As we approach what will be the eighth anniversary of the peak of the global financial crisis, many of the effects of the crisis have subsided. But while the crisis and many of the worst of its effects have largely faded into the past, a number of litigated matters related to the crisis have continued to grind through the courts. Among other things, the wave of failed bank lawsuits – that is, lawsuits filed by the FDIC against the former directors and officers of banks that failed in the wake of the crisis – has continued to roll along. However, at this point, it looks as if the failed bank litigation has just about played out. Now that the litigation is winding down, it may be time take a retrospective look at the failed bank litigation wave.
Continue Reading As the Failed Bank Litigation Wave Winds Down, A Look Back
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 to an interesting May 26, 2016 memo from the U.S. Chamber of Commerce’s Institute for Legal Reform entitled “DOJ’s New Threshold for Cooperation” (here), the agency’s new threshold for cooperation credit is “likely to have a number of unintended consequences.” Among other things, the report notes, the new policy risks alienating personnel whose cooperation is essential to the investigation, and indeed may motivate individuals to seek individual counsel. These and other potential unintended consequences may mean that the agency’s new policy may have a counterproductive impact on corporate cooperation.
Continue Reading Will the Yates Memo’s Emphasis on Individual Prosecution Have A Counterproductive Impact?
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 and Resercher Brian Tayan examine several “commonly accepted beliefs about boards of directors that are not substantiated by empirical evidence.”
Continue Reading The “Myth” of Outside Director Liability and the Critical Importance of D&O Insurance
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 must provide the agency with all relevant facts about the individuals involved in the misconduct. As discussed below, the agency’s new directive could pose added challenges for companies involved in DoJ investigations, and it could represent a significant new threat to the executives of the companies involved. As also discussed below, the directive raises some important D&O insurance issues as well.
Continue Reading Thinking About the Justice Department’s New Policy Directive Targeting Corporate Executives
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
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
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
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
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
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