As I have noted in recent posts (here, for example), SPAC-related securities suit filings continue to accumulate and represent a significant current securities litigation phenomenon. But while the number of suits continues to mount, relatively few of these cases have yet reached the dismissal stage. In a recent ruling, however, the defendant company’s motion to dismiss in a SPAC-related securities suit was substantially denied as to the company itself and its top executives. In particular, the claims based on allegations that the company, Romeo Power, and its senior officials made supply chain misrepresentations were sustained, though the related claims against three former executives of the SPAC with which Romeo had merged were dismissed. A copy of the June 2, 2022 opinion in the case can be found here.
Continue Reading Dismissal Denied in SPAC-Related Securities Suit Alleging Supply Chain Misrepresentations
Two More Post-SPAC-Merger Companies Hit with Securities Suits
The pace of SPAC-related securities lawsuit filings recently has perceptibly increased. Earlier this week, I noted two SPAC-related securities class action lawsuits that had been filed in the preceding days. Following my publication of that earlier post, plaintiffs’ lawyers filed two more SPAC-related securities suits, adding to the growing numbers of SPAC-related securities suits that have been filed this year. As discussed below, the likelihood is that we will continue to see further SPAC-related securities suit filings in the months ahead.
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Can Economic Inflation Really Lead to D&O Claims? Yup. Here’s How.
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.
Guest Post: The Globalization of Corporate Governance
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.
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Global Semiconductor Shortage Leads to Securities Lawsuit
In my recent year-end wrap up of directors’ and officers’ liability and insurance issues that arose during 2021, I conjectured that several current economic circumstances – including in particular supply chain disruptions – could lead to D&O claims in 2022. The way that D&O claims might arise out of these economic conditions is illustrated in a new securities class action lawsuit filed against the software company Cerence, which experienced a reduction in automobile industry demand for its products and services due to the global semiconductor shortage. A copy of the complaint filed against Cerence on February 25, 2022 can be found here.
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Supply Chain Disruption Leads to Securities Suit Against Mattress Manufacturer
Among the significant constraints in the current business and financial environment is the continuing disruption of corporate supply chains. The disruption is a side-effect of the pandemic that has been exacerbated by weather events and other developments. I have been concerned that supply-chain disruption could not only interfere with ongoing business operations but could, for companies experiencing significant setbacks, lead to D&O claims, including securities class action lawsuits. There have in fact been prior securities suits filed this year arising out of supply chain issues.
The latest securities suit to reflect this phenomenon is the securities class action lawsuit filed on December 14, 2021 against bed and mattress manufacturer Sleep Number Corporation, whose supply sources for mattress foam was disrupted by the Texas winter storms earlier this year. This latest lawsuit illustrates how supply chain issues can translate into D&O claims. As discussed below, this new lawsuit raises a number of interesting questions about possible future claims.
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Tracking Two Emerging Securities Litigation Trends: SPACs and Supply Chain Disruption
Electric vehicle battery company Romeo Power, which became a publicly traded company through a December 2020 merger with a SPAC, has been hit with a securities class action lawsuit following a share price decline after its announcement of a disruption in its supply chain. The new lawsuit is interesting both because of the SPAC angle and because it resulted from supply chain issues. The new lawsuit against Romeo Power was, in fact, one of two securities suits filed last week arising out of supply chain disruption. As discussed below, supply chain disruption could represent an emerging new area of corporate and securities litigation exposure. I also discuss below the fact that the new lawsuit involves yet another de-SPAC company in the electric vehicle industry
Continue Reading Tracking Two Emerging Securities Litigation Trends: SPACs and Supply Chain Disruption