As I have noted in recent posts, several members of the Delaware Court of Chancery have made it clear that they are increasingly skeptical of disclosure-only settlements in merger objection lawsuits. It now appears that the Chancery Court rulings are starting to have an impact at the supply end of the food chain; according to a recent analysis by The Chancery Daily, the number of new merger objection lawsuit filings in the Delaware Chancery Court has begun to drop in response the Chancery Court’s rulings. The publication reported what it observed to be during October and November 2015 a “pronounced decline in the number of class action complaints filed compared to prior months in the year 2015.” The Chancery Daily’s November 13, 2015 blog post discussing its analysis can be found here. Alison Frankel’s November 16, 2015 post on her On the Case blog discussing the recent filing trends can be found here. Continue Reading Delaware Merger Objection Lawsuit Filings Decline in Response to Chancery Court’s Rejection of Disclosure-Only Settlements
SEC Whistleblower Reports Continue to Increase
The number of whistleblower reports to the SEC’s Office of the Whistleblower under the Dodd-Frank Act’s whistleblower provisions continues to increase, according to the agency’s latest annual report. The November 16, 2015 report, which is entitled “The 2015 Annual Report to Congress: Dodd-Frank Whistleblower Program,” and which can be found here, reports that the number of whistleblower reports to the agency has increased every year since the program was instituted in 2011. The agency has also made over $54 million in whistleblower awards since the program’s inception, including more than $37 million to eight whistleblowers in fiscal year 2015 alone. Continue Reading SEC Whistleblower Reports Continue to Increase
London Weekend
The D&O Diary is on assignment in Europe this week, with the first stop over the weekend in London. When I arrived at my hotel on Saturday morning I learned for the first time about the Friday night terrorist attacks in Paris, which had taken place while I was in transit. Since the primary purpose for my trip was to attend meetings this week in Paris (to which I planned to travel next after leaving London), these developments certainly put my trip plans in an entirely different and unsettling light. I spent most of my weekend in London trying to decide whether I should travel on to Paris from London or just return home after the weekend. Continue Reading London Weekend
PLUS International Conference in Dallas
The D&O Diary was on assignment last week at the annual PLUS International Conference at the Hilton Anatole Hotel (pictured left) in Dallas, Texas. As always, the PLUS Conference involved a busy mix of meetings and receptions, and was highlighted by a surprisingly entertaining keynote address by former President George W. Bush. Continue Reading PLUS International Conference in Dallas
A Trio of Delaware Decisions Reaffirms Corporate Director Protections
Because the vast majority of U.S. publicly traded companies are incorporated in Delaware, legal developments in Delaware have a particularly important impact on legal standards governing corporate conduct in the U.S. Delaware law is particularly influential with respect to the responsibilities and potential liability exposures of corporate directors. In a series of recent opinions written by Chief Justice Leo E. Strine Jr., the Delaware Supreme Court has, according to an October 22, 2015 memo from the Skadden law firm (here) “reaffirmed Delaware’s deference to the business judgment of disinterested corporate decision-makers and restored important protections for directors that had been weakened by prior court decisions.” Continue Reading A Trio of Delaware Decisions Reaffirms Corporate Director Protections
Book Review: A Cybersecurity Guide for Corporate Directors and Officers
We are long past the point where cybersecurity can be treated like an emerging, obscure or peripheral issue. The fact is that cybersecurity is now an important concern for every organization and enterprise. For that reason, cybersecurity is also now an important concern for everyone responsible for protecting and guiding those organizations and enterprises, including in particular corporate directors and officers. In the current environment, there is no shortage of advice available for these corporate officials as they seek to understand and fulfill their responsibilities to their organizations. Indeed the sheer volume of information available can be confusing or even overwhelming. Fortunately, there is now a single volume guide available to help corporate directors address their organization’s cybersecurity exposures and needs. The new book by Paul Ferrillo of the Weil Gotshal law firm entitled “Navigating the Cybersecurity Storm: A Guide for Directors and Officers” (here) is a readable, well-organized, and helpful guide for any corporate official seeking to address their cybersecurity responsibilities. Continue Reading Book Review: A Cybersecurity Guide for Corporate Directors and Officers
Up Next?: Climate Change Disclosure and Corporate Liability Exposures
The question whether concerns about climate change-related disclosures might lead to regulatory enforcement actions or even liability claims has been around for some time, but though the concerns have remained, the regulatory actions and liability claims have not really materialized. However, in the past week, the service of a subpoena on Exxon Mobil Corp. by New York Attorney General Eric T. Schneiderman has raised the possibility that an enforcement action against the energy giant relating to its climate change-related disclosures may be in the works. The Attorney General’s action also raises the question whether other companies and industries could also be targeted. These possibilities highlight possible corporate climate change-related enforcement and liability exposures. Continue Reading Up Next?: Climate Change Disclosure and Corporate Liability Exposures
Guest Post: Ten Mistakes Companies Make When Buying D&O Insurance –A Securities Litigator’s Perspective
![Mike%20Biles[1]](https://www.dandodiary.com/wp-content/uploads/sites/893/2015/11/Mike-Biles1.jpg)
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I would like to thank Mike for his willingness to publish his article on this site. I welcome guest post submissions from responsible authors on topics of interest to readers of the blog. Please contact me directly if you would like to submit a guest post. Here is Mike’s guest post.
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D&O insurance is a must-have for every public company. The risks and costs of private lawsuits or government investigations are too great for any rational person to serve as an officer or director of a company without a solid D&O insurance policy. After nearly twenty years of defending officers and directors in securities litigation, I have experienced firsthand the hardship caused by inadequate or inappropriate D&O insurance. Contrary to public perception, most officers and directors of public companies are not extraordinarily wealthy – the cost of financing the defense of a securities class action, derivative lawsuit or government litigation (much less of funding a settlement) is too great to bear for most individuals without D&O insurance.
The following are the top ten mistakes that I’ve seen companies make in selecting D&O insurance. Although some of these mistakes concern complex insurance coverage issues, I’ve prepared this article for the non-lawyer, stripped of legalese, so that officers and directors can discuss these issues with their insurance brokers to avoid these mistakes. D&O insurance is a competitive industry. While the core language of a standard D&O policy is generally fixed, companies can, and often do, negotiate better terms in endorsements to the policy. Continue Reading Guest Post: Ten Mistakes Companies Make When Buying D&O Insurance –A Securities Litigator’s Perspective
Does the Omnicare’s Holding Regarding Opinion Apply to Securities Fraud Claims?
In its March 2015 decision in the Omnicare v. Laborers District Council Construction Industry Pension Fund (here), the U.S. Supreme Court held that an issuer may be liable for opinions set forth in a registration statement if the issuer did not genuinely hold the stated opinion, or if the issuer failed to disclose material facts relating to the foundation for the opinion, as discussed here. Because the Omnicare decision was made with respect to claims under the liability provisions of the Securities Act of 1933, one of the questions that arose following the Court’s decision was whether and to what extent the principles the Court enunciated are applicable to securities fraud actions under the Securities Exchange Act of 1934. In an interesting article entitled “False Statements of Belief as Securities Fraud” (here), University of Idaho Law Professor Wendy Gerwick Couture takes a look at these questions and argues that the Omnicare’s holding with respect to statements of opinion analytically should apply equally to securities fraud claims under Section 10 of the ’34 Act as to prospectus liability claims under Section 11 of the ’33 Act. A summary version of Professor Couture’s article appeared on October 28, 2015 on the CLS Blue Sky Blog (here). Continue Reading Does the Omnicare’s Holding Regarding Opinion Apply to Securities Fraud Claims?
D&O Insurance: Contractual Liability Exclusion Applied to Preclude Coverage for Negligence Claim
In an unpublished October 5, 2015 opinion (here), the Eleventh Circuit, applying Florida law, held that a D&O insurance policy’s contractual liability exclusion precluded coverage for negligence claims asserted against persons insured under the policy. The contract exclusion was written with a broad “based upon, arising out of” preamble wording. As discussed below, the decision highlights concerns about the use of the broad preamble in D&O insurance policies’ contractual liability exclusion. An October 28, 2015 post on the Wiley Rein law firm’s Executive Summary Blog about the Eleventh Circuit’s ruling can be found here. Continue Reading D&O Insurance: Contractual Liability Exclusion Applied to Preclude Coverage for Negligence Claim