An important recent litigation phenomenon that I have been monitoring on this site is the recent revival of the duty of oversight as a legal theory on which plaintiffs can try to assert claims against corporate boards. Delaware’s court have recently sustained several of these kinds of claims – often referred to as “Caremark” claims in reference to the 1986 Delaware Court of Chancery decision that first recognized the legal theory behind these claims – and indeed on recent federal court decision sustained a breach of the duty of oversight claim under Ohio law. In light of these developments, boards will need to anticipate the possibility that these kinds of claims can arise, which possibility in turn raises the question of what boards can do to protect themselves from these kinds of claims.
Continue Reading The Duty of Oversight and the Need for Regular Board Review of Corporate Risk

Paul R. Bessette
Chris Crawford

As I have documented on this site, along with the rapid rise of SPAC-related transaction activity has come a surge in SPAC-related litigation. In the following guest post, Paul R. Bessette and Chris Crawford consider the likelihood for even further litigation relating to SPAC transactions and review the steps that well advised companies involved in SPAC transactions can take to try to reduce their litigation risks. Paul is co-chair of the King & Spalding law firm’s Corporate & Securities Litigation Practice and Chris is a Senior Vice President and Client Executive with Marsh in Los Angeles. A version of this article was previously published in Westlaw Today, 2021 WL 1990398. I would like to thank Paul and Chris for allowing 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 Paul and Chris’s article.
Continue Reading Guest Post: SPACs and SPAC-Related Litigation: A Primer on Reducing Litigation and Enforcement Risk

In February 2018, the SEC updated its cybersecurity disclosure guidelines for reporting companies, emphasizing the importance to investors and markets for prompt and robust disclosure relating to cyber issues. Indeed, in April, the agency brought its first enforcement action relating to cybersecurity enforcement issues. In its recent annual report, the agency’s enforcement division emphasized that cybersecurity disclosure is a priority issue. Clearly, public company’s cybersecurity-related disclosure practices are receiving a great deal of attention and scrutiny.

But what are public companies actually doing in terms of cybersecurity disclosures? A recent study by EY took a look at the actual cybersecurity disclosure practices. Their analysis shows that cybersecurity-related disclosure practices “vary widely,” suggesting there is an “opportunity for enhancement.” The October 22, 2018 report, entitled “Cybersecurity Disclosure Benchmarking,” can be found here.
Continue Reading Cybersecurity Disclosure Practices and Standards

It is axiomatic in the current global economy that every business needs to have a China strategy. Most business enterprises are drawn to the world’s most populous country and second-largest economy. But while China represents an attractive business marketplace, it can also in many respects be a perilous place to try to do business, particularly from a regulatory and compliance standpoint. While most businesses may recognize these challenges, many may struggle to try and address the concerns. A new book entitled “Governance, Risk and Compliance Management in China” (here), which I review below, may provide substantial help to companies trying to address compliance concerns arising from doing business in China. Of particular interest to this blog’s readers, the book includes an interesting chapter on D&O insurance issues in China.  
Continue Reading Book Review: Governance and Risk Management in China

As I detailed in recent blog posts (here and here), these days virtually every public company M&A transaction is likely to involve M&A-related litigation. For that reason, M&A litigation represents a significant liability exposure for directors and officers of the companies involved in the M&A transaction and they have a keen interest in

In October 2000, the SEC promulgated Rule 10b5-1 to provide company insiders with a way to trade their shares in company stock without incurring securities law liability, through the pre-trading adoption of a written trading plan. Despite the Rule’s protective purpose, concerns have arisen more recently about Rule 10b5-1 plan abuses, as I noted in

You will never read a headline that says “Financial Institution Fires Rogue Trader Who Racked Up Massive Gains.” Therein lies the fundamental tension in financial institution risk management. It is not a merely cynical view that financial institutions tacitly tolerate control lapses as long as gains result – indeed, some of the leading commentators place the blame for