nystateOne of the key current concerns in the global D&O insurance marketplace involves questions of cross-border implementation of insurance policy responsibilities and requirements. This concern is usually presented as a problem for policyholders, as they must determine how their insurance might respond to claims arising outside their home jurisdictions. However, a recent decision in the Eastern District of New York and involving one of the individuals caught up in the FIFA improper payments scandal show that the problems involved with cross-border policy implementation represent a challenge for insurers, as well.

 

In an April 27, 2016 ruling (here), Eastern District of New York Judge Raymond J. Dearie determined that, notwithstanding a provision in FIFA’s D&O insurance policy requiring insurance disputes to be litigated in a Swiss forum, he had the authority to enter a preliminary injunction against FIFA’s insurers requiring them to advance the defense fees of Eduardo Li, one of the defendants in the FIFA criminal proceedings.    Continue Reading Despite Swiss Forum Selection Clause, U.S. Court Orders FIFA’s Insurers to Advance Insured’s Defense Expense

californiaOne of the interesting (and challenging) quirks of the federal securities laws is that Section 22 of the ’33 Act provides concurrent state court jurisdiction for liability actions under the Act. Many courts have taken the view that legislation subsequent to the ’33 Act preempts state court jurisdiction under Section 22, as discussed here. While the courts continue to struggle with the preemption question, some plaintiffs are continuing to file ’33 Act actions in state court, particularly in California.

 

In the following guest post, Priya Cherian Huskins, Donna Moser, and Vysali Soundararajan of Woodruff-Sawyer & Co. take a look at these state court securities lawsuits, and in particular at the recently increased numbers of state court filings in California, as well as the practical implications. I would like to thank Priya, Donna and Vysali for their willingness to publish their article 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 a guest post. Here is Priya, Donna, and Vysali’s guest post. Continue Reading Guest Post: IPO Companies, Section 11 Suits, and California State Court

green_stock_tickerAs I have noted previously on this site, there are many fewer publicly traded companies in the United States now than there were within past decades. I have noted this phenomenon primarily within the context of observing that while the annual number of securities class action lawsuits has remained broadly stable within a range, the number of public companies has declined, suggesting that the average likelihood of any company getting hit with a securities suit has increased over  time (as discussed here). This often-overlooked observation is important, but it doesn’t address the more fundamental question of why there are so many fewer publicly traded companies than there once were. A recent academic paper documents the decline in the number of publicly traded companies and suggests several possible reasons for the decline. I have my own thoughts, as well. As discussed further below, these decline in the number of listed companies has important implications for the economy generally and for the D&O insurance marketplace in particular. Continue Reading Yes, But WHY Are There So Many Fewer Publicly Traded Companies?

nystateIPO activity so far this year is well off the pace compared to this time a year ago. According to Renaissance Capital, as of last Friday, there have only been 16 IPOs in 2016, compared to 45 at this point last year, representing a decline of 71%. Indeed, when cybersecurity firm Secure Works Corp. completed its IPO last Thursday, it was the first tech IPO in over four months – and its debut was less than encouraging, as the offering priced below the targeted range. In an environment like this, companies whose strategies included an IPO may find that their plan to go public is simply no longer a realistic – or even desirable – option.

 

Among the many consequences that may befall a company whose IPO plans are sidetracked is the possibility that it may face claims from disappointed investors who assert that the company and its senior officials should be held liable to them for their losses arising from the company’s failure to launch. As discussed below, a recently filed lawsuit underscores the susceptibility of pre-IPO companies to these kinds of claims, which in turn highlights some important D&O insurance considerations for these kinds of companies. Continue Reading When Pre-IPO Companies Fail to Launch

TheranosIn a speech last month, SEC Chair Mary Jo White signaled that the agency was going to be paying closer attention to private companies, particularly so-called “unicorns” – that is, the private venture-backed start-ups with valuations over $1 billion (as I discussed in a recent post). In her speech, White highlighted the concerns that can surround companies with these kinds of lofty valuations, noting that “the concern is whether the prestige associated with reaching a sky-high valuation fast drives companies to appear more valuable than they actually are.”   It wasn’t clear at the time exactly what the agency’s scrutiny of these private companies might mean, but recent news involving the high-flying start-up company Theranos shows what White had in mind.  The developments involving Theranos, in turn, raise the question of whether other high-flying privately held companies might also face scrutiny, as well. Continue Reading Theranos, the SEC, and the Enforcement of the Securities Laws Against Private Companies

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David Bergenfeld

In the following guest post, David Bergenfeld, a Senior Associate in D’Amato & Lynch, LLP’s Fidelity Bond Practice Group, takes a look at key court decisions during the first quarter of 2016 analyzing cybercrime insurance.  I would like to thank David for his willingness 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 David’s guest post. Continue Reading Guest Post: Fidelity Bonds and Cybercrime Insurance: 2016 First Quarter Update

cornerstone reserach pdfThe number of securities class action lawsuit filings raising accounting-related allegations rose in 2015, as did the number and value of accounting-related securities suit settlements, according to a new report from Cornerstone Research. In addition to the increase in the number of accounted-related lawsuit filings, the market capitalization losses associated with those new filings increased as well. The April 19, 2016 report, entitled “Accounting Class Action Filings and Settlements: 2015 Review and Analysis,” can be found here. Cornerstone Research’s April 19, 2016 press release about the report can be found here. Continue Reading Cornerstone Research: Accounting-Related Securities Suit Filings and Settlements Increase

weilComplicated coverage issues frequently arise in connection with D&O claims, and that is particularly true with respect to claims arising in bankruptcy. In the following guest post, Paul Ferrillo and Ronit Berkovich of the Weil, Gotshal & Manges law firm take a look at the key D&O insurance considerations that companies heading into bankruptcy should keep in mind. I would like to thank Paul and Ronit for their willingness 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 Paul and Ronit’s guest post. Continue Reading Guest Post: Please Buckle Your Seatbelts and Check Your D&O Insurance: A Gloomy Forecast Is Ahead

marylandOne of the recurring battles in the continuing wars about whether or not a policyholder’s late provision of notice of claim precludes coverage is the question whether or not the “notice prejudice” rule applies. The notice prejudice rule specifies that the insurer can assert late notice as a coverage defense only if the delayed notice prejudiced the insurer. But if the notice prejudice rule applies, what constitutes “prejudice”? In an April 14, 2016 decision (here), the Fourth Circuit, applying Maryland law, addressed this issue and held that where the policyholder did not provide notice until after a $98.5 million default judgment had been entered in the underlying claim, the insurer was prejudiced and coverage under the policy was precluded. As discussed below, the ruling raises a number of interesting questions and also has wording implications for policy notice provisions. Continue Reading O.K., The Notice Prejudice Rule Applies, But What Constitutes “Prejudice”?

paul weiss largeIn its June 2014 decision in Halliburton Co. v. Erica P. John Fund, Inc., the U.S. Supreme Court held, among other things, that in order to try to rebut the fraud-on-the-market presumption in order to defeat class certification, defendants can contend that the allegedly corrective disclosure did not impact the defendants company’s share price. In an April 12, 2016 decision in IBEW Local 98 Pension Fund v. Best Buy Co., Inc., the Eight Circuit, applying Halliburton, held that the defendants had successfully rebutted the presumption in the case by demonstrating absence of price impact. In the following guest post, attorneys from the Paul Weiss law firm takes a look at the Eighth Circuit’s decision and considers its significance. I would like to thank the attorneys from the Paul Weiss firm for allowing 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 site’s readers. Please contact me directly if you would like to submit a guest post. Here is the Paul Weiss attorneys’ guest post. Continue Reading Guest Post: Eight Circuit: Under Halliburton II, Defendants Successfully Rebut Fraud-on-the Market Presumption