U.S. Supreme High Court Won’t Review InterMune CEO’s Conviction for Federal Wire Fraud

WASHINGTON, D.C. — (Mealey’s) U.S. Supreme Court on Dec. 16 declined to review the wire fraud conviction of the former chief executive officer of biotechnology company InterMune Inc. based on a press release about a drug clinical study that federal prosecutors allege was false and misleading...

What Are the Bad Guys Up to Now? Hacking Health-Care Records, Apparently

As if it were not bad enough that hackers are attacking retail businesses like Target and Neiman Marcus to obtain consumer credit card information, it turns out that the bad guys are also targeting health-care records. According to sources cited in a February 18, 2014 Wall Street Journal report entitled...

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...

U.S. Supreme Court Denies Hearing on Tax Duty of Bankrupt Airline Executive

WASHINGTON, D.C. — (Mealey’s) The U.S. Supreme Court today declined to hear a case in which the former chief financial officer of a bankrupt airline contended that he should not be personally liable for $8.5 million in federal excise taxes that were due when his company filed for bankruptcy...

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...

SEC Commissioner Aguilar Addresses Cybersecurity Oversight Responsibilities of Corporate Boards

In a June 10, 2014 speech entitled “Boards of Directors, Corporate Governance and Cyber-Risks: Sharpening the Focus” delivered at the New York Stock Exchange, SEC Commissioner Luis A. Aguilar highlighted the critical importance of the involvement of boards of directors in cybersecurity oversight...

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...