In yet another securities suit following on news of a bribery or corruption investigation, and in the latest securities suit involving a global mining company, on December 12, 2016, a plaintiff shareholder filed a securities class action lawsuit in the Southern District of New York against the world’s second-biggest mining company, U.K.-based Rio Tinto plc, and certain of its current and former officers. The complaint arises out of the company’s recent announcement of a corruption investigation involving its operations in the Simandou iron mine, located in southern Guinea. As discussed below, this latest lawsuit exemplifies a number of the key securities litigation filing trends that have arisen this year.
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The Securities Litigation Storm is Already Here
In an interesting post on his D&O Discourse blog earlier this fall (here), Doug Greene of the Lane Powell law firm raised the question whether there is a securities litigation storm brewing. Citing a number of different factors ranging from the SEC whistleblower program to changes in the plaintiffs’ bar, Greene suggested that we could be headed toward a significantly increased number of securities class action lawsuits. I agree with most of what Greene said, except for one thing. The securities litigation storm isn’t on the horizon – it is already here.
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The Rise of Collective Shareholder Actions in Europe
In numerous recent posts, I have noted the global rise of investor collective actions (refer for example here). These lawsuits, which take a variety of different forms according to the applicable forum laws, have been filed in a number of different countries. Among other regions that have seen a recent rise in this type of litigation is Europe. In an interesting November 16, 2016 publication entitled “Rise of European Shareholder Class Action? (here), AIG Europe takes a look at the recent rise of collective investor actions, noting among other things that these types of actions are “on the rise in Europe” as a result of “a number of converging factors.”
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Privately-Held Brazilian Mining Company Hit with U.S. Securities Class Action
On November 14, 2016, in an interesting lawsuit that brings together a number of recent securities litigation trends, a noteholder of Samarco Mineração, S.A. filed a purported securities class action lawsuit in the Southern District of New York against the company and its CEO on behalf of investors who purchased the company’s debt securities. Samarco, a joint venture of mining giants Vale, S.A., and BHP Billiton, owned and operated the Fundão tailings dam that collapsed on November 5, 2015, in what has been called Brazil’s worst-ever environmental disaster. There are a number of interesting features to this new lawsuit, beyond just its relationship to the dam collapse disaster. A copy of the plaintiff’s November 14, 2016 complaint can be found here.
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SEC Enforcement Activity Involving Public Companies
While the confirmation earlier this week that Mary Jo White will step down as SEC Chair at the end of the Obama administration raises interesting questions about the SEC’s possible future direction and priorities, the agency’s public company-related enforcement activities during the last fiscal year provide some very interesting insights about the SEC’s recent priorities. In an interesting November 15, 2016 report entitled “SEC Enforcement Activity Against Public Companies and Their Subsidiaries: Fiscal Year 2016” (here), the NYU Pollack Center for Law & Business and Cornerstone Research take a detailed look the SEC’s enforcement activity during the fiscal year ending on September 30, 2016. The report examines the agency’s record levels of enforcement activity involving public company defendants during the fiscal year.
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Investors File Climate Change Related Securities Suit Against Exxon Mobil
For many years, I have been raising the possibility of climate change-related corporate and securities litigation. However, despite my best prognostication, the climate change-related corporate and securities lawsuits have basically failed to materialize – that is, until now. On November 7, 2016, investors filed a purported securities class action lawsuit in the Northern District of Texas against Exxon Mobil Corporation and certain of its directors and officers. The lawsuit specifically references the company’s climate change-related disclosures, as well as the company’s valuation of its existing oil and gas reserves. One lawsuit doesn’t make a trend, and many of the lawsuit’s allegations relates specifically to Exxon Mobil and its particular disclosures. Nevertheless, the filing of the lawsuit raises the question whether there may be other climate change-related disclosure cases ahead. A copy of the November 7, 2016 lawsuit can be found here.
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Generic Drug Companies Hit With Antitrust Enforcement Follow-On Securities Suits
In a recent post, I noted that plaintiffs’ lawyers had recently launched a series of securities class action lawsuits against several poultry producers in the wake of news that companies in that industry were the target of antitrust enforcement action. Now news has emerged that antitrust regulators may be targeting companies in a different sector, the generic drug manufacturing industry. Within days of the news, plaintiffs’ lawyers have filed several securities class action lawsuits against several generic drug companies — the latest companies to be hit with follow-on securities suits following news of antitrust enforcement actions.
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Poultry Producers Hit with Antitrust Suits, Follow-on Securities Litigation
One of the characteristic securities litigation patterns for many years has been that lawsuit filings tend to come in distinctive waves, in which specific sectors get hit with a series of securities suits or companies engaging in certain types of conduct or business practices attract securities litigation. The lawsuits arising out of the dot-com crash and the options backdating scandal are examples of these kinds of litigation patterns. Over the last several weeks, a different industry sector pattern has emerged. The poultry production industry, which recently has been the target of private antitrust litigation, has now been hit with a string of follow-on securities class action lawsuits as well. These lawsuits represent one of the more distinctive securities litigation filing patterns this year.
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First Monday in October: What to Watch in the Supreme Court’s New Term
October 3, 2016 is the first Monday in October, and that means that on that date the U.S. Supreme Court, as it has on the first Monday of every October since 1917, will begin its new term. While the Court will begin its term this year as it traditionally has in the recent past, it will also be operating on an unusual basis. For the first time in almost 30 years, the Supreme Court will begin its new term will only eight justices.
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What to Watch Now in the World of D&O
Every year just after Labor Day, I take a step back and survey the most important current trends and developments in the world of Directors’ and Officers’ liability and D&O insurance. This year’s survey is set out below. Once again, there are a host of things worth watching in the world of D&O.
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