There is no private right of action under the Foreign Corrupt Practices Act. However, FCPA-related matters frequently are the subject of D&O claims, as investors file follow-on civil actions in the wake of news of an FCPA-related investigation or enforcement action. The latest examples of this type of corrupt payment-related follow-on actions are the lawsuits recently filed against Raytheon Technologies Corporation and certain of its directors and offices in the wake of the company’s disclosures of governmental investigations of alleged improper payments. The new lawsuits are representative examples of the ways in which news of corruption investigations can lead to D&O claims against the target companies.
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Online Learning Firm Hit with COVID-19-Related Securities Suit
Technology-based education firm K12, Inc., which hoped to be able to profit from the pandemic-related shift to virtual learning , has been hit with a securities class action lawsuit alleging that the company’s share price declined after school systems using its platform to address their online learning needs allegedly experienced disappointing results. A copy of the shareholder plaintiff’s November 19, 2020 complaint can be found here.
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Does Increased IPO Activity Foreshadow Increased IPO-Related Securities Litigation Ahead?
In recent months, IPO activity has reached levels “not seen since the dot-com era,” according to a recent report on the IPO market. On November 3, 2020, the IPO Tracker reported that October was the busiest month for IPOs in 20 years. As discussed below, all this IPO activity may foretell the possibility of increased IPO-related securities litigation ahead.
According to the IPO Tracker, there were 85 IPOs completed in October 2020, which is “the busiest single month for IPOs in 20 years” – surpassing even September 2020’s totals, which had been the busiest month in that period. The October surge brings the 2020 YTD total through year’s first ten months to 351 completed offerings, which surpasses “every yearly total since 2000.”
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Petition to SEC Seeks Protection for Companies from Pandemic-Related Securities Suits
Readers of this blog well know that in recent years there has been unprecedented levels of securities class action litigation activity, and that even in the midst of the current global health crisis plaintiffs’ lawyers have filed what one law firm has characterized as a “wave” of COVID-19-related securities litigation. The heightened pace of securities filings over the last several years has already triggered calls for another round of securities litigation reform. Now, organizations representing business interests have filed a petition with the SEC seeking to have the agency implement a number of reforms to protect businesses from “unjustified COVID-19 lawsuits.”
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Tallying and Analyzing COVID-19-Related Securities Suits
Since the coronavirus outbreak emerged earlier this year, I have been tracking the COVID-19-related securities class action lawsuits and writing about each of the cases as they have come in. In an October 28, 2020 memo entitled “COVID-19: Lessons from the Second Wave of Securities Fraud Lawsuits” (here), the WilmerHale law firm takes a deeper look at the coronavirus-related securities litigation, with particular focus on the securities suits filed in the May to September 2020 time frame. Along the way, the memo identifies a number of securities lawsuits filed during that period as coronavirus-related that I had not included in my COVID-19 litigation tally. As discussed below, the memo makes several interesting points about the coronavirus-related securities suits. I also discuss below whether or not I agree that the additional cases that the law firm identified in the memo belong on the list of coronavirus-related cases.
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Rare Australia Securities Class Action Trial Results in First-Ever Defense Verdict
Securities litigation observers know that class action securities lawsuit in the U.S. rarely go to trial. The same is true in Australia as well. However, in a recent ruling in only the second-ever securities lawsuit to go to trial in Australia, a Federal Court Justice has ruled in favor of the defendant company, the first ever trial verdict won by a defendant in Australia. The recent ruling has a number of interesting and important implications, as discussed below.
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Title Insurance Company Hit with Cybersecurity Incident-Related Securities Suit
When the news circulated in February that the Equifax data breach securities lawsuit had settled for $149 million, I wondered whether the sizeable settlement might further encourage plaintiffs’ lawyers to file more securities suits against companies that had experienced cybersecurity incidents. As it has turned out, there have been no new cybersecurity incident-related securities suits filed since then – until now. Earlier this week, a plaintiff shareholder filed a securities suit against title insurance and insurance services company First American Financial Corp., which experienced a significant cybersecurity incident in May 2019. As discussed below, the filing of this complaint is noteworthy in several respects. A copy of the complaint in the recently filed First American securities lawsuit can be found here.
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Rain on the SPAC Parade?
2020 has been called “the year of the SPAC.” (2020 has been called a lot of other things as well, but for purposes of this blog post, I am going to focus on the SPAC-related issues.) The reason for the fanfare about Special Purpose Acquisition Companies (SPACs) is that there has been a wave of SPAC offerings this year, raising tens of billions of dollars of capital. While the rush to conduct SPAC offerings has at times started to feel like a stampede, there are in fact questions being raised about at least some SPAC transactions. As discussed below, there has been a series of recent lawsuits involving SPACs, and regulators have made it clear that they are concerned about some features of some SPAC transactions. These recent developments suggest that some trouble could be brewing in SPAC-Land.
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Royal Caribbean Hit with COVID-19-Related Securities Suit
In the latest COVID-19-related securities class action lawsuit filing, the cruise ship company Royal Caribbean Cruises has been hit with a securities suit alleging that the as the viral disease spread earlier this year the company attempted to soft-pedal its statements about the outbreak’s impact on its operations and bookings, as well as about the safety threat that the outbreak represented for ship crews. As discussed further below, the new lawsuit against Royal Caribbean reflects several of the key trends in the coronavirus-related lawsuits. A copy of the new complaint against Royal Caribbean can be found here.
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Guest Post: Securities Class Action Risk in South East Asia
In the following guest post, Arati Varma and Ian Roberts take a look at the evolving risk of securities class actions in South East Asia. Arati Varma is Head of Financial, Professional, and Casualty Lines, Asia, for QBE, based in Singapore. Ian Roberts is the Managing Partner of Clyde & Co’s Singapore office and leads their regional insurance practice. A version of this article previously was published in the Q3 2020 PLUS Journal. I would like to thank Arati and Ian 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 Arati’s and Ian’s article.
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