In a post last week, I wrote about the proposed revised Financial Choice Act (H.R. 10) now pending before Congress and the potential impact that the bill could have on the SEC’s enforcement program. In this post, I address the potential impact that the bill’s provisions could have on public company disclosure requirements and corporate governance. If the bill’s provisions are enacted into law, the measures could significantly alter or eliminate many of the Dodd-Frank Act’s disclosure and corporate governance requirements. Continue Reading Proposed Disclosure and Corporate Governance Reforms in the Financial Choice Act 2.0
Guest Post: The Impact of a Recent Criminal Case in Spain on D&O Insurance
As part of The D&O Diary’s ongoing efforts to keep abreast of important D&O insurance developments around the world, I am pleased to present the following guest post regarding D&O issues in Spain. In his guest post, Jorge Angell, the senior partner at the Madrid law firm of LC Rodrigo Abogados, takes a look at certain features of the criminal liability system in Spain and reviews the implications for D&O insurance. I would like to thank Jorge for his willingness to publish his article as a guest post on my 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 an article. Here is Jorge’s guest post. Continue Reading Guest Post: The Impact of a Recent Criminal Case in Spain on D&O Insurance
Financial Choice Act 2.0 Proposes Significant Changes to the SEC’s Enforcement Authority
One of the Trump administration’s high profile initiatives is the review and rollback of many of the Dodd-Frank Act’s features. Consistent with these efforts, an updated version of a bill that would undo many of the Act’s provisions is now making its way through Congress. The Financial Choice Act (H.B. 10) was introduced in April by Rep. Jeb Hensarling (R-Tex.) Because Hensarling introduced a similar bill with the same name during the last Congressional session, the recently introduced bill is referred to as Financial Choice Act 2.0. The bill, which has already passed through the House Financial Services Committee, addresses a number of high profile issues affecting the regulation of the financial system. The systemic issues are attracting all of the headlines. Other features of the bill are attracting less notice. Of particular interest here, the bill introduces a number of changes to the SEC’s enforcement authority. As Columbia Law School Professor John Coffee commented in congressional hearing testimony, these changes, if enacted, would “hobble the SEC’s enforcement program,” and the “cumulative effect” would be “devastating.” Continue Reading Financial Choice Act 2.0 Proposes Significant Changes to the SEC’s Enforcement Authority
Important D&O Insurance Program Structure Concerns
Most D&O insurance buyers understand the critical importance of limits selection – that is, deciding how much insurance to buy. But an equally important question involves the issue of program structure – that is, how the insurance program is put together. Many insurance buyers understand that, in order to be able to purchase an insurance program with the desired limits of liability, their D&O insurance will be structured with a layer of primary insurance and one or more layers of excess insurance. In addition, these days many D&O insurance buyers also purchase an additional layer – usually on the top of program – of Side A Difference in Condition (DIC) insurance. As noted in an interesting May 2, 2017 post on the Pillsbury Policyholder Pulse blog (here), “no coverage may be less understood” than the Side A DIC policy. But even if frequently misunderstood, the coverage provides corporate directors and officers an important safety net. Moreover, there are other important D&O insurance program structure issues, beyond just the need for Side A DIC insurance. Continue Reading Important D&O Insurance Program Structure Concerns
Supreme Court Asked to Review Responsible Corporate Officer Doctrine
The U.S. Supreme Court may soon get a chance to consider and review the “Responsible Corporate Officer” Doctrine (also sometimes referred to as the “Park doctrine,” in reference to the 1975 case in which the Court first described the doctrine) in a case in which corporate executives challenge their individual criminal imprisonment sentences for alleged corporate misconduct in which they were not involved and of which they had no knowledge. As discussed here, the executives’ sentences were affirmed by the Eighth Circuit, and the executives have now filed a petition for a writ of certiorari to the Supreme Court, in which they seek to have the Court take up the question of whether the imposition of a sentence of imprisonment for a supervisory liability offense violates constitutional due process requirements. As a May 3, 2017 memo from the Cadwalader law firm put it, the case may be the “most important Park doctrine case in over forty years.” Continue Reading Supreme Court Asked to Review Responsible Corporate Officer Doctrine
Mandatory Disclosure of Third-Party Litigation Funding: Up Next?
Most observers of the current litigation scene are well aware of the recent rise in litigation funding, both in the U.S. and around the world. Indeed, according to a recent memo from the Skadden law firm (here), in 2016, “the worldwide market for third-party litigation financing was estimated to exceed $1 billion.” The industry is likely to continue to grow. The rise of litigation funding has not been without its concerns, however; with the increasing role of litigation funding have come calls for regulation of various kinds. One recurring issue has been with respect to the requirement of mandatory disclosure of litigation funding. Continue Reading Mandatory Disclosure of Third-Party Litigation Funding: Up Next?
Reading the Latest Securities Class Action Lawsuit Complaints
Here at The D&O Diary we generally review securities class action lawsuit complaints as they come in. The complaints pretty reliably make for interesting reading but every now and there are specific complaints that particularly catch our eye. Among the host of new securities class action lawsuit filings this past week, there were two that were of particular interest. Continue Reading Reading the Latest Securities Class Action Lawsuit Complaints
In Long-Running Bear Stearns Dispute, N.Y. Court Rejects Insurers’ Remaining Coverage Defenses
In what seems like the culminating trial court clash in the long-running effort of J.P. Morgan, as successor in interest to Bear Stearns, to try to obtain insurance coverage for amounts Bear Stearns paid to settle charges that it had facilitated market timing and late trading, New York (New York County) Supreme Court Judge Charles E. Ramos, applying New York law, on April 17, 2017 entered a summary judgment order (here) comprehensively rejecting the insurers’ various remaining coverage defenses. While further appellate proceedings in the case seem likely, Judge Ramos’s order makes for interesting reading. Continue Reading In Long-Running Bear Stearns Dispute, N.Y. Court Rejects Insurers’ Remaining Coverage Defenses
Which Whistleblowers Can Claim Dodd-Frank Act Anti-Retaliation Protection?
Within the Dodd-Frank Act’s whistleblower provisions, Congress included some stiff anti-retaliation protections. Since the Act’s passage, however, the lower federal courts have struggled to try to determine whether the anti-retaliation protections apply only to whistleblowers who file reports with the SEC or whether or not the protections extend to individuals who file internal whistleblower reports within their own companies. A split on this issue has developed within the federal circuit courts and now the United States Supreme Court may have the opportunity to address the question. Continue Reading Which Whistleblowers Can Claim Dodd-Frank Act Anti-Retaliation Protection?
Home Depot Settles Data Breach-Related Derivative Lawsuit
During the period 2014-2015, several companies –including Home Depot — that had experienced high-profile data breaches were hit with cybersecurity-related D&O lawsuits. All of these lawsuits, including the one against Home Depot, were dismissed. The plaintiffs in the Home Depot case filed an appeal of the dismissal. Now it appears that while the appeal was pending the parties to the Home Depot data breach-related derivative lawsuit have reached a settlement. The settlement could have interesting implications for the plaintiffs’ bar’s ongoing efforts to pursue data breach related D&O litigation. Continue Reading Home Depot Settles Data Breach-Related Derivative Lawsuit