FDIC Files First D&O Suit of Current Failed Bank Wave

On July 2, 2010, in what is as far as I am aware the first suit by the FDIC against former directors and officers of a failed bank as part of the current wave of bank failures, the FDIC as receiver of IndyMac filed a lawsuit in the Central District of California against four former officers of IndyMac's...

Free Download: Liability of Corporate Officers and Directors--Ch. 5.08-Executive Compensation

§ 5.08 Executive Compensation. For years shareholders have complained of the highly lucrative executive compensation arrangements maintained by their companies, and some complaints have found their way into the courts. Examples of such lawsuits include: Viacom shareholders initiated a derivative...

Free Download: Liability of Corporate Officers and Directors--Ch. 17.03-Guidelines: The Corporate Director's Guidebook

The governance legacy of the recent credit crisis is the importance of directors and officers effectively identifying, quantifying and managing the company's most important risks. A new discussion has been added which explains the purpose, importance and structure of an Enterprise Risk Management...

Securities Class Action Opt-Out Claims: A Growing Problem

Excerpt: The exposure to Insureds and their D&O insurers from securities class action lawsuits has escalated greatly over the last ten years. Much has been written about the explosion in the magnitude of settlements in those lawsuits. Unfortunately, this exposure is now getting even larger and...

Executive Protection: Indemnification and D&O Insurance - The Basics

My primary objective on this blog is to address important developments in with world of directors' and officers' liability as they occur. From time to time, however, readers contact me with more fundamental questions about executive liability and protection, particularly regarding the basics...

Free Download: Liability of Directors & Officers--Chapter 27 “Insurance: Side A Policies” § 27.02 Non-Indemnifiable Loss

New Chapter 27 explores the popularity of Side A D&O Insurance policies, which have skyrocketed in recent years. Many insured and insurers remain unclear as to how the policy should respond in various circumstances and what is the true exposure being covered under a Side A policy. This new chapter...

Lehman Bankruptcy, Defense Expenses, and D&O Insurance

The September 2008 collapse of Lehman Brothers resulted in the largest bankruptcy filing in U.S. history , as well as an explosion of litigation and regulatory actions and investigations. In the pending bankruptcy proceedings a recent motion by the debtor's counsel details the massive legal costs...

What to Watch Now in the World of D&O

Every fall since I first started writing this blog, I have assembled a list of the current hot topics in the world of directors' and officers' liability. This year's list is set out below. As should be obvious, there is a lot going on right now in the world of D&O, with further changes...

Some More Top Issues Lists for 2011

With the first week of the New Year just about over, I have come upon three more top issues lists for directors and management in 2011. Consider this an addendum to my Dec. 21 post . One list comes from the very prolific and opinionated Norman Marks of the Institute of Internal Auditors, a thought...

The Case for Professional Boards

If you want to improve governance at a corporation, do you need professional directors? Did SOX merely add a layer of legal obligations of board, and do little to improve the quality of those serving as directors? Robert C. Pozen makes the case in The Case for Professional Boards in the December...

Supreme Court Rejects "Statistical Significance" Requirement for Securities Suit Materiality

In a unanimous March 22, 2011 opinion by Justice Sonia Sotomayor , the U.S. Supreme Court rejected the argument of Matrixx Initiatives that adverse product reports must be "statistically significant" in order for a manufacturer to have an obligation to disclose the reports to investors....

High Court Rejects 'Statistical Significance' Requirement For Securities Lawsuit Materiality

In a unanimous March 22, 2011 opinion by Justice Sonia Sotomayor , the U.S. Supreme Court rejected the argument of Matrixx Initiatives that adverse product reports must be "statistically significant" in order for a manufacturer to have an obligation to disclose the reports to investors. As...

Merrill Lynch/BofA Subprime-Related "Double Derivative" Lawsuits Dismissed

In a March 29, 2011 order ( here ), Southern District of New York Judge Jed Rakoff granted the defendants' motions to dismiss a pair of subprime-related derivative lawsuits that had been brought against certain directors and officers of Merrill Lynch. Because the plaintiffs -- former shareholders...

Merrill Lynch/Bank of America Subprime-Related 'Double Derivative' Lawsuits Dismissed

In a March 29, 2011 order ( here ), Southern District of New York Judge Jed Rakoff granted the defendants' motions to dismiss a pair of subprime-related derivative lawsuits that had been brought against certain directors and officers of Merrill Lynch. Because the plaintiffs -- former shareholders...

U.S Supreme Court Addresses Materiality in Securities Fraud Case

In Matrixx Initiatives, the U.S. Supreme Court reaffirmed the case-by-case analysis for materiality that it espoused in Basic Inc. v. Levinson, but it may also have signaled that the pleading of materiality is subject to the standards found in Rule 8(a) of the Federal Rules of Civil Procedure and not...

Cadwalader Clients & Friends Memo: In Matrixx Decision the Supreme Court Rejects Bright-Line Materiality Test for Motions to Dismiss Securities Fraud Claims

On March 22, 2011, the United States Supreme Court, in a unanimous decision written by Justice Sonia Sotomayor, stated that the "materiality" element of a claim for securities fraud under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, "is satisfied...

Disclosure of "Material" Information To Shareholders: Matrixx v. Siracusano

Plaintiff attorney James M. Wilson, Jr. discusses the Supreme Court unanimous rejection of a pharmaceutical company's attempt to inject a bright line test to determine what "material" information is required to be disclosed to shareholders to avoid liability in federal securities litigation...

Securities Class Actions-Analysis of Supreme Court's Decision In Erica P. John Fund, Inc. v. Halliburton Co.

Excerpt: Introduction: On June 6, 2011, the Supreme Court unanimously rejected the Fifth Circuit Court of Appeal's requirement that plaintiffs in securities class actions prove "loss causation" at the class certification stage of the case. In order for investors to proceed as a class...

James M. Wilson Jr. On Securities Class Actions - Analysis Of The Supreme Court's Decision In Erica P. John Fund, Inc. v. Halliburton Co.

Excerpt: Introduction: On June 6, 2011, the Supreme Court unanimously rejected the Fifth Circuit Court of Appeal's requirement that plaintiffs in securities class actions prove "loss causation" at the class certification stage of the case. In order for investors to proceed as a class...

First HP Lawsuit on File

No surprise. The first derivative suit against HP and its board of directors was filed in the Central District of California. Here's the complaint: Espinoza v. Leo Apotheker et al . It was filed on Wednesday - before Apotheker was fired. So it's more concerned with Apotheker's recent...

More Woes for Companies with Chinese Connections

SciClone Settles FCPA Follow-on Derivative Suit : In a settlement that involves a company with significant Chinese operations -- and that also may represent something of a template for the settlement of FCPA enforcement follow-on civil lawsuits -- SciClone Pharmaceuticals and the individual defendant...

SciClone FCPA Lawsuit Settlement: New Enhanced Best Practices?

In a story in the D&O Diary , entitled " More Woes for Companies with Chinese Connections ", Kevin LaCroix discussed the settlement reached by the entity SciClone Pharmaceuticals, and its individual defendant directors and officers, in litigation involving three consolidated derivative...

Taking a Look at the Limits of Indemnification

Indemnification is the first and most important line of defense for the protection of directors and officers. But corporate officials are not always entitled to indemnification. For example, under Delaware law, they cannot claim mandatory indemnification if their defense is not successful. And they...

First Circuit: D&O Insurer Must Advance Failed Bank Directors and Officers’ Defense Expenses

In an interesting March 31, 2014 opinion ( here ), the Unites States Court of Appeals for the First Circuit, applying Puerto Rico law, affirmed a district court’s ruling that the D&O insurer for the failed Westernbank of Mayaguez, Puerto Rico must advance the bank’s former directors’...