining insurance coverage can be vexing; at a minimum, they are always fact-intense. In a recent decision, the Tenth Circuit examined the question of whether or not a later civil lawsuit was interrelated with an earlier SEC investigation, and therefore deemed first made at the earlier date (prior to the policy period). The appellate court affirmed the district court’s conclusion that the lawsuit was interrelated with the investigation, precluding coverage for the claim. As discussed below, while the appellate court’s conclusion arguably is unremarkable, it still does highlight the elusive problems involved with relatedness issues. The Tenth Circuit’s September 10, 2018 decision in the case can be found here. Continue Reading
Dutch Court OKs Petrobras Claim Jurisdiction Despite Brazilian Arbitration Clause
In a development with significant implications both for Petrobras investor claims and for the global pursuit of investor claims generally, a Dutch court has accepted jurisdiction for a securities fraud action filed in the Netherlands against Petrobras, and also ruled that the arbitration clause in Petrobras’s bylaws do not preclude the Dutch proceeding. As discussed below, the court’s rulings could have important global ramifications for the viability of Dutch procedures for investors seeking collective redress, even (as is the case in the Petrobras action) with respect to companies based outside of the Netherlands. Continue Reading
Guest Post: Stronger UK Pensions Regulator: Risks for Directors and Officers
In the following guest post, Tristan Hall, Andrew Milne, and Emma Boulding of the CMS Cameron McKenna Nabarro Olswang LLP law firm take a look at the increased risks to directors and officers in the U.K. for non-compliance with employer pension schemes, as well as the implications of those increased risks for D&O insurance purposes. I would like to thank the authors for their willingness to allow me to publish their 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 the authors’ article. Continue Reading
Guest Post: Top Tips on Getting ‘Insurance Ready’ for an ICO
Liam Fitzpatrick
As I have noted in a number of recent posts, the question of providing appropriate insurance solutions for cryptocurrency companies – particularly for companies about the complete an initial coin offering (ICO) – continues to be a significant challenge. In the following guest post, Liam Fitzpatrick, Head of Public Offerings Focus Group for Marsh in London, takes a look at the characteristics of an ICO company that could make the company a more acceptable risk to prospective insurers. A version of this article previously appeared on Marsh’s Risk in Context blog. I would like to thank Liam 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 Liam’s article. Continue Reading
