One of the more noteworthy developments in recent years has been the increasing frequency of collective investor actions outside the U.S. In certain instances, these cases have resulted in settlements that rival the largest U.S. securities class action lawsuit settlements in size. The largest of the settlements outside the U.S. are compiled in an October 31, 2022 report from ISS Securities Class Action Services entitled “The Top 25 Non-North American Settlements: Largest Securities-Related Settlements Outside of North America of All-Time.” The report, which updates ISS SCAS’s earlier research and was written by Jeff Lubitz, Managing Director, ISS Securities Class Action Services, and Jarett Sena, Director of Litigation Analysis, ISS Securities Class Action Services, can be found here. Continue Reading The Top 25 Collective Investor Action Settlements Outside of North America

In the current difficult business environment, many businesses face a broad array of daunting business challenges, including economic inflation, rising interest rates, supply chain and labor supply disruptions, the continuing threat of COVID-19 shutdowns, and the war in Ukraine. These various circumstances not only represent potential operational hurdles they may also involve increased litigation risk as well – as I have noted on previous posts (for example, here) these various business challenges can translate into litigation, as well. In the latest example of this phenomenon, earlier this week a plaintiff shareholder launched a securities class action lawsuit against the healthcare apparel firm FIGS, Inc. relating to the increased supply chain costs the company experienced since its June 2021 IPO. A copy of the November 1, 2022 complaint against the company can be found here. Continue Reading Apparel Company Hit with Supply Chain-Related Securities Lawsuit

In numerous prior posts I have examined efforts by plaintiffs’ attorneys to try to impose civil liability on corporate executives in D&O claims following cyber security incidents. Two recent cases show that, in addition to potential civil litigation liability exposure, corporate executives may also face potential regulatory liability and even criminal liability exposure for cyber security incidents at their company. The two recent cases are discussed in an October 27, 2022 memo from the White and Case law firm, here. Continue Reading Corporate Executives Face Personal Liability Exposure for Cyber Incidents

As I have previously noted (most recently here), something of an anti-ESG backlash has started to take shape, at least in certain quarters. Legislatures in several states have passed legislation prohibiting state pension funds from investing in ESG- focused investments or prohibiting the state from doing business with companies that boycott certain industries. The backlash has also taken the form of litigation, as, for example, with respect to the lawsuit recently filed against Starbucks board pertaining to the company’s diversity, equity, and inclusion initiative (DEI).

 

As Alison Frankel discusses in an October 26, 2022 post on her On the Case blog (here), and in the latest manifestation of this kind of anti-ESG litigation, a nonprofit group has filed an action against the pharmaceutical giant Pfizer based on the company’s sponsorship of a foundation offering fellowships aimed at Black, Latino, Native American and other minority candidates. This latest lawsuit is yet another indication that the companies that get caught up in ESG litigation may the companies taking ESG initiatives, perhaps more so that ESG laggards. Continue Reading Suits Targeting Firms Seeking to Boost Minorities Highlight ESG Risks

The SEC imposed fines on U.S. exchange-listed publicly traded companies at the highest levels in years during fiscal year 2022 (which ended September 30, 2022), according to an analysis published Saturday by the Wall Street Journal. As the Journal noted, the fines imposed during the fiscal year on firms accused of wrongdoing “underscore the Biden Administration’s tougher regulatory stance.” The October 29, 2022 Wall Street Journal article, entitled in the online edition “Under Biden Administration, Wall Street Watchdog’s Fines Surge,” can be found here. Continue Reading Massive SEC Fines Surged During the Most Recent Fiscal Year

In the latest development a long-running D&O insurance coverage dispute, a Delaware Court has held that Verizon’s D&O insurance program covers the company’s $95 million settlement of a bankruptcy Trustee’s fraudulent transfer claim. In reaching this conclusion, the Court held, among other things, that the fraudulent transfer claim was a “Securities Claim” within the meaning of Verizon’s primary D&O insurance policy. The specifics of the court’s analysis of this issue underscores how complicated the question of what constitutes a “Securities Claim” can be. A copy of Delaware Superior Court Judge Eric Davis’s October 20, 2022 opinion can be found here. Continue Reading Delaware Court Holds D&O Insurance Covers Fraudulent Transfer Claim Settlement

Jeff Lubitz
Jarett Sena

In the following guest post, Jeff Lubitz, Managing Director, ISS Securities Class Action Services, and Jarett Sena, Director of Litigation Analysis, ISS Securities Class Action Services, review an important recent Australian High Court decision in which the court paved the way for foreign shareholders to join the collective investor action pending in Australia against BHP Billiton Limited. I would like to thank Jeff and Jarett 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: Australian High Court OKs Foreign Shareholders In BHP Collective Investor Action

As I have previously noted, plaintiffs’ lawyers have over the last several months filed a plethora of securities class action lawsuit against companies that became publicly traded through a merger with a Special Purpose Acquisition Company (SPAC). Since these cases have only just been filed, few of the cases have yet reached the initial pleading hurdles. However, in a ruling last week, Central District of California Judge Christina A. Snyder denied in part the defendants’ motion to dismiss the securities suit pending against electric vehicle company Faraday Future Intelligent Electric, Inc., which became a public company through a June 2021 merger with a SPAC. As discussed below, the ruling may have significance for a number of the recently filed SPAC-related securities suits. A copy of Judge Snyder’s October 20, 2022 order can be found here. Continue Reading Court Denies in Part Motion to Dismiss SPAC-Related Securities Suit Against EV Company       

As readers of this blog know, there have been important case law developments in Delaware concerning boards’ duty of oversight. In the following guest post, the authors review the key recent developments and consider the practical implications for boards. The authors of this paper are: Sebastian M. Alia, Deputy General Counsel, Hudson Insurance Group; H. Stephen Grace, Ph.D., President, H.S. Grace & Company, Inc.: Alvin H. Fenichel, CPA, Senior Advisor, H.S. Grace & Company, Inc.; and Joseph P. Monteleone, Esq., Partner, Weber Gallagher. A version of this article previously was published in the ACC Docket. I would like to thank the authors for allowing me to publish their articles 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: How To Structure a Board to Oversee Mission-Critical Activities

Most D&O insurance policies preclude loss resulting from fraudulent or criminal misconduct. However, most policies specify that the exclusion applies only if there has been a judicial determination that the precluded misconduct has taken place. What specific judicial determination is required in order to trigger the exclusion is a matter of policy wording. In an interesting recent ruling, Southern District of New York Judge Denise Cote reaffirmed her prior conclusion that a credit union executive’s criminal conviction precluded coverage for the executive’s cost of appeal – even though his appeal remains pending and even though the applicable policy had the “final adjudication” language. A copy of Judge Cote’s October 18, 2022 opinion can be found here. Continue Reading Court Holds Fraud Exclusion with “Final Adjudication” Language Precludes Coverage for Post-Conviction Appeal