Posts Tagged ‘Directors & Officers Liability’

Directors & Officers liability for life sciences marketplace

February 16, 2016 Leave a comment

stocks_lifesciIn 2015, the D&O market as a whole experienced a competitive environment, with new and increased capacity leading to healthy premium decreases for some companies. The public D&O insurance market for life sciences companies, however, continues to evolve, with the industry still a prime target of Federal Securities Class Action (FSCA) lawsuits. In 2014, a total of 170 FSCA lawsuits were filed, including 39 complaints against 38 companies in the life sciences sector. At 23% of all 2014 FSCA filings, this represents a noteworthy increase over recent years.

The heightened regulatory environment and the increase in investigations and enforcement actions by the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) –perhaps most notably in the SEC’s increased targeting of individuals–has presented more complex and costly exposures for life sciences companies. Read more…

Concerns after hackers target corporate data to commit securities fraud

August 25, 2015 Leave a comment

stock_arrowsOn Wednesday August 12, both The Wall Street Journal and New York Times reported on what most believe is the first case in which hackers used stolen corporate data to initiate securities fraud in conjunction with stock traders. More troubling are concerns that it’s likely just the tip of the iceberg, and that it came from a five-year long “unholy global alliance” between overseas hackers and U.S. based traders.

As Paul Fishman, the U.S. District Attorney for New Jersey notes, “This is the intersection of hacking and securities fraud. The hackers were relentless and patient.” It’s estimated that 32 traders and hackers took in over $100M in illegal proceeds via this highly sophisticated and bold scheme. Those involved gained a big advantage over others in the stock market by securing access to news releases, then trading on their information before they hit the wires.  Read more…

Increasing support of activist investors is cause for concern

August 12, 2015 Leave a comment

agreementA Wall Street Journal article published on Sunday August 9th referenced the subtle backing by large institutional investors of small activist investors to invoke change within large U.S. companies. Activist investors are prevailing frequently and targeting even larger companies, usually as a result of private support from mutual funds. This partnership is altering how U.S. businesses deal with challenges from activist campaigns – if they resist they risk losing shareholder votes. In a 2015 survey of over 350 mutual-fund managers, Rivel Research Group discovered that half had been contacted by an activist in the past year, and 45% of those contacted chose to support the activist. According to FactSet, activists acquired board seats at 107 companies last year, 91 of them through pacts negotiated with the companies. In the first half of 2015, activists are on pace to surpass that mark after acquiring seats at 86 companies. FactSet also reported that activists won a record 73% of battles for board seats in the U.S. in 2014, a 21% increase since 2012. Read more…

Cooperation from companies is crucial in reducing burden of criminal investigation

flag_scale_gavelAccording to a spokeswoman from the criminal division of the U.S. Department of Justice, a company’s willingness to investigate its own possible wrongdoing and to identify those responsible, counts tremendously in the agency’s prosecutorial decisions. Assistant Attorney General Leslie Caldwell told the Program on Corporate Compliance and Enforcement at New York University’s Law School that cooperation can, “significantly affect the length of the investigation and the costs incurred by the company. To receive cooperation credit, we expect companies to conduct appropriately tailored investigations designed to root out misconduct, identify wrongdoers and provide all available facts.” Read more…

Kidnap and ransom policies become necessary as demand figures cracks $1 billion mark

kidnap_ransomCrimes that involve kidnap and ransom have become a lucrative and prosperous practice with the rise of the Islamic State in the Middle East, and piracy in the Gulf of Guinea off the west coast of Africa. The scale of for these crimes can be massive, with media reports estimating global ransom demand figures above $1 billion per year. Crisis response firm Olive Group estimates that there are about 100,000 kidnappings every year, 40 percent of which involve a ransom demand.

Experts claim that most kidnappings go unreported because victims and their families fear retribution, or have been warned not to do so by the authorities or company responsible for securing the release. Chuck Regini, director of global response at crisis response company Unity Resources Group, states that approximately one in 10 kidnappings actually gets reported. He also warned that there has been a noticeable increase in the number of incidents over the past 10 years. In particular, he has seen a rise in kidnappings of foreigners working overseas this year across all business sectors and socioeconomic groups. As a result of this spike, premiums written in this area have risen, and at least 75 percent of Fortune 500 companies now hold Kidnap & Ransom (K&R) policies according to industry estimates. Read more…

Newman case continues to blur line of what is and is not insider trading

April 23, 2015 Leave a comment

The landmark December 2014 ruling in United States v. Newman by the United States Court of Appeals for the Second Circuit overturned the convictions of two hedge fund traders, Todd Newman and Anthony Chiasson. In early April, the Second Circuit denied reconsidering their ruling as requested by United States Attorney Preet Bharara. The government must now decide whether to appeal to the Supreme Court, and if they should depend on Congress adopting legislation for the first time that clearly provides a statutory definition of illegal insider trading.

These latest developments in the Newman case make it much more difficult for the government to prosecute individuals accused of insider trading. Prosecutors must now demonstrate that the defendant(s) alleged to have traded on confidential information leaked by a corporate insider: Read more…

5 reasons your private company should consider D&O insurance

5_D&OPrivate company leaders should not make the mistake in thinking they are protected from personal lawsuits simply because their company is not publicly traded. According to Chubb’s Private Company Risk Survey, 27% of private companies experienced a D&O lawsuit over the previous decade, compared to 33% of public companies. And in 2013, the cost of a lawsuit against a director or officer of a private company was an average of nearly $700,000. Despite such risks as costly lawsuits, government fines, and more, a large percentage of company leaders are not taking steps to protect themselves. So, before you write it off entirely, keep these 5 factors in mind.

  1. The threat of lawsuits
    Private companies are statistically less likely to be sued in comparison to public companies, but a few instances stand out:

    • Creditor suits. If your private company were to go bankrupt, there is a chance creditors could sue. D&O insurance would protect the personal assets of company leadership from these creditor lawsuits.

    Read more…