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Posts Tagged ‘D&O’

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…

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…

Planning an IPO? Pre-launch stage calls for critical D&O coverage

September 2, 2014 Leave a comment

ipo_2With IPO activity on pace to increase for the third consecutive year, (112 IPO’s completed in the first half of 2014 alone) the active market has encouraged an unprecedented number of companies, both large and small, to start planning an initial public offering. Yet as several recent cases have shown, many companies involved in the initial or “pre” IPO planning stage fail to consider the numerous liability risks and claims they face, well before they go public. Many may not realize the significance of the pre-IPO period and the exposures presented during this time, which often include organizational shifts, accounting and debt restructuring and other corporate changes. Pre-IPO activities, such as private placement agreements or pre-offering disclosures, can lead to claims from angry investors and others involved in the process if the company fails to launch its IPO. Read more…

Halliburton – another catalyst for increased Shareholder Derivative litigation?

February 12, 2014 Leave a comment

supremecourtShareholder derivative lawsuits have become increasingly problematic for both Directors’ & Officers’ Liability carriers and the companies they insure.  Their increased frequency has led to both an increase in losses paid by carriers, and to additional legal/settlement costs paid directly by companies on behalf of their directors and officers. Furthermore, the spike in these lawsuits has also led to higher premiums and self-insured retentions for many companies.

Unlike shareholder class-actions, which are brought against companies and their directors and officers by shareholders on their own behalf, derivative lawsuits are filed by shareholders on behalf of the company itself.  The concept is that any person/entity that has harmed the company’s share price should have to repay the company for their transgression . In practice, plaintiffs often bring derivative lawsuits in parallel Read more…

Duty to Defend/Non Duty to Defend – Do you understand the difference?

November 25, 2013 Leave a comment

smallclaimspixInsurance professionals frequently encounter “duty to defend” clauses in general liability policies and while handling third-party claims for clients.  However, insurers and policyholders are often less-familiar with the language surrounding “non duty to defend” provisions, especially those found in Director’s and Officer’s Liability (D&O) and Employment Practices Liability (EPL) policies.

The comparisons below describe the differences between the two clauses, and highlight the rights and duties of the insured and insurer in each type of case.

Duty to Defend: in a duty to defend policy, the insurer has the right and duty to defend a claim.  Read more…

Executive compensation litigation – nightmare or nuisance?

execLitigationv2Prologue — The Continuing Scourge of M&A Litigation

Resourceful plaintiffs’ lawyers are always on the hunt for strategies to extract quick payoffs from public companies. Mergers and acquisition (M&A) litigation has for the last couple of years provided a stylized and fairly predictable ritual for plaintiffs lawyers and public companies. Almost all the M&A claims are resolved prior to the deal’s closing, the plaintiffs’ lawyers are awarded fees based on a sliding scale of accomplishment (low-end: some additional disclosure; high-end: increased purchase price), and everyone goes home happy — except, in many cases, D&O insurers. D&O insurers have responded to the avalanche of M&A litigation — more than 90% of deals for more than $100M draw litigation — by imposing separate, higher M&A retentions that in typical deals will leave the insurers unscathed. While there is some anecdotal evidence of cases that continue beyond the deal’s closing and result in more expensive settlements, most selling companies that have undergone robust and thorough pre-deal processes Read more…