Tag Archives: Director and officer liability

Investors File Data Breach-Related Securities Suit Against PayPal

Commentators (including me) have long speculated about the possible future direction of data breach-related litigation. There have of course been a number of very high profile data breach-related consumer class action suits, but so far relatively few data breach related D&O lawsuits. Of course, more recently investors filed a securities class action lawsuit involving the high-profile … Continue Reading

Guest Post: Directors and Officers Must Defend Secondary Market Misrepresentation Claim

As I have noted in prior posts, securities class action litigation represents a significant part of the corporate liability landscape in Canada. In the following guest post, James R. Lane, a founding partner of the Toronto law firm of Bersenas Jacobsen Chouest Thomson Blackburn LLP, takes a look at a recent important decision by the … Continue Reading

FCPA Follow-On Civil Actions: Frequently Filed, Less Frequently Successful

There is no private right of action under the Foreign Corrupt Practices Act. However, a company’s announcement of an FCPA investigation or enforcement action frequently will draw a follow-on civil lawsuit in the form of a shareholders’ derivative lawsuit, in which a shareholder plaintiff alleges that the company’s board failed to prevent the company from … Continue Reading

Will the Yates Memo’s Emphasis on Individual Prosecution Have A Counterproductive Impact?

In a September 9, 2015 memo from Deputy Attorney General Sally Yates, the U.S. Department of Justice described a new policy focused on individual accountability for corporate wrongdoing. The keystone of the policy embodied in the Yates memo is that for companies to receive any cooperation credit, they must completely disclosure “all relevant facts about individual misconduct.”  According … Continue Reading

The “Myth” of Outside Director Liability and the Critical Importance of D&O Insurance

In the world of corporate governance, there are a number of common presumptions about board structure and practices. However, according to a recent paper, many of these presumptions may in fact represent corporate governance “myths.” In their September 30, 2015 paper entitled “Seven Myths of Boards of Directors” (here) Stanford Business School Professor David Larcker … Continue Reading

Thinking About the Justice Department’s New Policy Directive Targeting Corporate Executives

The U.S. Department of Justice released a directive last week 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 … Continue Reading

Creditors’ Rights to Pursue Derivative Claims against Company Directors Under Delaware Law

In a detailed May 4, 2015 opinion (here), Vice Chancellor Travis Laster of the Delaware Chancery Court extensively reviewed the rights of an insolvent company’s creditors to pursue derivative claims against the company’s directors. As Francis Pileggi put it in a May 6, 2015 post on his Delaware Corporate and Commercial Litigation blog (here), Laster’s … Continue Reading

Bank Directors Facing Increased Regulatory Scrutiny, Raising Fears of Potential New Liability Exposures

Federal banking regulators have stepped up their interactions with and scrutiny of bank directors, according a recent Wall Street Journal article. The March 31, 2015 article, entitled “Regulators Intensify Scrutiny of Bank Boards” (here) details the ways in which regulators are “zeroing in on Wall Street boardrooms as part of the government’s intensified scrutiny of … Continue Reading

An Alarming Liability Award Against Not-for-Profit Organization’s Directors and Officers

A question that frequently recurs when I am speaking to directors and officers of non-profit organizations is why – given that their firms have no shareholders – they need to bother with D&O insurance. The reality is that even though officials at non-profit firms don’t have to worry about the possibility of shareholder claims, non-profit … Continue Reading

Personal Liability for Corporate Officials Under U.S. Import Laws

Import laws and custom duties are not areas of the law into which I frequently (or lightly) venture, but I delve into these topics here and now because developments in these areas have served up yet another example where individual corporate officers have been held liable personally for matters that previously had been regarded exclusively … Continue Reading

While You Were Out

I have no idea where summer went, but with the passage of Labor Day weekend there’s no denying that summer is over and that it is time to get back to work. For those of you who were fortunate enough to take some time off this summer or who maybe just found it a little … Continue Reading

On the Frontiers of Corporate Litigation and Liability: Inversion Transactions and a Proposed Duty to Warn

Among the developments dominating the business headlines in recent weeks have been two unrelated stories – the rising wave of so-called “inversion” transactions in which U.S. companies acquire foreign firms to avoid U.S. tax laws and the revelation of previously undisclosed problems with the ignition switches in certain GM cars that allegedly resulted in numerous … Continue Reading

Georgia Supreme Court Affirms, Elucidates Business Judgment Rule – and Its Limitations

A recurring issue in FDIC litigation against the former directors and officers of failed banks has been whether the business judgment rule insulates the defendants  from claims of ordinary negligence. This question has been particularly important in Georgia, where there were more bank failures than any in other state and consequently more failed bank litigation. … Continue Reading

SEC Commissioner Aguilar Addresses Cybersecurity Oversight Responsibilities of Corporate Boards

In a June 10, 2014 speech entitled “Boards of Directors, Corporate Governance and Cyber-Risks: Sharpening the Focus” delivered at the New York Stock Exchange, SEC Commissioner Luis A. Aguilar highlighted the critical importance of the involvement of boards of directors in cybersecurity oversight. In his speech, Aguilar stressed that “ensuring the adequacy of a company’s … Continue Reading

Guest Post: Cyber Security, Cyber Governance, and Cyber Insurance: What Every Public Company Director Needs to Know

  As I have frequently noted on this site (refer, for example, here), cyber security issues increasingly are a board level concern, and indeed, recent shareholder litigation has shown that investors intend to hold board members accountable when data breaches cause problems for their companies.  In the following guest article, which was previously published as a … Continue Reading

Wyndham Worldwide Board Hit with Cyber Breach-Related Derivative Lawsuit

 In what is the latest example of the potential cybersecurity-related liability of corporate boards, a shareholder for Wyndham Worldwide Corporation has initiated a derivative lawsuit against certain directors and officers of the company, as well as against the company itself as nominal defendant, related to the three data breaches the company the company and its … Continue Reading

Liability Exposures of Audit Committee Chairs

One frequently asked question is whether members of a corporate board’s audit committee face heightened liability exposures. Two recent SEC enforcement actions seem to underscore that audit committee chairs do face liability exposures. Though both cases involve somewhat unusual circumstances, they seem to suggest that the “gatekeepers” on which SEC has said it will be … Continue Reading

Antitrust Enforcement and Corporate Risk Exposure

As a result of heightened regulatory scrutiny and changing enforcement priorities around the world, “cartel enforcement is a hot topic in boardroom,” according to a March 29, 2014 Economist magazine article entitled “Just One More Fix” (here). According to the article, antitrust enforcement authorities are getting “better at detecting cartels and bolder in punishing them.” … Continue Reading
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