In the following guest post, Dan Gold, Thad Behrens, Kit Addleman, Emily Westridge Black, Carrie L. Huff, Timothy Newman, Matt McGee, and Odean L. Volker of the Haynes and Boone, LLP law firm review the key developments during 2019 in securities litigation and enforcement, including significant securities related decisions by the Supreme Court and federal appellate courts, key developments in SEC enforcement, and significant rulings in state law fiduciary litigation against directors and officers of public companies. A version of this article previously was published as a Haynes and Boone client alert. I would like to thank the authors for their willingness to allow 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.
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John Reed Stark

On February 27, 2020, the SEC announced that it had settled charges against the actor Steven Seagal on charges that he had failed to disclose compensation he received for promoting an initial coin offering. In the following guest post, John Reed Stark, President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement, takes a look at three important takeaways from the SEC’s order against Seagal. A version of this article originally appeared on Securities Docket. I would like to thank John 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 John’s article.
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In the following guest post, Alison Finn, Claims Counsel, DWF Claims; Elan Kandel, Member, Bailey Cavalieri; and James Talbert, Associate, Bailey Cavalieri, take a look at the most important management and professional liability coverage decisions for 2019, involving the perennial coverage issues for insurers and policyholders. I would like to thank Alison, Elan, and James 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.
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In its June 2017 decision in Kokesh v. SEC  (discussed here), the U.S. Supreme Court held that disgorgement in an SEC enforcement action represents a “penalty,” and therefore a SEC enforcement action  claim for disgorgement is subject to a five-year statute of limitation. In reaching this decision, the Court emphasized (in footnote 3 to the opinion) that it was only deciding the statute of limitations issue, and was emphatically not reaching the larger issue of whether the SEC has the proper authority to order disgorgement in enforcement proceeding.

Having previously reserved this larger question in Kokesh, the Court has now agreed to take up a case that will address head-on the question of whether the SEC has the authority to order a disgorgement. On November 1, 2019, the Court granted the petition for a writ of certiorari in the case of Liu v. SEC, which will require the Court to decide whether the SEC may seek may seek and obtain disgorgement from a court as “equitable relief” for a securities law violation even though the Supreme Court determined in Kokesh that disgorgement is a penalty.  The Court’s November 1, 2019 order granting the writ of certiorari can be found here.
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As I have noted in a prior post, 2018 was a very eventful year in the world of directors and officers liability. In the following guest post, written by Kelly S. Johnson, Esq., Claims Counsel, Hiscox USA; Elan Kandel, Esq., Bailey Cavalieri; and Jennifer Lewis, Esq., Bailey Cavalieri, the authors make it clear that 2018 was also a very eventful year for important D&O insurance coverage decisions. I would like to thank the authors for allowing me to publish their article. 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’ guest post.
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In the latest development in nearly decade-long legal battle, a New York intermediate appellate court has held in light of the U.S. Supreme Court’s 2017 decision in Kokesh v. SEC that amounts Bear Stearns paid under an SEC disgorgement order represent a “penalty” for which coverage is precluded under the bank’s insurance policy. This ruling, which overturned a trial court order holding that the disgorgement amount was covered, represents a substantial reversal of fortune for the claimants in this long-running and high-profile insurance coverage dispute. While further proceedings in the case seem likely, the ruling nevertheless represents a setback for policyholders seeking to establish insurance coverage for disgorgement amounts. The intermediate appellate court’s September 20, 2018 opinion can be found here.
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A coverage defense that insurers frequently raise is the assertion that the amount for which the insurance payment is sought represents uninsurable disgorgement. Beyond the more general question of whether or not disgorgements are or are not insurable is the more specific question of whether or not the amount for which coverage sought represents disgorgement. In an interesting July 30, 2018 opinion in a case involving the investment firm TIAA-CREF, the Delaware Supreme Court, applying New York law, rejected the firm’s insurer’s argument that the amount the firm paid in settlement of three underlying class action lawsuits represented uninsurable disgorgement. The Court expressly distinguished a series of three decisions in which New York courts had ruled that settlement amounts paid in settlement of regulatory enforcement actions represented uninsurable disgorgement. The Delaware Supreme Court’s July 30, 2018 order can be found here.
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In the following guest post, Jennifer Bergstrom, Esq., Senior Claim Counsel, Hiscox USA, Elan Kandel, Esq. and Jennifer Lewis, Esq. of Bailey Cavalieri take a look at the key D&O insurance coverage decisions of 2017. I would like to thank the authors for allowing me to publish their article. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is the authors’ guest post.
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sotomayorOn June 5, 2017, in an opinion written by Justice Sonia Sotomayor for a unanimous court, the U.S. Supreme Court held that the five-year statute of limitations applies to claims for disgorgement imposed as a sanction for violation the federal securities laws. The Court rejected the SEC’s argument that the statute of limitations was not applicable to claims for disgorgement. The decision provides greater certainty about the scope of potential liability for parties facing SEC liability. The decision is also important in light of the other securities law statute of limitations case that remains pending on the Court’s docket. The U.S. Supreme Court’s June 5, 2017 opinion can be found here.
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new yorkIn what seems like the culminating trial court clash in the long-running effort of J.P. Morgan, as successor in interest to Bear Stearns, to try to obtain insurance coverage for amounts Bear Stearns paid to settle charges that it had facilitated market timing and late trading, New York (New York County) Supreme Court Judge Charles E. Ramos, applying New York law, on April 17, 2017 entered a summary judgment order (here) comprehensively rejecting the insurers’ various remaining coverage defenses. While further appellate proceedings in the case seem likely, Judge Ramos’s order makes for interesting reading.
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