regulatory enforcement

The directors’ and officers’ liability environment is always changing, but 2022 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 2023 – and possibly for years to come.  I have set out below the Top Ten D&O Stories of 2022, with a focus on future implications. Please note that on Thursday, January 12, 2023 at 11:00 AM EST, my colleagues Marissa Streckfus, Chris Bertola, and I will be conducting a free, hour-long webinar in which we will discuss The Top Ten D&O Stories of 2022. 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 2022

If you have had the sense that under the current administration the SEC is more active and more aggressive, two reports issued this past week will confirm that your sense is correct. First, on November 15, 2022, the SEC’s Enforcement Division issued its Enforcement Results Report for FY 2022 (ended September 30, 2022), showing that during the fiscal year money ordered in SEC enforcement actions totaled $6.439 billion, the most on record in SEC history. Second, on November 16, 2022, Cornerstone Research, in conjunction with the NYU Pollack Center for Law & Business, issued its report on SEC Public Company-related enforcement activity during FY 2022, which shows that the agency’s actions against public companies increased relative to prior fiscal years and that the agency’s $2.8 billion in aggregate total monetary settlements with public companies was the highest in any fiscal year.
Continue Reading You Aren’t Just Imaging Things: The Current SEC Really is More Active

The SEC imposed fines on U.S. exchange-listed publicly traded companies at the highest levels in years during fiscal year 2022 (which ended September 30, 2022), according to an analysis published Saturday by the Wall Street Journal. As the Journal noted, the fines imposed during the fiscal year on firms accused of wrongdoing “underscore the Biden Administration’s tougher regulatory stance.” The October 29, 2022 Wall Street Journal article, entitled in the online edition “Under Biden Administration, Wall Street Watchdog’s Fines Surge,” can be found here.
Continue Reading Massive SEC Fines Surged During the Most Recent Fiscal Year

I was struck by the recent statements of Chubb CEO Evan Greenberg quoted an insurance industry publication that a colleague circulated to me last week. In the article, Greenberg said that when it comes to ESG commitments, many companies – particularly insurance companies – may be over-promising. What made Greenberg’s remarks particularly interesting to me was his suggestion that companies’ commitment to net-zero goals and other lofty-sounding climate aspirations could lead to shareholder lawsuits. It is worth thinking about this litigation possibility in the context of current regulatory action focused on so-called “greenwashing” in the investment fund industry. In both cases, the concern is that companies may tried to take on an ESG aura that the actual facts may not support.
Continue Reading Will Companies’ ESG Goals Lead to Shareholder Litigation?

Due to an increase in the number of enforcement actions resulting from an agency initiative during the year, the number of enforcement actions brought by the SEC against public companies was at the highest level in at least ten years, according to a recent report. The report, entitled “SEC Enforcement Activity: Public Companies and Subsidiaries Fiscal Year 2019 Update,” which can be found here, was prepared by the NYU Pollack Center for Law & Business and Cornerstone Research. According to the report, the agency’s public company enforcement action monetary recoveries during the fiscal year were consistent with long-term averages.  Cornerstone Research’s November 20, 2019 press release about the report can be found here.
Continue Reading SEC Public Company Enforcement Actions Highest in Ten Years

As I have previously noted (most recently here), the SEC recently has stepped up its regulatory efforts to police the burgeoning Initial Coin Offering (ICO) market, as well as cryptocurrencies generally. Now it appears that the federal regulators are not going to be the only ones to get in on the act. U.S. state regulators have recently stepped forward to assert their concerns and their authority as well, and at least one state regulator is backing the words up with action.
Continue Reading State Securities Regulators Step Up on ICO and Cryptocurrency Enforcement

One of the fundamental principles on which our system of securities regulation is based is the importance of disclosure. The system is built on the notion that companies must disclose certain basic information about their operations and performance so that investors can make informed investment decisions. While the disclosures required are a matter of regulation and statute, investors’ and regulators’ expectations about what must be disclosed changes over time. Signs are that disclosure expectations  — and as a result disclosure practices — are changing rapidly in two particular areas: cybersecurity and climate change.
Continue Reading Now Trending: Cybersecurity and Climate Change Disclosure Practices

skarzynski 1In the following guest post, Tammy Yuen and Ted Carleton of the Skarzynski Black law firm review and analyze the May 9, 2017 Cornerstone Research report entitled “SEC Enforcement Activity: Public Companies and Subsidiaries, Midyear FY 2017 Update” (here), which details the SEC’s enforcement activity during the first half of the current fiscal year. I would like to thank Tammy and Ted for their willingness to allow me to publish their article 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 Tammy and Ted’s guest post.
Continue Reading Guest Post: SEC Enforcement Data: Midyear Review

Mark Sutton1
Mark Sutton

Karen Boto
Karen Boto

On January 17, 2017, the U.K.’s Serious Fraud Office announced that it had entered into a significant Deferred Prosecution Agreement (DPA) with Rolls-Royce PLC following its approval by Sir Brian Leveson. The agreement followed an extensive investigation of alleged bribery involving the company’s operations in a number of different countries. The full text of the deferred prosecution agreement can be found here.  In the following guest post, Mark Sutton and Karen Boto of the Clyde & Co law firm take a look at the agreement and examine the agreement’s D&O insurance implications. I would like to thank Mark and Karen for their willingness to publish their article 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 Mark and Karen’s guest post.
Continue Reading Guest Post: D&O Insurance Implications as Deferred Prosecution Agreements Take Off in the U.K.

latham logo 1The SEC is the primary regulatory body charged with the enforcement of the U.S. securities laws. Most insurance and legal professionals are well-aware of the agency and familiar with its regulatory role. But in an era that has been (at least up until now) characterized by heightened enforcement activity, many of those professionals may be unfamiliar with the agency’s investigative and enforcement process and protocols. In the following guest post, Ted Carleton and Tammy Yuen of the Skarzynski Black law firm and John Sikora of the Latham & Watkins law firm provides a basic outline of the SEC’s investigative and enforcement processes, reviews some recurring D&O insurance coverage issues arising from SEC investigations and enforcement actions, highlights some of the current issues at the agency, and take a look ahead at what the change in administration may mean. I would like to thank Ted, Tammy, and John for their willingness to publish their 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 Ted, Tammy and John’s guest post.
Continue Reading Guest Post: The Nuts & Bolts of SEC Investigations & Enforcement