slaterandgordonIn May 2007, Sydney-based plaintiffs’ law firm Slater & Gordon listed its shares on the Australian Stock Exchange, becoming the world’s first publicly traded law firm. On its website, the firm touts its “outstanding record” in class actions and group actions. As the firm’s website also highlights, the firm has been an active in pursuing securities class action lawsuits in Australia. More recently, however, the firm has recently experienced some financial turbulence, as a result of which its share price has plunged.  Now, in a twist that can only be called ironic, the firm may be facing a class action lawsuit of its own. Continue Reading Publicly Traded Australian Plaintiffs’ Securities Law Firm Slater & Gordon Faces Possible Securities Suit

kalobiosI am sure that many of you, like me, felt a satisfying wave of schadenfreude when you heard the news last week that biotech bad boy Martin Shkreli had been arrested on securities fraud charges. Shkreli became the poster-child for drug company price-gouging after his company, Turing Pharmaceuticals, increased the price of Daraprim, a life-saving drug, by over 5,000 percent. However, his arrest is unrelated to his activities at Turing. Instead, his arrest relates to his previous activities as a hedge fund portfolio manager and involves a different biotech company, Retrophin Pharmaceuticals, which Shkreli founded and took public, and at which Shkreli had served as CEO until September 2014. Continue Reading Biotech Bad Boy Shkreli Hit With Securities Class Action Lawsuit

globalAs we ease into the final two weeks of the year, it seems likely that just about all of the securities class action lawsuits that are going to be filed this year have already been filed. Sure, one or two more may slip in yet, so it is not quite time for the final analysis of the year’s filings. But with the year just about done, there are some trends that already seem clear. One is the increased numbers of IPO-related securities lawsuits, which I recently noted here. Another securities class action filing trend is the heightened level of securities suit filing activity involving non-U.S. companies. The number of securities suit filings against non-U.S. companies during the year was both above historical levels and disproportionately greater than  the number of foreign companies whose shares are listed on U.S. exchanges. Continue Reading Securities Litigation Filing Trends: Suits Against Foreign Companies Continue to Accrue

seclogoEarlier this year, the SEC rules adopted rules amending Regulation A under the Securities Act to provide companies with an intermediate path between, on the one hand, exempt offerings to qualified investors only, and, on the other hand, a full-blown initial public offering of registered securities. Since the amended rules, known as Regulation A+, took effect, a number of companies have initiated offerings taking advantage of the new rules. Perhaps because of unfamiliarity, many D&O insurance underwriters have reacted very cautiously with regard to these new Reg. A+ offerings. The purpose of this post is to briefly review the background regarding these new offerings and to provide links to relevant resources, in the hope of addressing some of the D&O underwriters’ concerns. Continue Reading Sharpening the Focus on Regulation A+ Offerings

gavelapril2013It will not come as news to anyone that corporate directors face the possibility of direct personal liability for their actions or omissions in the capacities as directors. However, the scope of these individuals’ potential liability exposures can and does change. As a result of recent legal developments, at least two new areas of potential liability exposure for corporate directors have emerged. As discussed below, a recent federal district court decision suggests that directors can be held personally liable under both the Sarbanes-Oxley Act and the Dodd-Frank Act for whistleblower retaliation, and a recent California legislative enactment provides that corporate directors can be held personally liable for violations of the state’s wage and hour laws. Continue Reading New Dimensions in Director Liability Exposure

doleThe November 1, 2013 transaction in which David Murdock, Dole Food Company’s Chairman and CEO, acquired the Dole shares he did not already own has already been the subject of extensive litigation. Indeed, in 108-page August 27, 2015 post-trial opinion (here), Delaware Court of Chancery Vice Chancellor Travis Laster found that and Murdock and C. Michael Carter, Dole’s COO and General Counsel, had employed “fraud” to drive down the Dole’s share price to lower the amount Murdock paid in the deal. Laster entered a damages award against Murdock and Carter, jointly and severally, of $148.1 million, as discussed here.  On December 7, 2015, Murdock and Dole reached an agreement to pay the shareholders a total (including interest) of $113.5 million, with the remainder of the judgment amount to be paid to the plaintiffs in a separate appraisal action, as discussed here. As part of the settlement, the defendants gave up their right to appeal the Chancery Court rulings and judgment.

 

The recent settlement seemingly brought an end to the shareholder litigation over the November 2013 transaction. However, it now appears that there may be another round of litigation  yet to go.

 

On December 9, 2015, a plaintiff shareholder filed a securities class action lawsuit in the federal court in Delaware, against Dole, Murdock, and Carter. A copy of the plaintiff’s complaint can be found here. The lawsuit was filed on behalf of a class of Dole shareholders who sold their shares between January 2, 2013 and October 31, 2013. As might be expected, the complaint quotes extensively from Laster’s opinion. Notwithstanding the overlap between the Delaware Chancery suit and the new complaint, there are important differences between the cases. As discussed below, the securities class action complaint also presents a number of interesting issues and questions. Continue Reading Dole Shareholders File Securities Suit Based on Executives’ Share Price Deflating Conduct Prior to Going Private Deal

wyndham worldwideAccording to the company’s December 9, 2015 press release (here), Wyndham Worldwide has reached a settlement with the Federal Trade Commission in the long-running and high-profile civil action the agency filed against the company and its affiliates in connection with data breaches at the company during the period 2008-2010. Under the terms of the settlement, the company has agreed to undertake certain measures and to continue to meet certain standards with respect to its customers’ payment card information.  As the company said in its press release about the settlement, the company’s undertakings in the settlement set “a standard for what the government considers reasonable data security of payment card information.” The FTC’s December 9, 2015 press release about the settlement can be found here. The parties’ stipulated order for injunction, which is subject to court approval, can be found here. Continue Reading Wyndham Worldwide Settles Data Breach-Related FTC Enforcement Action

valeOn December 7, 2015, in a complaint that reflects a number of current U.S. securities class action lawsuit filing trends, a plaintiff securityholder filed a securities class action lawsuit in the Southern District of New York under the U.S. securities laws against the Brazilian mining giant Vale, S.A. and two of its officers. The complaint relates to the massive dam failure that occurred on November 5, 2015 near Mariana, in the Minas Gerais state, in Brazil. The failed dam is the property of Samarco Mineração, S.A., a joint venture between Vale and BHP Billiton. The securities suit plaintiff claims that the Vale defendants made misleading statements about the company’s safety and environmental standards and risk management, as well as about the spill itself. Continue Reading A Burst Dam in Brazil, a U.S. Securites Lawsuit, and a Heap of Current Litigation Trends

dojAlthough it is not something that is often considered, D&O insurance is in many ways a financial tool allowing companies to manage their indemnification obligations to their directors and officers. The D&O policy’s reimbursement coverage recompenses the company when it honors its indemnification obligations to its corporate officials, and the policy’s individual coverage (usual referred to as Side A coverage) protects the individuals when the company is unable to honor its indemnification obligations, whether due to insolvency or legal prohibition.

 

D&O insurance is of course a critical part of corporate risk management, but the fact is that indemnification is an even more basic and comprehensive source of protection for corporate executives. Even for companies that purchase and maintain significant levels of D&O insurance, corporate indemnification provides important protection for company officials. D&O insurance is subject to limits of liability, whereas indemnification is theoretically unlimited (although, of course, practically limited by the indemnifying company’s financial resources). Indemnification is often very broad, often extending “to the maximum extent permitted by law,” whereas D&O insurance polices contain numerous exclusions and conditions. In addition, D&O insurance must be renewed each year, with possible changes in terms and conditions. Indemnification rights are much less likely to be changed, particularly, as noted below, for corporate officials who negotiate their own indemnification contracts.

 

Indemnification, then, is a very important consideration for all corporate directors and officers. While this has long been true, indemnification arguably has taken on an increased importance in light of the recent action by the U.S. Department of Justice. As I discussed in a post at the time (here), in September the U.S. Department of Justice released a directive —  referred to as “the Yates Memo” –restating and reinforcing the agency’s commitment to targeting corporate executives in cases of corporate wrongdoing. The cornerstone of the agency’s new policies is the specification that in order for a company to qualify for any cooperation credit in connection with a DoJ investigation, the company must provide the agency with all relevant facts about the individuals involved in the misconduct. Continue Reading Corporate Indemnification and the Yates Memo

uscapitolThe five-year transportation bill known as the Fixing America’s Surface Transportation (FAST) Act that a House-Senate conference committee agreed on earlier this week is not something we ordinarily would comment on here. But in that inestimable way that Congress manages to do things, the transportation bill contains so many provisions affecting public company financing and reporting that Broc Romanek of TheCorporateCounsel.net blog described the provisions collectively as “JOBS Act 2.0.” The House and Senate passed the bill on Dec. 3, 2015, and President Obama is expected to sign it into law shortly. Continue Reading JOBS Act 2.0 Poised to Become Law