Corporate

    • 5 Jan 2016

    2016 Proxy Guidelines Update: ISS and Glass Lewis

    Proxy advisory firms Institutional Shareholder Service (ISS) and Glass Lewis & Co. recently released their United States policy recommendations for the 2016 proxy season. ISS updated its policy recommendations to: • Tighten restrictions on overboarded directors by decreasing the number of boards on which directors may serve; • Discourage unilateral bylaw/charter amendments by continuing vote...
    • 17 Nov 2015

    Delaware Court of Chancery Enforces Covenant Not to Compete

    The Chancery opinion in Revolution Retail Systems, LLC v. Sentinel Technologies, Inc. , C.A. No. 10605-VCP (Del. Ch. Oct. 30, 2015), discusses many issues in connection with the breach of contract for the sale of a business [subscribers can access an enhanced version of this opinion: lexis.com | Lexis Advance ]. The sale involved an ongoing collaborative relationship. Although Texas law applied to many aspects of the...
    • 17 Nov 2015

    A Trio of Delaware Decisions Reaffirms Corporate Director Protections

    Because the vast majority of U.S. publicly traded companies are incorporated in Delaware, legal developments in Delaware have a particularly important impact on legal standards governing corporate conduct in the U.S. Delaware law is particularly influential with respect to the responsibilities and potential liability exposures of corporate directors. In a series of recent opinions written by Chief Justice Leo E. Strine...
    • 16 Nov 2015

    Friday FCPA Roundup for Week Ending November 13

    This article was reprinted with permission from FCPA Professor A plethora of scrutiny alerts and updates, dismissed, quotable, and for the reading stack. It’s all here in the Friday roundup. Scrutiny Alerts and Updates Crawford & Company The company, a “provider of claims management solutions to the risk management and insurance industry, as well as to self-insured entities, with an expansive...
    • 12 Nov 2015

    Up Next? Climate Change Disclosure and Corporate Liability Exposures

    The question whether concerns about climate change-related disclosures might lead to regulatory enforcement actions or even liability claims has been around for some time , but though the concerns have remained, the regulatory actions and liability claims have not really materialized. However, in the past week, the service of a subpoena on Exxon Mobil Corp. by New York Attorney General Eric T. Schneiderman has raised...
    • 9 Nov 2015

    The Burgeoning Uzbekistan Telecommunication Investigations

    This article was reprinted with permission from FCPA Professor For approximately two years, Dutch telecommunications company VimpelCom and Swedish telecommunications company TeliaSonera have been under scrutiny concerning its business practices in Uzbekistan (see here and here prior posts). The scrutiny has sort of flown under the radar, but recent events suggest that the scrutiny, as well as related scrutiny of...
    • 4 Nov 2015

    Rule 11 Sanctions (Again!) from the NC Business Court

    This month, for the second time in the last two months, Judge McGuire of the NC Business Court entered Rule 11 sanctions against a party whose attorney relied on inaccurate information from the client in making claims against the opposing party. This month's decision was in NC Bioremediation, LLC v. Sea Winds, LLC , 2015 NCBC 94 [subscribers can access an enhanced version of this opinion: lexis.com | Lexis Advance...
    • 4 Nov 2015

    The Next Step in Litigation Financing?

    In recent years, litigation financing has become an increasingly important –albeit controversial – part of the litigation landscape. The ongoing evolution of litigation financing now appears to have taken a significant next step, in the form of a formal, public partnership between the litigation funding firm and a plaintiffs’ law firm. On October 28, 2015, the litigation funding firm Burford Capital...
    • 3 Nov 2015

    The Pressing Need for Diligence in the FCPA Space

    This article was reprinted with permission from FCPA Professor In running FCPA Professor for over six years, I literally search for FCPA content every day. There is a lot of good stuff out there that is frequently highlighted on these pages. There is also a lot of not so good stuff out there and I have frequently lamented (see here , here , here and here ) about the pressing need for diligence in the FCPA space...
    • 3 Nov 2015

    New York Court Pans Merger Objection Lawsuit Disclosure-Only Settlement

    Delaware’s courts have recently made it clear that the days where they would routinely approve disclosure-only settlements in merger objection lawsuits may be over (as discussed here ). It now appears that other states also are no longer willing to approve these kinds of settlements. In a blistering October 23, 2015 opinion ( here ), New York (New York County) Supreme Court Judge Charles E. Ramos refused to approve...
    • 2 Nov 2015

    Layla and Other Love Songs and Risk Assessments

    On this date in October 1971, Duane Allman died. He was the co-founder, along with his brother Greg, of the Allman Brothers Band. For my money he was one of the greatest guitarists of all time. At the time of his death, the Allman Brothers had released their debut album, simply entitled The Allman Brothers , and a second studio album Idlewild South . They had also released arguably one of the top live albums of all-time...
    • 2 Nov 2015

    Delaware Court of Chancery Allows Advancement for Motion to Intervene by Former CEO

    The Delaware Court of Chancery, in the decision styled In re Genelux Corporation , C.A. No. 10612-VCP (Del. Ch. Oct. 22, 2015), determined that a former CEO and Chairman of the Board was entitled to advancement in connection with his Motion to Intervene in a proceeding in which the corporation was a party and in which actions he had taken as the CEO were being challenged, and the election of directors was also being contested...
    • 28 Oct 2015

    Ninth Circuit: Embezzler Executive’s Knowledge Can Be Imputed to Company in Innocent Third Party-Filed Securities Suit

    For purposes of determining the scienter of a corporate entity defendant under the federal securities laws, a company’s executives’ knowledge generally is imputed to company. There is an exception to these general principles – the “ adverse interest exception ” – which provides that an executive’s knowledge will not be imputed to the company if the executive acted for his or her...
    • 27 Oct 2015

    Are You Ready? Five Key Cybersecurity Battlefronts.

    “No foreign nation, no hacker, should be able to shut down our networks, steal our trade secrets, or invade the privacy of American families. . . . I urge this Congress to finally pass the legislation we need to better meet the evolving threat of cyber attacks, combat identity theft, and protect our children’s information.” —President Obama’s 2015 State of the Union Address This clarion...
    • 26 Oct 2015

    D&O Insurance: Two Federal Appellate Courts Issue Rulings Confirming Carriers’ Coverage Denials

    When I started out as a law firm associate doing D&O insurance coverage work more than three decades ago, there was virtually no interpretive case law available. Legal research in connection with D&O insurance tended to be a meagre, frustrating process. Things have changed so much in the interim that now we can have two appellate decisions from two different federal circuit courts on D&O insurance issues in...
    • 23 Oct 2015

    The “Myth” of Outside Director Liability and the Critical Importance of D&O Insurance

    In the world of corporate governance, there are a number of common presumptions about board structure and practices. However, according to a recent paper, many of these presumptions may in fact represent corporate governance “myths.” In their September 30, 2015 paper entitled “Seven Myths of Boards of Directors” ( here ) Stanford Business School Professor David Larcker and Resercher Brian Tayan...
    • 22 Oct 2015

    Money Laundering Allegations and Follow-On Securities Litigation

    In the wake of the 9/11 terrorist attacks, Congress enacted or expanded a number of laws regarding the global financial system in order to combat money laundering and promote national security. As I have noted in prior post (most recently here ), regulatory enforcement activity under these laws represents a potentially significant new area of potential D&O exposure. In addition, as a recently filed securities class...
    • 21 Oct 2015

    Delaware Court of Chancery Dismisses Challenge to Board Decision to Settle Claims

    In Shaev v. Adkerson , C.A. No. 10436-VCN (Del. Ch. Oct. 5, 2015), the Delaware Court of Chancery dismissed claims for breach of fiduciary duty including the disclosure obligations of the board which granted stock units valued at approximately $35 million in connection with its decision to settle potential claims that could have been brought for more than $46 million [subscribers can access an enhanced version of this...
    • 21 Oct 2015

    SEC Enforcement Actions Against Outside Directors

    From time to time, the SEC reiterates its view of the critical gatekeeper role companies’ outside directors play in safeguarding investors’ interests. Nevertheless, it has been relatively rare for SEC to pursue enforcement actions against outside directors based on an alleged failure to fulfill that role. But while these actions are rare, the agency does periodically bring enforcement actions against directors...
    • 14 Oct 2015

    Compliance at the Tipping Point, Part III – The VW Emissions-Testing Scandal

    I continue my series on why I believe that compliance is at the ‘Tipping Point’ with a discussion of the Volkswagen (VW) emissions-testing scandal and its effect on the greater compliance world. Myself and many other commentators have written about the VW scandal from a variety of angles, which I will not repeat here, except to note that the VW emissions-testing scandal was not a failure of the company’s...
    • 14 Oct 2015

    Big News Out of Delaware: Tamika Montgomery-Reeves Nominated for Vice Chancellor

    Gov. Markell has announced the nomination of Tamika Montgomery-Reeves , a Wilson Sonsini partner, to replace retiring Vice Chancellor Donald Parsons. Ms. Montgomery-Reeves will be the first African-American to serve as Vice Chancellor in the Chancery Court and the first woman since Justice Carolyn Berger was elevated to the Supreme Court in 1994. Ms. Montgomery-Reeves recently represented the defendants in the Riverbed...
    • 12 Oct 2015

    Game Over?: Del. Chancery Court Rejects Disclosure-Only Settlement in H-P/Aruba Networks Merger Objection Lawsuit

    Stating his belief that merger objection litigation dynamic represents a “systemic” problem that has resulted in a “misshapen legal system,” Delaware Chancery Court Vice Chancellor Travis Laster rejected the proposed disclosure-only settlement of litigation that had been filed objecting to Hewlett-Packard’s $2.7 billion acquisition of Aruba Networks. In an October 9, 2015 settlement hearing...
    • 9 Oct 2015

    A Guide to Directors’ Duties and Liabilities in Europe

    One of the vestiges of the global financial crisis is that company directors and officers now face more scrutiny than ever. This scrutiny, in turn, has led to a greater liability exposure for corporate officials, as well. This increased scrutiny and amplified liability exposure applies not only in the U.S., but in other countries, including, in particular, in Europe, according to a recent report. The report, issued earlier...
    • 8 Oct 2015

    The Sound of Glass Cracking in Delaware

    Delaware Gov. Markell is about to announce his nomination to replace Vice Chancellor Parsons who announced his retirement this past summer. Here's the thing. The Chancery Court has not had a female chancellor since Vice Chancellor Berger left the court to join the Supreme Court in 1994. Now, according to press reports Gov. Markell is considering three nominees - all women: According to sources, the candidates are...
    • 7 Oct 2015

    Defense Costs Paid Under Reservation of Rights Do Not Erode Fiduciary Liability Policy’s Limit of Liability?

    As part of our beat here at the The D&O Diary , we read a lot of judicial opinions. We are quite accustomed to the fact that the case outcomes can be and often are all over the map. Just the same, every now and then we read a decision that really makes us scratch our heads. That was our reaction when we read Southern District of Mississippi Chief Judge Louis Guirola, Jr.’s October 2, 2015 opinion in the Singing...