One of the now-standard storylines about the global financial crisis is that despite all the chaos very few corporate executives were prosecuted and even fewer went to jail. However, rather than interpreting these circumstances to suggest that there was insufficient evidence to convict corporate executives beyond a reasonable doubt, some observers have decided that the problem was that there is something wrong with our criminal justice system.

One observer who has made a hobby horse out of these issues is the U.S. Senator and Presidential Candidate, Elizabeth Warren. Senator Warren has now introduced new legislation that would lower the standard of criminal liability for corporate executive. Among other things, the new legislation would make corporate executives criminally liable for mere negligence in certain circumstances, even in the absence of the degree of intent that has for centuries been viewed in our legal system as the indispensable basis for a criminal conviction. As discussed below, this legislation is not only a bad idea in terms of our country’s corporate competitiveness, it also threatens one of our legal system’s bedrock principles.
Continue Reading

I spend the better part of most days – both in my day job and in writing this blog – thinking about the liabilities of directors and officers. Most of the time I am focused on their civil liabilities. However, even though it is not something I think about all the time, the fact is that the potential liabilities of corporate executives also include criminal liabilities as well. I thought about this recently in reviewing a July 3, 2018 Bloomberg article entitled “From Executive Suit to Jail: One German CEO’s Tales of Prison” (here). The article tells the story of Thomas Middlehoff, a German executive who was convicted criminally and who served time in prison.
Continue Reading

Jorge Angell
Jorge Angell

As part of The D&O Diary’s ongoing efforts to keep abreast of important D&O insurance developments around the world, I am pleased to present the following guest post regarding D&O issues in Spain. In his guest post, Jorge Angell, the  senior partner at the Madrid law firm of LC Rodrigo Abogados, takes a look at certain features of the criminal liability system in Spain and reviews the implications for D&O insurance. I would like to thank Jorge for his willingness to publish his article as a guest post on my 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 an article. Here is Jorge’s guest post.
Continue Reading

board-of-directorsWhen the U.S. Department of Justice recently announced a renewed emphasis on the prosecution of individual directors and officers in instances of corporate misconduct, it raised the possibility that in the future we could see increased numbers of corporate officials prosecuted and convicted for actions they took as representatives of their company. There are times when popular sentiment rallies in favor of the prosecution of corporate officials – as, for example, was the case during and after the recent global financial crisis. And while there have been instances in the U.S. where corporate officials have in fact been convicted for criminal misconduct, it has been rare. I suspect that even under the new guidelines it will be only the unusual or egregious cases that will involve criminal prosecutions of individuals.

Of course, it is not preordained that criminal prosecutions of corporate individuals should be rare. In fact, there are places now where criminal prosecutions of corporate officials are more common. One of those places is China, as discussed in Steve Dickinson’s  September 26, 2015 China Law Blog post entitled “China Company Directors and China Criminal Liability” (here). Dickinson’s discussion of these issues raises some interesting questions about the role of criminal law in policing director misconduct.
Continue Reading

pwIn the following guest post, Susanna Buergel, Charles Davidow, Andrew Ehrlich, Brad Karp, Daniel Kramer, Richard Rosen and Audra Soloway, all of whom are litigation partners at Paul, Weiss, Rifkind, Wharton & Garrison LLP who are members of the Firm’s Securities Litigation Practice group explain the significance of the Second Circuit’s decision United States v.

A D&O insurer’s denial of coverage for a claim against corporate officials can leave the individuals in a very difficult position, as illustrated by a recent high-profile case in the U.K. According to an August 4, 2013 Financial Times article entitled “Call to Reform Directors’ Insurance as iSoft Four Left With Bill” (here), four

There has been widespread news coverage of the dramatic December 15, 2009 decision of Central District of California Judge Cormac Carney to throw out the options backdating related criminal charges against Broadcom co-founder Henry T. Nicholas III and CFO William Ruehle, based on prosecutorial misconduct.

But even though many of press accounts have reproduced some