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In my round-up of the Top D&O Stories of 2020, which I published earlier this week, I noted that the recent massive state-actor hack of U.S. government agencies and technology companies underscored the fact that cybersecurity represents a significant operational and management risk for organization of every type. I also noted that cybersecurity-related issues represent an ongoing D&O claims risk. As if to confirm these propositions, the first securities class action lawsuit of the New Year was filed against Solar Winds, the network infrastructure management company whose breached software is believe to have contributed to the recent massive hack. As discussed below, the newly filed complaint highlights the fact that cybersecurity represents a significant potential source of management liability risk.
Continue Reading SolarWinds Hit with Securities Suit Based on Third-Party Governmental Actor Cyber Attack

The directors’ and officers’ liability environment is always changing, but 2020 was a particularly eventful year, with important consequences for the D&O insurance marketplace. The past year’s many developments also have significant implications for what may lie ahead in 2021 – and possibly for years to come.  I have set out below the Top Ten D&O Stories of 2020, with a focus on the future implications. Please note that on Wednesday, January 13, 2021 at 11:00 AM EST, my colleague Marissa Streckfus and I will be conducting a free, hour-long webinar in which we will discuss The Top Ten D&O Stories of 2020. Registration for the webinar can be found here. I hope you will please join us for the webinar.
Continue Reading The Top Ten D&O Stories of 2020

The number of federal court securities class action lawsuit filings declined in 2020 relative to the most recent prior years, largely due to short-term filing lulls during the second and fourth quarters of the year. Though the number of filings last year was below the record-setting levels seen during the years 2017 to 2019, the number of 2020 filings was still well above historical annual averages.
Continue Reading Securities Suit Filings Declined in 2020 But Remained Above Historical Levels

As I noted in a recent post, one of the most distinctive phenomena in the U.S. financial markets this year has been the tremendous amount of IPO activity involving Special Purpose Acquisition Companies (SPACs). According to SPACInsider (here), there have been 243 SPAC IPOs so far in 2020 (as of December 22, 2020), raising total gross proceeds of over $81.3 billion. As I also noted in my prior post, lawsuits relating to SPACs are starting to accumulate. In the latest example of a securities suit relating to a SPAC transaction, a plaintiff shareholder has filed a securities class action against the surviving company following a SPACs acquisition of a target company; the complaint in the lawsuit names as defendants not only the CEO of the surviving company, but also the former president of the SPAC. As discussed below, this new lawsuit may have implications for possible future SPAC-related securities litigation in 2021, and possibly even beyond.
Continue Reading SPAC-Acquired Company Hit with Post-Acquisition Securities Suit

In the latest coronavirus outbreak-related securities suit, a Canadian diagnostic medical testing company that hoped to obtain emergency regulatory authorization for its rapid COVID-19 antigen test has been hit with a securities class action lawsuit after the company failed to obtain the regulatory approvals. A copy of the plaintiff’s complaint, filed on December 17, 2020 in the Central District of California, can be found here. In addition, as discussed below, this past week, the SEC separately filed a coronavirus-related enforcement action against a biotechnology company that touted its ability to provide a blood-based diagnostic test for the coronavirus.
Continue Reading Canadian Testing Company Hit with COVID-19-Related Securities Suit

A third California state court has ruled that a provision specifying that federal courts are the exclusive forum for the resolution of ‘33 act liability actions is valid and enforceable. This latest decision — in a state court securities class action lawsuit pending against Dropbox — suggests that a broad consensus is emerging in California court to enforce federal forum provisions. But while the Dropbox decision is largely consistent with the prior California state court decisions enforcing FFP, there are certain features of the Dropbox decision that make it noteworthy and interesting in its own right. A copy of the December 4, 2020 decision in the Dropbox case can be found here. A December 8, 2020 memo from the Seyfarth Shaw law firm about the ruling can be found here.
Continue Reading Third California State Court Upholds Enforceability of Federal Forum Provision

Jeffrey Lubitz
Elisa Mendoza

One of the most distinctive and interesting securities class action litigation phenomena in recent years has been the rise of event driven litigation. In the following guest post, Jeffrey Lubitz, Executive Director at ISS Securities Class Action Services, and Elisa Mendoza, Vice President of Operations at ISS Securities Class Action Services, take a detailed look at the event driven securities litigation phenomenon, which they describe as a new driver in the growth of securities suit filings. A complete version of this ISS SCAS white paper with footnotes, endnotes, and sources is available  on the ISS website. I would like to thank Jeff and Elisa 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 l like to submit a guest post. Here is Jeff and Elisa’s article.
Continue Reading Guest Post: Event Driven Securities Litigation: The New Driver in Class Action Growth

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.
Continue Reading Company Hit With D&O Claims Over Improper Payments Investigation

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.
Continue Reading Online Learning Firm Hit with COVID-19-Related Securities Suit

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.”
Continue Reading Does Increased IPO Activity Foreshadow Increased IPO-Related Securities Litigation Ahead?