As readers know, since the beginning the coronavirus outbreak in the U.S., I have been tracking the coronavirus-related D&O lawsuits as they are filed. As the lawsuits have started to accumulate, one challenge has been keeping a firm grasp on what it is that makes a lawsuit coronavirus-related. In the following post, I discuss two recently filed securities class action lawsuits that after some deliberation I have decided to include on the list of coronavirus-related securities suits. Though I have included them on the list, I will be the first to acknowledge that that the inclusion of these lawsuits, particularly the second of the two discussed below, is not beyond question. My hope is that by going through my logic for including the two lawsuits and my reasoning for including them on the list that readers will weigh in and share their thoughts about whether either or both of these lawsuits properly should be classified as coronavirus-related. I describe the two recently-filed lawsuits below, along with a description  of my reasons for including them on the list.
Continue Reading Do These Two New Lawsuits Belong on the List of COVID-19-Related Securities Suits? 

A plaintiff shareholder has filed a securities class action lawsuit against a diagnostic testing company alleging that the company misrepresented the accuracy of its COVID-19 antibody test. The company’s share price, which had risen on the news of the FDA’s authorization of the company’s test, declined after the FDA announced it was revoking the authorization due to performance concerns with the accuracy of the test. As detailed further below, this new lawsuit is the latest in a series of securities suits that have been filed since the coronavirus outbreak began against companies that are alleged to have made misrepresentations concerning their ability to provide coronavirus-related therapies, testing, or equipment.
Continue Reading Investor Files COVID-19 Related Securities Suit Against Testing Company

In the latest securities class action lawsuit alleging that the defendant company tried to position itself to investors as able to profit from the coronavirus outbreak, a plaintiff shareholder has filed a securities suit against a company that claimed to have developed COVID-19 tests that were 100% accurate. The plaintiff alleges company’s share price soared based on the company’s statements, but later fell when news reports and regulator statements began to circulate casting doubt on the company’s claimed testing accuracy. A copy of the June 15, 2020 complaint filed against Co-Diagnostics, Inc. can be found here.
Continue Reading Securities Suit Hits Company that Claimed 100% Accurate COVID-19 Tests

A lot has happened since early March, when I first wrote about the possibility that the coronavirus outbreak could lead to D&O claims. At that time, there were only 43 confirmed cases of COVID-19 in the United States and six deaths. Now, three months later, there have been over 2 million confirmed cases in the U.S. and over 115,000 deaths. Along with the public health crisis, a dramatic business downturn has unfolded over the last three months as well, one that likely will continue to effect the economy for months to come. Among other things, in the wake of these dramatic events, a number of disputes have developed, including litigation affecting corporate directors and officers. In this latest installment in my continuing series of monthly reports about the D&O consequences arising from the coronavirus outbreak, I have provided an overview of the developing claims trends, as well as the impact both the circumstances and the claims trends have had on the D&O insurance marketplace.
Continue Reading COVID-19 and D&O Insurance: The Latest Update

The troubled deal in which Advent International Corporation was to acquire cybersecurity firm Forescout Technologies, Inc. is already the subject of litigation pending in Delaware Chancery Court, and indeed a trial in the Delaware merger dispute case is scheduled for July. Now Forescout shareholders have filed a separate securities lawsuit, alleging that between the time the deal was announced in February 2020 and the time that Forescout announced in May 2020 that Advent had advised Forescout that Advent would not “consummate” the acquisition, Forescout made a series of misrepresentations about the company’s financial condition and performance. Among other things, the investors allege that Forescout misrepresented or omitted to disclose the impact that the COVID-19 outbreak was having on its financial performance.  A copy of the plaintiffs’ June 10, 2020 complaint can be found here.
Continue Reading Securities Suit Alleges Cybersecurity Company Misrepresented COVID-19 Impact

In prior enforcement actions the agency filed in the wake of the coronavirus outbreak, the SEC has made it clear that it intends to target companies and individuals that are seeking to secure gains by misrepresenting to investors the companies’ ability to profit from the pandemic. On June 9, 2020, the SEC filed what is the latest of these pandemic-related enforcement actions. In its complaint, the agency alleges that a penny stock trader engaged in a fraudulent pump-and-dump scheme involving the stock of a biotechnology company. The SEC alleges he drove the company’s share price by making hundreds of false statements about the company in an online forum, and then after the company’s share price rose, he sold his stock for significant profits.
Continue Reading SEC Files Enforcement Action Based on Alleged COVID-19 Pump-and-Dump Scheme

In prior posts on this site (most recently here), I have suggested that D&O claims could arise in connection with the Paycheck Protection Program (PPP), a fiscal stimulus program Congress enacted as part of the Coronavirus Aid, Relief and Economic Security Act (CARES Act). In what is as far as I know the first PPP-related securities class action lawsuit, a plaintiff shareholder has filed a securities class action lawsuit against Wells Fargo & Company, alleging that the company made misrepresentations to investors in connection with the company’s participation in the PPP. A copy of the plaintiff’s June 4, 2020 complaint can be found here.
Continue Reading Wells Fargo Hit with First PPP-Related Securities Class Action

Peter M. Gillon

In a recent post (here), I discussed the possibility investigative, regulatory, and enforcement actions in connection with funds disbursement under the Paycheck Protection Program. In the following guest post, Peter M. Gillon of the Pillsbury Winthrop Shaw Pittman LLP law firm takes a closer look at the kinds of claims that may arise in connection with the PPP, as well as the D&O insurance issues that the claims may present. A version of this article previously was published as a Pillsbury Client Alert. The author wishes to acknowledge the assistance of Daniel Gillon (Duke Law 2021). I would like to thank Peter for allowing me 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 Peter’s article.
Continue Reading Guest Post: Implications of PPP Certifications for D&O Coverage

Kevin Douglas
Lora Wuerdeman

In the following guest post, Kevin Douglas and Lora Wuerdeman of the Bass, Berry & Sims law firm take a look at post-pandemic reporting of non-GAAP financial measures. A version of this article previously was published on the Bass, Barry & Sims Securities Law Exchange. 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: COVID-19 and Non-GAAP Financial Measures: A Survey and Overview of 1Q20 Disclosure Practices

Since the outset of the coronavirus outbreak, a relatively modest number of COVID-19 related securities suits have been filed. However in the past two days, two additional coronavirus-related securities suits were filed, bringing the total number of coronavirus-related securities suits to nine, so far. The two new suits were filed against Sorrento Therapeutics, a biopharma company, and Carnival Corporation, a cruise ship line. The Sorrento complaint can be found here and the Carnival Corporation complaint can be found here.
Continue Reading Two Additional Coronavirus Outbreak-Related Securities Suits Filed