LexisNexis® Legal Newsroom
Liability Exposures of Audit Committee Chairs

One frequently asked question is whether members of a corporate board’s audit committee face heightened liability exposures. Two recent SEC enforcement actions seem to underscore that audit committee chairs do face liability exposures. Though both cases involve somewhat unusual circumstances, they...

Survey: Existing and Potential Bank Directors Unwilling to Serve Due to Fear of Personal Liability

Banking industry commentators have long contended that aggressive efforts by the FDIC and others to hold bank developers liable is having a chilling effect on the willingness of existing and potential directors to serve on bank boards. An April 2014 American Association of Bank Directors report of a...

Corporate Employment Practices and D&O Liability Exposure

I am sure most readers were as fascinated as I was by the allegations in the high profile case involving alleged hiring practices among some of the most prominent companies in Silicon Valley. The lawsuit asserted that the companies – including, for example, Apple and Google – had agreed among...

Looted Art, Provenance, and D&O Claims

The recent discovery in the Munich apartment of Cornelius Gurlitt of a massive trove of Nazi-looted art has drawn renewed attention to the fraught and murky world of art provenance – that is, the ownership history of art works, which can be critical for determining who holds proper title to the...

Corporate Shield Holds Up Against Creditor

There's no expression when speaking of football players to recognize a performance that hits three exceptional marks (like a hat trick in hockey or a triple double in basketball or the triple crown in baseball). Maybe there should be, because Jeff Bostic, who played twelve years in the NFL for...

Environmental Liability and D&O Exposure

Duke Energy, the largest provider of electricity in the United States, faces a number of challenges as it struggles to deal with the consequences of the February 2, 2014 coal ash spill at its Dan River Steam Station in Eden, North Carolina. In addition to the environmental remediation issues facing the...

Is Climate Change a D&O Insurance Issue?

In a series of letters sent to individual board members of various major energy companies and to a number of participants in the directors and officers liability insurance industry, three environmental groups contend that climate change denial by energy industry representatives presents a risk of personal...

Board Member Ouster For Catastrophic Incident?

Wouldn’t it be nice if you could be a board or board committee member without worry or concern? Well . . . you can’t unless you are oblivious to issues and risks, but of course you can and should endeavor to be proactive and ahead of the game; spot, obtain needed information about and deal...

D&O Insurance: Later Securities Suit and Prior FDIC Failed Bank Claim Held Unrelated, Securities Suit Not Covered

On May 8, 2014, Southern District of New York Judge Deborah Batts, applying New York law, held that a there was not a sufficient “factual nexus” between a securities suit filed after the expiration of a failed bank’s D&O insurance policy and an FDIC claim that had been first made...

D&O Insurance: Liberalization Endorsement Allows Insureds to Rely on New Policy Form’s Enhanced Insured vs. Insured Exclusion Carve-Back

On June 19, 2014, in a case involving so many unusual coverage issues that it seems more like a law school exam question than an actual coverage dispute, New York (New York County) Supreme Court Judge Melvin Schweitzer, applying New York law, granted summary judgment for the former directors of the bankrupt...

Georgia Supreme Court Affirms, Elucidates Business Judgment Rule – and Its Limitations

A recurring issue in FDIC litigation against the former directors and officers of failed banks has been whether the business judgment rule insulates the defendants from claims of ordinary negligence. This question has been particularly important in Georgia, where there were more bank failures than any...

Rural Metro and Joint Liability

Vice Chancellor Laster handed down an opinion on damages in the Rural Metro case. You'll remember in Rural Metro, RBC was found liable for aiding and abetting director violations of their fiduciary duties in connection with the sale of the corporation to Warburg Pincus. RBC worked hard to structure...

Dismissal Granted in Cyber Breach-Related Derivative Suit Filed Against Wyndham Officials

Along with the separate derivative lawsuit filed against Target Corporation’s board, the cyber breach-related derivative action filed against Wyndham Worldwide Corporation’s board has been closely watched as representative of a potential new area liability exposure for corporate directors...

O.K., So Here’s the First Ebola Outbreak-Related D&O Lawsuit

Like everyone else, I have been following the Ebola outbreak news with a mixture of horror and fascination. I never in a million years imagined that I would have occasion to write about the Ebola outbreak on this blog. Perhaps due to a lack of imagination on my part, I never foresaw that there might...

Largest Derivative Lawsuit Settlements

My post earlier this week about the $275 million Activision Blizzard shareholder derivative lawsuit settlement – and in particular my suggestion that the Activision settlement may be the largest derivative suit settlement ever – provoked an interesting flurry of emails and conversations about...

Insolvent Company Directors’ Duties to Creditors Under Delaware Law

A question that frequently recurs is whether or not directors of insolvent companies have fiduciary duties to creditors. Creditors often attempt to argue that as companies move into the “zone of insolvency,” directors’ duties move from the company’s shareholders to the company’s...

Will Investors Sue Over the Sony Hack Attack?

As I noted in my recent rundown of the top D&O stories of 2014, one of the most important developments during the year just finished was the emergence of cyber security as a D&O liability concern. During 2014, plaintiff shareholders launched cyber breach-related derivative lawsuits against the...

Fiduciary Duty as a Source of Board Focus for Long-Term Shareholder Value Creation

The fiduciary duties of members of corporate boards are usually invoked in connection with directors’ potential liability exposures. However, in their January 2015 Harvard Business Review article entitled “Where Boards Fall Short” ( here ), Dominic Barton , global managing director...

Should There Be More Litigation Against Corporate Officers? (Uh, No.)

Over the past fifteen years, there has been a steady progression of corporate scandals, from Enron to options backdating to the excesses that led to the global financial crisis. These debacles were followed by waves of shareholder litigation. However, according to one legal scholar, the shareholder lawsuits...

Navigating Circuit Split, District Court Finds Omission of Item 303 Disclosure Actionable Under Section 10(b)

One of the more interesting issues that has emerged recently in the securities litigation arena is the question of whether or not the alleged failure to make a disclosure required by Item 303 of Reg. S-K is an actionable omission under Section 10(b) and Rule 10b-5. The Ninth Circuit, in its October 2014...

An Alarming Liability Award Against Not-for-Profit Organization’s Directors and Officers

A question that frequently recurs when I am speaking to directors and officers of non-profit organizations is why – given that their firms have no shareholders – they need to bother with D&O insurance. The reality is that even though officials at non-profit firms don’t have to worry...

Bank Directors Facing Increased Regulatory Scrutiny, Raising Fears of Potential New Liability Exposures

Federal banking regulators have stepped up their interactions with and scrutiny of bank directors, according a recent Wall Street Journal article. The March 31, 2015 article, entitled “Regulators Intensify Scrutiny of Bank Boards” ( here ) details the ways in which regulators are “zeroing...

Another U.S. Securities Suit Arising From Overseas Corruption Investigation

In an earlier post , I noted that a significant factor driving securities litigation filings so far this year has been the rising number of U.S. securities lawsuits involving non-U.S. companies. A number of different factors are contributing to the filing of these suits, but among the factors is the...

Taking Control of Cybersecurity: A Practical Guide for Officers and Directors

Major cybersecurity attacks of increased sophistication — and calculated to maximize the reputational and financial damage caused to the corporate targets — are now commonplace. These attacks have catapulted cybersecurity to a top priority for senior executives and board members. To help...

Meanwhile, Back at the FDIC Failed Bank Litigation Ranch

As the global financial crisis has receded further into the past and as other issues have crowded to the top of the agenda, the remaining vestiges from the credit crisis have faded into the background. But though the peak of the crisis is now nearly seven years behind us, the crisis remnants continue...