By almost any measure, Fiscal Year 2021 (ended September 30, 2021) was a watershed year in the history of the SEC’s Whistleblower program. According to the recently published annual report of the SEC’s Whistleblower Office, during FY 2021 the agency made the highest annual number of awards in the history of the program, both in terms of dollars and individuals awarded. Indeed, during FY 2021 the agency made more whistleblower awards than in all of the program’s prior years combined. The SEC’s Office of the Whistleblower’s November 15, 2021 Report to Congress can be found here.
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New SEC Enforcement Actions Overall Increased in FY 2021
In a post last week, I noted that in FY 2021 the SEC had flied fewer enforcement actions against public companies compared to FY 2020. However, according to the SEC’s recently released fiscal year end enforcement activity report, the number of new enforcement actions overall (that is, inclusive of both public and private companies) increased by 7 percent in FY 2021. The SEC’s November 15, 2021 press release detailing the agency’s enforcement statistics can be found here. The enforcement action statistical breakdown for FY 2021 can be found here.
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COVID-19-Related Securities Suit Against Biophama Company Dismissed
As I have noted in prior posts (most recently here), since the outbreak of the coronavirus in the U.S. last March plaintiff shareholders have filed numerous COVID-19-related securities class action lawsuits. Relatively few of these cases have reached the motion to dismiss stage, but the few dismissal motion results so far are decidedly mixed, at best, from the plaintiffs’ perspective. In the latest of these cases to fail to survive the initial pleading hurdle, the court in the COVID-19-related securities suit against biopharma firm Sorrento Therapeutics has granted the defendants’ motion to dismiss, albeit with leave to amend. The court’s November 18, 2021 order can be found here.
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Shareholder Files New Pandemic-Related Litigation Variant Suit Against Citrix Systems
In recent posts (here and here), I have discussed new lawsuits that represent interesting new variants of coronavirus-related securities class action claims; these new kinds of suits involve defendant companies whose fortunes had prospered at the outset of the pandemic but that later saw their financial performance decline after the initial surge eased. In the latest example of this new variant on the pandemic-related securities litigation theme, a plaintiff shareholder has filed a securities lawsuit against computer networking firm, Citrix Systems. The complaint alleges that the company misled investors about the company’s ability to initial short-term business success as the pandemic evolved. A copy of the plaintiff’s November 19, 2021 complaint can be found here.
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Shareholders Sue Post-SPAC-Merger Biotech Firm After Short Seller Attack
In the surge of SPAC-related litigation that has been filed this year, one of the distinctive features of the filings has been that many of the lawsuits have followed shortly after a short seller published a report critical of the defendant company. In the latest example of this phenomenon, a shareholder has filed a securities class action lawsuit against biotech firm Ginkgo Bioworks Holdings, which merged with a SPAC in September 2021, after the company’s share price declined following the publication of a negative short seller report. As discussed below, this new lawsuit has several other features in common with the SPAC-related securities lawsuits filed this year. A copy of the November 18, 2021 complaint against Ginkgo Bioworks can be found here.
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Post-SPAC-Merger Baby Product Company Hit with SPAC-Related Securities Suit
One of the most substantial securities litigation phenomena so far in 2021 has been the rising tide of securities litigation relating to SPACs and SPAC-acquired companies. In the latest example of this type of lawsuit, a plaintiff shareholder has filed a securities class action complaint against Owlet, Inc., a company that sells baby health products and that was in July 2021 merged with a SPAC. The defendants named in the lawsuit include not only officers of Owlet itself but also include certain former directors and officers of the SPAC. A copy of the November 17, 2021 complaint against Owlet can be found here.
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Public Company SEC Enforcement Activity Declined in FY 2021
According to the latest report from the NYU Pollack Center for Law & Business in conjunction with Cornerstone Research, SEC Enforcement Activity against publicly traded companies and their subsidiaries declined in fiscal year 2021 (which ended on September 30, 2021) relative to recent years as well as relative to fiscal year 2020. Monetary recoveries were in aggregate greater in FY 2021 relative to FY 2020. The report, entitled “SEC Enforcement Activity: Public Companies and Subsidiaries: Fiscal Year 2021 Update” can be found here. Cornerstone Research’s November 17, 2021 press release about the report can be found here.
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Vaccine Development Firm Hit with COVID-Related Securities Suit
Just as the coronavirus pandemic itself continues to disrupt economic and social activity, it also continues to generate COVID-related securities class action litigation. In the latest COVID-related securities suit, the vaccine development firm Novavax has been hit with a securities suit pertaining to delays the company has experienced regarding its coronavirus vaccine candidate. As discussed below, this latest lawsuit shares a number of features with other previously filed coronavirus-related securities suit. The November 12, 2021 complaint in the new Novavax lawsuit can be found here.
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Guest Post: SCA Loss Mitigation is Critical for D&O Profitability
In the following guest post, Nessim Mezrahi takes a detailed look at the factors driving D&O profitability and the securities class action loss mitigation steps insurers can take to improve profitability. Mezrahi is co-founder and CEO of SAR, a securities class action data analytics and software company. A version of this article previously was published on the PLUS Blog. I would like to thank Nessim 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 site’s readers. Please contact me directly if you would like to submit a guest post. Here is Nessim’s article.
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Boeing Air Crash Derivative Lawsuit Settles for $237.5 Million
In what is one of the largest derivative lawsuit settlements ever, and — according to the statement from one of the co-lead plaintiffs in the case — the largest settlement ever in Delaware of a Caremark/breach of the duty of oversight case, the parties to the Boeing 737 Max Crash shareholder derivative suit in Delaware Chancery Court have agreed to settle the case for a payment of $237.5 million, all of which is to be funded by D&O insurance. As part of the settlement, the company also agreed to adopt several safety and oversight protocols and other corporate governance measures. The settlement is subject to court approval. A copy of the November 5, 2021 statement of the co-lead plaintiff, New York State Comptroller Thomas DiNapoli, about the settlement can be found here. A copy of the parties’ settlement stipulation can be found here.
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