The coronavirus pandemic poses a host of threats and challenges for every organization. The outbreak also presents a number of serious challenges for boards of directors as well. In the following guest post, Paul Ferrillo, a partner in the McDermott, Will & Emery law firm, considers the challenges that boards are facing and the litigation threats that may arise as a result. I would like to thank Paul 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 Paul’s article.
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Francis Kean

In a post published last month, I wrote about an interesting U.K. case in which a claim had been asserted post-bankruptcy against a director of a private company. In the following guest post, Francis Kean, a partner in the financial lines team at McGill and Partners, takes another look at the case and considers its implications. A version of Francis’s article previously was published on LinkedIn. I would like to thank Francis for allowing me 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 of you would like to submit a guest post. Here is Francis’s article.
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The directors of companies have roles, responsibilities and potential liabilities. But who can be held liable as a director? That was the question that the Third Circuit recently answered in an interesting ruling in which the appellate court determined that board observers could not be held liable as directors or director equivalents under Section 11 for alleged registration misstatement misrepresentations. The decision raises some interesting considerations when it comes to directors and their roles. The Third Circuit’s July 23, 2019 decision can be found here.
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third editionIn an increasingly global economy, questions arising from cross-border activities are an increasingly common part of day-to-day business activities. Among other things, these circumstances mean that companies frequently must contend with the legal requirements in multiple jurisdictions and deal with the associated legal exposures as well. The potential liability issues in turn raise sometimes difficult questions about indemnification and insurance. For those of us in the insurance industry, these cross-border liability, indemnification, and insurance issues can be challenging.
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sec sealLast September, amidst considerable fanfare, the U.S. Department of Justice released a new directive – now universally known as the Yates Memo – in which it restated and reinforced 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. This same focus on individuals has been echoed by top SEC officials, including the SEC’s current chair. With several months’ of experience now under the new directive, it seems worth asking how the SEC renewed focus on individuals has translated into practice and what the implications are for corporate directors.
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seclogoFrom time to time, the SEC reiterates its view of the critical gatekeeper role companies’ outside directors play in safeguarding investors’ interests. Nevertheless, it has been relatively rare for SEC to pursue enforcement actions against outside directors based on an alleged failure to fulfill that role. But while these actions are rare, the agency does periodically bring enforcement actions against directors whom the agency contends shirked their duties.
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scrutiny2Federal 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

As part of its scheme to improve corporate transparency and director accountability, a UK government ministry has proposed what UK Business Secretary Vince Cable calls “tough measures” to “give the public greater confidence that irresponsible directors will face consequences for their actions.” These proposals, if adopted, could significantly increase UK corporate directors’ liability exposures in

One of the most important sources of director protection is corporate  indemnification. But as significant as indemnification is for the protection of directors, the directors’ first line of defense, literally, is their right to advancement of their costs of defense. All too often, these two terms – advancement and indemnification – are used interchangeably, but