Every participant in the world economy currently faces an environment fraught with geopolitical risk, with a war in the Middle East showing a dangerous potential to expand, a war in Ukraine that continues to flame, tensions in the South China Sea, and many other concerns. While companies’ operating risks in these environments in many cases may seem apparent, it may not always be obvious how geopolitical risks can translate into corporate and securities litigation.  A recent securities class action lawsuit filed against technology company Super Micro Computer provides some insight into these litigation risks. Although the lawsuit involves a host of issues, among the principal concerns are allegations that the company misrepresented its compliance with trade control regulations restricting exports to Russia. These allegations illustrate how trade issues, for example, can contribute to securities litigation activity. A copy of the new complaint in the Super Micro Computer case can be found here.Continue Reading Geopolitics and Securities Litigation Risk

In my recent year-end wrap up of D&O issues, I speculated that certain current conditions – supply chain woes, labor supply constraints, and economic inflation – could lead to a rash of D&O claims. I actually had examples in my wrap-up article of D&O claims arising from supply chain issues and labor supply concerns, but I didn’t have any inflation-related D&O claims examples – until now. The securities class action lawsuit filed last week against Vertiv Holdings is directly related to the company’s recent inflation-caused earnings miss and ensuing stock price drop. As discussed below, there could be more inflation-related D&O claims to come. A copy of the March 24, 2022 complaint against Vertiv can be found here.
Continue Reading Can Economic Inflation Really Lead to D&O Claims? Yup. Here’s How.

Michael W. Peregrine

Russia’s invasion of Ukraine will have many ramifications, some of which may only become apparent over the course of years . For those of us whose job is to worry about the liability exposures of corporate directors and officers, one question has been whether the developments in Ukraine will have legal implications for companies and their executives. Among other concerns for companies and their executives is the sanction regimes that the governments of the U.S., U.K. and other countries have put in place.  In the following guest post, Michael W. Peregrine, a partner at McDermott Will & Emery LLP, examines at the corporate governance implications for U.S. companies arising from the sanctions. A version of this article previously was published by Forbes. I would like to thank Michael for allowing me to publish his 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 Michael’s article.
Continue Reading Guest Post: The Globalization of Corporate Governance

seadrillIn a prior post, I noted that among the implications of the international trade sanctions is the possibility that companies affected by sanctions could face D&O claims. Among the risks the sanctions program presents is the possibility that a company dealing with sanctions-related issues could face a follow-on securities lawsuit, as investors seek to hold the company and its senior officials liable for share prices declines following disclosure of sanctions-related issues.

In the Seadrill Limited Securities Litigation, a securities class action lawsuit pending in the Southern District of New York, investors sued the company, a subsidiary, and certain of its directors and officers, for the company’s elimination of its dividend and loss of significant business with a Russian oil company subject to international sanctions following Russia’s invasion and annexation of Crimea. On June 20, 2016, in an interesting opinion (here), Southern District of New York Lorna Schofield granted the defendants’ motion to dismiss the Seadrill case. Due to the case’s factual circumstances, the opinion makes for some interesting reading. In any event, the case represents an important example of the possibilities for D&O claims arising from sanctions-related issues.
Continue Reading Russian Trade Sanctions-Related Securities Lawsuit Dismissed