Recent reports from the FDA’s Center for Devices and Radiological Health (CDRH) indicate that medical device recalls have nearly doubled (about 97%) since 2003. The Medical Device Recall Report, released last month, analyzed data from the last decade showing the number of recalls, as well as why the products had been pulled from the market. The report looked specifically at devices like ventilators, infusion pumps and external defibrillators, all of which have been historically linked to device failures, such as batter problems or improper device maintenance.
CDRH officials say that while the report’s data may appear alarming, the jump in recalls may be a good thing. The increase reflects industry efforts to improve the quality and safety of medical devices, which has resulted in a greater number of recalls reported. Manufacturers who were cited for violations in the past have an improved understanding of their products, Read more…
It happens more than 200 times per year: a publicly traded company discloses an adverse development, its stock price drops, and it — and its directors and officers — are hit with a class action lawsuit by shareholders who allege that they bought the company’s stock based on material misrepresentations and are entitled to financial compensation for the decreased value of their shares once the truth came out. These lawsuits can drag on for years, are expensive to defend even in victory, and can lead to expensive settlements.
In the closely watched Halliburton case, the Supreme Court is reconsidering an earlier holding that made many shareholder class action lawsuits feasible. The Halliburton case involves class action claims brought pursuant to SEC Rule 10b-5, promulgated pursuant to Section 10(b) of the Securities Exchange Act of 1934, as amended. A core element of a 10b-5 claim is that each plaintiff had to rely on the supposed misrepresentation. Plaintiffs’ lawyers have to demonstrate this reliance in the early stages of the lawsuit, as one of the conditions for certification of a plaintiff class. If plaintiffs’ lawyers had to show that each and every plaintiff actually relied on the alleged misrepresentations, broad class actions under Rule 10b-5 would be nearly impossible to pursue. Read more…
“A game changer changes the way that something is done, thought about, made or addressed.” The game changer as it relates to the risk management and risk transfer of Cyber/Data Liability comes in the aftermath of the Target breach that occurred earlier this year.
Data protection is fast becoming the responsibility of an organization’s CEO and Board of Directors; or both private or public companies. Board and Audit Committee oversight should involve:
- Education and knowledge of data breach exposures and how they should be monitored, managed and addressed in order to protect a company’s assets and reputation.
- Data security should be part of an organization’s Board member orientation and an on-going agenda item.
- Understanding of an organization’s risk profile (credit card systems, employee personnel data, customer Personal Identifiable Information (PII), etc.) at the Board level is paramount.
- Implementation of a complete data security plan.
- Board level reporting system and disclosure framework.
- Continual review of risk management and risk transfer mechanisms.
In an unusual twist in shareholder litigation, four different public companies – EMC Corp, Express Scripts Holding Co., Omnicom Group Inc. and Chipotle Mexican Grill Inc. - recently filed lawsuits against a 68-year old retired investor shareholder filing numerous shareholder proposals. Over the past several decades, retail investor John Chevedden of Los Angeles has targeted over 400 large organizations, including, Google, GM, Dreamworks Animation and Hewlett Packard, issuing nonbinding proposals to pressure companies to change their governing and pay practices.
Having filed and won more proposals than any individual or institution in history, Chevedden has gained widespread notoriety amongst large corporation executives, attorneys and shareholders as the most “persistent provocateurs” around. Unlike big-money shareholder activists, he typically only buys the minimum number of shares ($2,000) required to submit proposals before launching reform measures, which often digs deep into the details of corporate governance issues such as how directors are elected and when shareholders can call special meetings. He claims the companies’ litigation is an attempt to thwart investors from pushing reform movements through the proxy process. And although he’s been successful in many of his previous efforts more and more companies have begun suing Chevedden for abusing the proxy process.
Earlier this month Congress passed legislation scaling back major hikes in flood insurance premiums sending the bill to the White House where it is expected to be signed into law by President Obama in the coming weeks. The bill effectively halts many of the changes outlined in the Flood Insurance Reform Act of 2012, which was passed with the goal of making NFIP financially solvent; at the time, the program was $30 billion in debt from claims from Hurricane Sandy and other major storms.
The 2012 changes, frequently referred to as The Biggert-Waters Flood Insurance Reform Act, included provisions requiring the NFIP to raise premium’s to an actuarial sound basis for flood risks. Biggert-Water’s also called for re-mapping of flood zones, moved hundreds of thousands of homeowners into new, high-risk flood areas, thus eliminating subsidized premium rates they had previously benefitted from. In addition, the reform repealed the property sales trigger, which prevented new homeowners from keeping the very low pre-FIRM rates on new purchases.
With the legal U.S. cannabis market expected to reach 2.34 billion this year, use of marijuana continues to expand across the nation. As of today, 20 states and Washington D.C. have passed compassionate use laws, while 13 more have pending legislation to legalize the drug this year. American support has buoyed the state laws as well. According to a CNN/ORC International poll released in January, 55% of Americans support legalizing the drug, the highest percentage ever reported by the survey. In Massachusetts, marijuana policy reformers plan to introduce an initiative on the 2016 ballot to make pot legal for all adults, regulated similarly to alcohol.
However, along with the surge in market value and product use comes the need for a clear understanding about medical marijuana regulations beyond state borders. The U.S. Federal Government still Read more…
In the weeks following the Target data breach, we continue to learn of new exposures that may be falling on deaf ears. As a nation, we have become rather desensitized to the influx of data breaches. The number of large-scale security breaches has grown so steadily over the last several years that we are all starting to dismiss these events as “yet another breach”. But the Target case reminds us that risks change continuously, and that we ignore emerging risks at our businesses’ peril.We need to stay attuned to the risks that this data breach presented and to make sure that we ask questions and vigilantly review risk management practices.
Recent reports indicate that the data breach impacted over 100 million records, involved over 40 million credit and debit card numbers, and personal data from over 70 million customers. It’s also Read more…
Cyber risk tops the list of main concerns among risk managers, insurers, brokers, and risk-management consultants, according to data released by Business Insurance from a December 2013 poll. Nearly 1,000 risk management professionals responded to the publication’s survey asking about cyber security management and protection.
- 56% said data breaches are the biggest threat to their organizations, followed by changing legislation (53%) and natural disasters (36%.)
- Just over half (52%) currently have a cyber-risk insurance policy in place, while 38% do not and 10% were unsure.
The survey results come on the heels of several recent high-profile data breaches in the past few months at stores like Target, Michael’s Stores and Neiman Marcus, igniting further angst among Read more…
Our February 27th webcast received an early morning boost thanks to the Wall Street Journal‘s piece “Securities Class Action: Endangered Species?” outlining the potential impact of the Supreme Court’s ruling on the Halliburton case. Securities Class-Actions have been the bane of U.S. publicly held companies since 1988 when the Supreme Court ruling on Basic vs Levinson established the “fraud -on-the- market “ theory which plaintiffs’ securities lawyers quickly exploited for the benefit of their clients, and themselves .
To provide some idea of the overall size and financial impact of the Securities Class-Action cottage industry, consider the following:
- 3,200 + securities class-actions filed between 1997 and 2013 (Cornerstone Research)
- $75B + paid to settle those actions (Cornerstone Research)
- $50B (est.) in fees for plaintiffs’ and defense lawyers
- $2.5B (est.) paid in D & O premiums annually by US public companies Read more…