On March 13, 2024, the European Parliament approved the adoption of the EU Artificial Intelligence Act, legislation that the Wall Street Journal, in a front-page article, called the “World’s First Comprehensive AI Law.” The sweeping law, the effectiveness of which will be staged-in over the next several years, will affect all companies deploying or using Artificial Intelligence (AI) in the EU. As discussed below, the passage of the Act, which has been several years in the making, could have significant implications for the adopting and deployment of AI worldwide, and could also have significant liability risk implications as well. A copy of the EU’s March 13, 2024, press release about the Act’s adoption can be found here. The Act’s text as adopted can be found here.

Continue Reading EU Adopts Sweeping AI Law: What Does it Mean?

I have noted in prior posts on this site the phenomenon of ESG backlash, which has not only taken the form of legislative and other overtly pollical action, but has also taken the form of litigation as well. Though the ESG backlash lawsuits generally have not fared well in the courts, one of these suits recently survived a motion to dismiss.

In a February 21, 2024, ruling, the Northern District of Texas denied the motion to dismiss in a lawsuit filed by an American Airlines pilot alleging that the airline and its employee benefits committee violated their fiduciary duties under ERISA to the company’s 401(k) plan participants in connection with selection and retention of funds whose managers allegedly pursue non-economic ESG objectives rather than maximizing plan participants’ financial benefits. As discussed below, the ruling underscores just how fraught the ESG-related litigation picture has become. A copy of the court’s ruling can be found here.

Continue Reading ESG Backlash ERISA Lawsuit Survives Dismissal Motion

Form PF (here) is a reporting form that requires private fund advisers to report regulatory assets under management to the Financial Stability Oversight Council (FSOC). On February 8, 2024, the SEC and the CFTC announced amendments to the Form PF disclosure requirements (as reflected here and here). In the following guest post, Geoffrey Fehling, Scott Kimpel, and Evan M. Holober of the Hunton Andrews Kurth law firm review the new disclosure requirements and consider the potential liability exposures and possible insurance implications. A version of this article previously was published as a Hunton Andrews Kurth client alert (here). I would like to thank the authors 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 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: Insurance Implications of SEC and CFTC’s New Form PF Requirements

On March 6, 2024, in a decision that has attracted a lot of attention in the business press, the Eastern District of Virginia, applying Virginia law, held that the bump-up exclusion in Towers Watson’s D&O insurance policy precludes coverage for the $90 million paid in settlement of claims relating to the firm’s January 2016 merger with Willis Group Holdings. As discussed below, the court’s ruling highlights recurring issues concerning the wording of the bump-up exclusion. A copy of the March 6, 2024, opinion can be found here.

Continue Reading Bump-Up Exclusion Precludes Coverage for Merger-Related Claims Settlement

As reflected in my recent post, last week I attended the PLUS D&O Symposium in New York. The sessions were great, but based on some comments of various panelists, there are some items for follow-up – for example, references that panelists made that need to be checked out, items that panelists suggested we should pursue, and so on. I have run down these various items, and I link to them below. I emphasize that these items will be of interest even if you didn’t attend the Symposium. I have also included below several other items from around the Internet as well.

Continue Reading PLUS D&O Symposium Follow-Up and Other Notes
Nighttime in Times Square

This week I was in New York for the 2024 PLUS D&O Symposium, along with a thousand or so professionals from around the D&O insurance community. PLUS staged the conference at the Marriott Marquis hotel in Times Square, the bright, beating heart of NYC. No matter how many times you may visit, there is still something special about being in New York. The conference was great as well, a great chance to catch up on the latest news and developments, to meet with my many friends in the industry, and to make some new friends, as well.

Continue Reading PLUS D&O Symposium 2024

On March 6, 2023, a divided SEC, and based on a 3-2 vote, adopted its final climate change disclosure guidelines. The guidelines as adopted are significantly watered down from the draft guidelines originally proposed; for example, the final guidelines do not require  disclosure of so-called Scope 3 greenhouse gas emissions (GGE). As discussed below, the new guidelines will almost certainly face legal challenge. The SEC’s March 6, 2024, press release about the new rules can be found here. The actual rules themselves can be found here. An SEC fact sheet about the new rules can be found here.

Continue Reading SEC Adopts Final Climate Change Disclosure Guidelines – What Next?

As readers know, in recent years I have been tracking two securities class action litigation filing trends:  the filing of SPAC-related lawsuits, and the filing of COVID-related lawsuits. In a noteworthy development, a securities suit filed last week embodies both of these filing trends. That is, a company that was formed through a SPAC merger has been hit with a securities suit based on COVID-related allegations. As discussed below, the new lawsuit has several interesting features. A copy of the February 28, 2024, complaint can be found here.

Continue Reading Two-Fer: SPAC-Merged Company Hit With COVID-Related Securities Suit        

It is not news that ESG has become a battleground issue, with prominent ESG efforts now facing an anti-ESG backlash. And while in the recent past institutional investors and advocacy groups tried to push publicly traded companies to establish their ESG credentials, the ESG-related litigation (such as it has been, so far at least) has primarily been filed not against ESG laggards, but rather against companies that have tried to promote their sustainability efforts and other climate-friendly measures.

In the latest example of litigation against a company in connection with its efforts to promote its ESG qualifications, the New York Attorney General, Letitia James has filed a fraud lawsuit in New York state court against the U.S. subsidiary of JBS, a Brazil-based meat and poultry producer, alleging that its sustainability claims and its publicized goal of achieving net zero greenhouse gas emissions by 2040 misled consumers.  A copy of the New York Attorney General’s February 28, 2024, press release about the lawsuit can be found here. The NYAG’s February 28, 2024, complaint can be found here.

Continue Reading NYAG Sues Meat Company for Its Net Zero Emissions Claims

Largely as a result of an influx of new actions in the fiscal fourth quarter, new SEC accounting and auditing enforcement actions increased in FY 2023 (which ended September 30, 2023) according to a new Cornerstone Research report. The number of new accounting and auditing enforcement actions increased by 22% in FY 2023, compared to the 8% increase in the overall number of enforcement actions during the fiscal year. While the number of accounting and auditing enforcement actions increased in FY 2023, aggregate monetary settlements in accounting and enforcement actions decreased 7% during the fiscal year.

Continue Reading SEC Accounting and Auditing Enforcement Actions Increased in FY 2023