Navigating today’s complex risk environment can be a monumental task. Steve Shappell, Alliant Claims & Legal, spearheads Executive Liability Insights, a monthly review of news, legal developments and information on executive liability, cyber risk, employment practices liability, class action trends and more.
Table of Contents
U.S. SUPREME COURT SAYS RETIREMENT PLAN SPONSORS HAVE DUTY TO MONITOR AND IMPROVE INVESTMENT OPTIONS
Hughes v. Northwestern Univ., No. 19-1401 (U.S. Jan. 24, 2022)
Participants of a university’s defined contribution retirement plans filed suit against their employer, alleging plan fiduciaries breached their duty of prudence under the Employee Retirement Income Security Act (“ERISA”).
Read More >>
COURTS TAKE SPACS TO TASK IN SECURITY CLAIMS INVOLVING MISREPRESENTATIONS
2021 saw a surge of special purpose acquisition company (“SPAC”)-related securities litigation, and while we wait on tenterhooks for most of these cases to make their way through the courts, three recent decisions out of Delaware, California, and New York may be an omen of what is to come.
Read More >>
DELAWARE SUPREME COURT UPHOLDS DISMISSAL OF SHAREHOLDER SUIT CHALLENGING PRE-IPO INSIDER STOCK DEAL
In Re: SmileDirectClub Inc. Derivative Litig., No. 205,2021 (Del. Jan. 6, 2022)
In the underlying action, shareholders of a teledentistry company filed a derivative lawsuit alleging unjust enrichment arising from an arrangement for insiders to sell stock units at a fixed price after the completion of the company’s initial public offering (“IPO”).
Read More >>
COURT LIMITS DISCRETION OF DELAWARE CORPORATIONS’ FORUM SELECTION BYLAWS FOR DERIVATIVE CLAIMS
Seafarers Pension Plan v. Bradway, No. 20-2244 (7th Cir. Jan. 7, 2022)
A shareholder of a Delaware corporation filed a derivative lawsuit in federal court under the Securities Exchange Act of 1934 (“Exchange Act”), alleging the company’s board and its officers made materially false and misleading public statements in proxy materials relating to the development and operation of an aircraft the company manufactured.
Read More >>
BREACH OF CONTRACT EXCLUSION IN E&O POLICY BARS COVERAGE FOR TRAVEL AGENCY’S ARBITRATION WITH VENDOR
Global Travel Int’l Inc. v. Mt. Vernon Fire Ins. Co., No. 6:21-cv-00716 (M.D. Fla. Dec. 21, 2021)
A travel agency notified its customers it was unable to meet its contractual obligations due to embezzlement on the part of one of its employees.
Read More >>
DELAWARE COURT FINDS APPRAISAL ACTION DOES NOT CONSITUTE “SECURITIES CLAIM” UNDER D&O POLICY
Stillwater Mining Co. v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA, No. N20C-04-190 (Del. Super. Ct. Dec. 22, 2021)
This coverage litigation arose out of an appraisal action in which shareholders of a Montana-based mining company sought a judicial determination as to the fair value of their shares after a proposed merger between the company and a South African mining company.
Read More >>
INSURER’S BID TO RESCIND EXCESS PROFESSIONAL LIABILITY POLICY CAN MOVE FORWARD
Ironshore Specialty Ins. Co. v. Univ. of S. Cal., et al., No. 2:2021cv01272 (C.D. Cal. Jan. 21, 2022)
A California federal judge recently held that an insurer can proceed with its action to rescind a university’s excess health care professional liability insurance policy for failure to disclose potential claims arising out of allegations of sexual misconduct made against a gynecologist employed by the university.
Read More >>
MULTIPLE D&O POLICY YEARS POTENTIALLY TRIGGERED BY SERIES OF LAWSUITS
Benefytt Techs. v. Capitol Specialty Ins. Corp., No. N21C-02-143 PRW CCLD (Del. Super. Ct. Jan. 3, 2022)
A health insurance technology company tendered a series of securities class actions and derivative complaints under its directors and officers liability (“D&O”) insurance program in place at the time the suits arose.
Read More >>
D&O INSURER HAS DUTY TO DEFEND AND INDEMNIFY HOA IN NUISANCE CLAIM
The Crosby Estate at Rancho Santa Fe Master Ass’n. v. Ironshore Specialty Ins. Co., No. 19-cv-2369-WQH-NLS (S.D. Cal. Jan. 6, 2022)
A homeowners association (“HOA”) was sued by a neighboring community for breaching its duties under a written easement agreement, which required that the HOA repair, maintain, and enforce the speed limits on a road owned by the neighboring community.
Read More >>
CYBER CORNER
Click to read the following cases:
- WAR EXCLUSION IN “ALL RISKS” PROPERTY POLICY INAPPLICABLE TO CYBER LOSS
- HEALTH INSURER SCORES TEMPORARY VICTORY IN DATA BREACH CASE
Read More >>
EPL CORNER
Click to read the following case:
- EMPLOYMENT-RELATED PRACTICES EXCLUSION IN BUSINESSOWNERS POLICY BARS COVERAGE FOR BIPA SUIT
Read More >>
SEC CORNER
Click to read the following cases:
- SEC’S SHADOW TRADING CASE MOVES FORWARD
- SEC PROPOSES NEW DISCLOSURE MANDATES FOR PRIVATE MARKET PARTICIPANTS
- SEC STARTS 2022 WITH SIGNIFICANT WHISTLEBLOWER AWARDS
Read More >>
SHAREHOLDER CORNER
SECURITIES CLASS ACTION FILINGS DECLINE IN 2021
In 2021, there were 218 new securities class action filings in federal and state court, a 35% decrease from 2020 and nearly 5% below the 1997-2020 average of 228.
Read More >>
U.S. SUPREME COURT SAYS RETIREMENT PLAN SPONSORS HAVE DUTY TO MONITOR AND IMPROVE INVESTMENT OPTIONS
Hughes v. Northwestern Univ., No. 19-1401 (U.S. Jan. 24, 2022)
Participants of a university’s defined contribution retirement plans filed suit against their employer, alleging plan fiduciaries breached their duty of prudence under the Employee Retirement Income Security Act (“ERISA”).
According to the plaintiffs, in addition to failing to control the fees the plans paid for recordkeeping services, the plans included only high-cost “retail” plans instead of offering identical low-cost “institutional” plans, and offered too many investment options.
The Seventh Circuit rejected the plan participants’ claims on the grounds that at least some of the options the plans offered were adequately well-designed to satisfy the university’s obligation of prudence and care. The U.S. Supreme Court, however, disagreed with the Seventh Circuit’s dismissal of the claims, finding it erred in relying on the participants’ ultimate choice over their investments to justify allegedly imprudent decisions by plan fiduciaries.
In a unanimous opinion, Justice Sotomayor noted that fiduciary duty includes a “continuing duty … to monitor investments and improve imprudent ones.” Since plan fiduciaries “are required to conduct their own independent evaluation to determine which investments may be prudently included in the plan’s menu of options,” Sotomayor wrote, the fiduciaries fall short if they “fail to remove an imprudent investment from the plan within a reasonable time.” The Court did, however, add a caveat, stating that “[a]t times, the circumstances facing an ERISA fiduciary will implicate difficult tradeoffs, and courts must give due regard to the range of reasonable judgments a fiduciary may make based on her experience and expertise.”
Recently, in Goodman v. Columbus Reg’l Healthcare Sys., the first decision since the Supreme Court issued its ruling in Hughes, a federal district court declined to dismiss investment management fee claims brought by participants of an employer sponsored defined contribution plan. In its ruling, the court noted Hughes “suggested” a plan participant may state a prudence claim by merely alleging the plan offered higher priced retail class mutual funds over identical lower-cost institutional classes of the same funds. Like in Hughes, the district court also held that merely giving participants a choice over their investments does not relieve a fiduciary of the ongoing duty to monitor plan investments.
The Takeaway
While the Supreme Court’s decision in Hughes confirmed that the duty of prudence applies to all investment selection and monitoring, it failed to address the applicable pleading standard for bringing an ERISA fiduciary imprudence claim in connection with the management of a defined contribution plan. Nevertheless, if Goodman is any clue of what is to come, it seems likely that the Court’s decision in Hughes will embolden the plaintiffs’ bar when it comes to bringing ERISA claims.
COURTS TAKE SPACS TO TASK IN SECURITY CLAIMS INVOLVING MISREPRESENTATIONS
Multiple Cases
2021 saw a surge of special purpose acquisition company (“SPAC”)-related securities litigation, and while we wait on tenterhooks for most of these cases to make their way through the courts, three recent decisions out of Delaware, California, and New York may be an omen of what is to come.
- In re Multiplan Corp
In re QuantumScape
- SL Globetrotter, L.P. v. Suvretta Cap. Mgmt., LLC
The Takeaway
These decisions may have serious implications for SPAC sponsors, directors and officers, and other stakeholders. As a result, such entities and individuals could face greater difficulty obtaining insurance coverage, let alone at a reasonable cost.
DELAWARE SUPREME COURT UPHOLDS DISMISSAL OF SHAREHOLDER SUIT CHALLENGING PRE-IPO INSIDER STOCK DEAL
In Re: SmileDirectClub Inc. Derivative Litig., No. 205,2021 (Del. Jan. 6, 2022)
In the underlying action, shareholders of a teledentistry company filed a derivative lawsuit alleging unjust enrichment arising from an arrangement for insiders to sell stock units at a fixed price after the completion of the company’s initial public offering (“IPO”).
The shareholders filed suit after learning insiders received a higher cash-out price than what was ever available to the public shareholders who participated in the IPO. According to the complaint, the board failed to act in the shareholders’ best interests and unjustly benefitted as a result. Notably, shortly after the IPO, share prices tumbled when it was announced the company was facing litigation due to alleged improper licensing of its professionals. Securities class action litigation also ensued.
Recently, the Delaware Supreme Court upheld the Delaware Court of Chancery’s dismissal of the derivative action, in which the lower court found the insider stock deals were sufficiently detailed in pre-IPO disclosures, and therefore, all material terms were set before the plaintiffs ever became shareholders. Accordingly, the Chancery Court held the shareholders lacked standing. In order “to challenge the insider transactions, plaintiffs must establish that they were [stockholders] when the board established the insider transactions’ terms,” the court noted, “but they could not do so in this instance due to the timing of their own purchases.”
The Takeaway
Pre-IPO disclosures are critical tools in combatting frivolous shareholder litigation that seeks to undermine the decision making of corporate boards. Sufficiently descriptive and transparent pre-IPO disclosures will present challenges for plaintiffs’ firms and should minimize the risk of derivative litigation.
COURT LIMITS DISCRETION OF DELAWARE CORPORATIONS’ FORUM SELECTION BYLAWS FOR DERIVATIVE CLAIMS
Seafarers Pension Plan v. Bradway, No. 20-2244 (7th Cir. Jan. 7, 2022)
A shareholder of a Delaware corporation filed a derivative lawsuit in federal court under the Securities Exchange Act of 1934 (“Exchange Act”), alleging the company’s board and its officers made materially false and misleading public statements in proxy materials relating to the development and operation of an aircraft the company manufactured.
Ordinarily, the Exchange Act confers exclusive jurisdiction upon federal courts in derivative cases; however, a company bylaw provided that “unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for … any derivative action or proceeding brought on behalf of the Corporation.” Citing this provision of the bylaws, the trial court dismissed the matter for lack of jurisdiction, and the shareholders appealed.
The Seventh Circuit disagreed with the lower court, holding that “applying the forum bylaw to this case is contrary to Delaware corporation law and federal securities law.” The court further noted that while Delaware law affords corporations a fair degree of latitude in writing bylaws, they must still defer to federal securities law and not use their bylaw to effectively “opt out” of the Exchange Act.
BREACH OF CONTRACT EXCLUSION IN E&O POLICY BARS COVERAGE FOR TRAVEL AGENCY’S ARBITRATION WITH VENDOR
Global Travel Int’l Inc. v. Mt. Vernon Fire Ins. Co., No. 6:21-cv-00716 (M.D. Fla. Dec. 21, 2021)
A travel agency notified its customers it was unable to meet its contractual obligations due to embezzlement on the part of one of its employees.
As a result, the travel agency’s credit card processor (“CCP”) refunded the customers. The travel agency then asserted it was unable to reimburse the CCP due to the embezzlement. When the CCP commenced arbitration to recoup the fees it had refunded, the travel agency reported the matter to its professional liability (“E&O”) insurer, which denied coverage.
In the ensuing coverage litigation, the court held the E&O insurer had no duty to defend the travel agency, finding the issue at arbitration fell within the policy’s exclusion for matters arising out of a breach of contract. The exclusion precluded coverage for “Loss or Claim Expenses on account of any Claim [arising] out of, directly or indirectly resulting from or in consequence of or in any way involving actual or alleged contractual liability [including] any breach of written contract.” Although the exclusion did not apply to unintentional acts, the court found that lacking sufficient funds to pay did not render the travel agency’s breach unintentional such that it would fall outside the scope of the exclusion.
The Takeaway
It bears noting that the travel agency’s contract with the CCP did not involve the delivery of travel agent services. As such, the agency’s E&O policy was not designed to cover this type of agreement. Claims alleging breaches of contract are typically excluded from coverage unless they would be covered in the absence of such contract or otherwise fall within the scope of the professional services the policy is intended to cover.
DELAWARE COURT FINDS APPRAISAL ACTION DOES NOT CONSITUTE “SECURITIES CLAIM” UNDER D&O POLICY
Stillwater Mining Co. v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA, No. N20C-04-190 (Del. Super. Ct. Dec. 22, 2021)
This coverage litigation arose out of an appraisal action in which shareholders of a Montana-based mining company sought a judicial determination as to the fair value of their shares after a proposed merger between the company and a South African mining company.
After incurring tens of millions of dollars defending the appraisal action, the company sought indemnification from its directors and officers liability (“D&O”) insurance. The primary insurer declined coverage, arguing the appraisal action was not a “Securities Claim” under the policy and no covered “Wrongful Act” was alleged. “Securities Claim” was defined as “a Claim … alleging a violation of any law, rule or regulation, whether statutory or common law.”
In the ensuing litigation, the company argued the insurers had a duty to indemnify because the matter constituted a claim brought by stockholders alleging the company violated Delaware, or in the alternative, Montana law by negotiating and entering into the merger for “inadequate consideration based on an improper sale process and seeking damages in the form of fair value of their shares.” The insurers argued that Delaware law, rather than Montana law, applied and therefore the company’s claim was barred. The insurers cited the Delaware Supreme Court ruling in In re Solera Ins. Coverage Appeals, in which the court held that an appraisal action does not constitute a claim for a “violation of law” and therefore was not a “securities claim” under the D&O policy at issue.
The Delaware Superior Court found that the state of Delaware, rather than Montana, had the most significant relationship to the parties because the mining company was incorporated in Delaware and the state’s corporate law focus meant that it had a strong interest in the scope and applicability of coverage. The court also found the policy’s plain terms afforded coverage for the company only for a “Securities Claim” specifically alleging a “violation of law.” Since an appraisal action did not constitute a claim alleging a “violation of law,” as decided by Solera, the court found in favor of the insurers.
The Takeaway
The decision here is an exception to the pro-policyholder decisions coming out of the Delaware courts as of late. Moreover, as this case exemplifies, the definition of “Securities Claim” is of critical importance in a D&O policy, where a properly worded provision can mean the difference between full coverage and the time and expensive of coverage litigation.
INSURER’S BID TO RESCIND EXCESS PROFESSIONAL LIABILITY POLICY CAN MOVE FORWARD
Ironshore Specialty Ins. Co. v. Univ. of S. Cal., et al., No. 2:2021-cv-01272 (C.D. Cal. Jan. 21, 2022)
A California federal judge recently held that an insurer can proceed with its action to rescind a university’s excess health care professional liability insurance policy for failure to disclose potential claims arising out of allegations of sexual misconduct made against a gynecologist employed by the university.
According to the complaint, the university was made aware of the misconduct after concerns were raised over the doctor’s interactions with patients. The university subsequently opened an internal investigation into the matter, and a year later, after the investigation concluded the doctor had violated the university’s policies on sexual and racial harassment, he was terminated. The following month, the insurer issued a follow form excess health care professional liability policy to the university. Despite having previously provided its insurers with periodic reports of claims and incidents that might result in claims, the university failed to disclose the facts and allegations surrounding its investigation of the doctor during the renewal process.
Several months later, after the university was forced to make a public statement following the publication of an article concerning the allegations made against the doctor, multiple lawsuits were filed by former patients against the doctor and the university. The university sought coverage for the suits from its health care professional liability tower of insurance. After paying its full limits toward the federal class action settlement, the insurer filed a coverage action seeking to rescind its policy, claiming the university concealed the facts regarding the doctor’s misconduct.
The court found the excess insurer sufficiently pled that the university “either reasonably believed or, at minimum, should have known that the allegations” against the doctor were material to the insurer’s assessment of the risk and issuance of the excess policy. Despite the fact that the insurer’s “application did not specifically ask about the information pertaining to [the doctor], a failure to inquire is not necessarily dispositive on the question of materiality,” the judge noted, adding it was “plausible that [the university] deviated from its practice of providing updated incident reports because it knew [the insurer] would deny coverage if such facts were disclosed.”
The Takeaway
As this case demonstrates, warranties, as well as facts and circumstances, are critical issues for coverage. Failure to disclose potential matters could ultimately lead to millions of dollars in lost coverage.
MULTIPLE D&O POLICY YEARS POTENTIALLY TRIGGERED BY SERIES OF LAWSUITS
Benefytt Techs. v. Capitol Specialty Ins. Corp., No. N21C-02-143 PRW CCLD (Del. Super. Ct. Jan. 3, 2022)
A health insurance technology company tendered a series of securities class actions and derivative complaints under its directors and officers liability (“D&O”) insurance program in place at the time the suits arose.
The insurers accepted coverage and the claims ultimately settled within the first two layers of insurance. Subsequently, the company was named as a defendant in a consumer class action and another securities class action, and these new lawsuits were tendered under the D&O program for the new policy period. Several excess insurers on the new D&O program denied coverage on the grounds that the new suits constituted “Related Claims” and therefore coverage would fall to the prior program under which the first suits was noticed. Coverage litigation ensued.
The second excess insurer under the older program stood to benefit if the court determined both policy periods were implicated and the two sets of claims were unrelated. Accordingly, the second excess insurer took the position that since the settlement of the earlier cases was below its attachment point, it had no further obligation to provide coverage. The court, however, disagreed, noting that the result of the subject coverage dispute would ultimately determine whether the excess insurer’s policy was impacted. Therefore, the court held that since it was reasonably likely that the excess policy could be triggered, the second excess insurer could not be dismissed from the case.
The Takeaway
Related claim analysis is critical where multiple lawsuits, investigations, or demands are involved. If the claims are considered related, then the policyholder only has to pay one self-insured retention and has one insurance tower to use to pay covered loss. If, on the other hand, the claims are considered unrelated, the policyholder must pay two separate retentions but can then use available insurance limits for both implicated programs, perhaps doubling the amount of available insurance.
D&O INSURER HAS DUTY TO DEFEND AND INDEMNIFY HOA IN NUISANCE CLAIM
The Crosby Estate at Rancho Santa Fe Master Ass’n. v. Ironshore Specialty Ins. Co., No. 19-cv-2369-WQH-NLS (S.D. Cal. Jan. 6, 2022)
A homeowners association (“HOA”) was sued by a neighboring community for breaching its duties under a written easement agreement, which required that the HOA repair, maintain, and enforce the speed limits on a road owned by the neighboring community.
The matter ultimately resulted in a judgment against the HOA. Several years later, the neighboring community brought a second suit, this time alleging the HOA breached the easement agreement by intentionally destroying and removing speedbumps. The complaint also alleged a concerted effort by residents to honk horns when driving by speedbumps, which interfered with the neighboring community members’ rights to “quiet use and enjoyment” of the property. The neighboring community later amended its complaint to include acts of littering by the residents, which included throwing food and trash from their cars. After the community filed a second amended complaint against the HOA, the matter was settled.
The HOA sought coverage under its not-for-profit directors and officers liability (“D&O”) policy. The insurer initially issued a denial based on several policy exclusions, but later agreed to defend the HOA under a reservation of rights. After the neighboring community amended its complaint, however, the HOA filed a breach of contract and bad faith action against its insurer.
Finding in favor of the HOA, the court held the insurer breached the terms of the policy by failing to defend its insured from the date of the original tender. According to the court, the allegations in the original complaint in the underlying action, which was the operative complaint at the time of tender, triggered the insurer’s duty to defend. The insurer argued that the noise allegations were excluded from coverage by the policy’s pollution exclusion, but the court disagreed with that contention, finding the insurer breached its duty to defend.
The HOA then filed an amended complaint against its insurer containing additional factual allegations. The insurer attempted to argue that the underlying second amended complaint released it from its defense and indemnity obligations. According to the insurer, the second amended complaint arose from the insured’s alleged destruction of the neighboring community’s property and duties under the easement agreement, which were both precluded from coverage by the policy’s exclusions for property damage and breach of contract. Moreover, the insurer argued the entire underlying action related back to the initial lawsuit, and as such, coverage was barred by the policy’s prior acts exclusion.
The court disagreed with the insurer, noting it was not clear that the potential for coverage no longer existed upon the filing of the second amended complaint. In rejecting the insurer’s arguments, the court first determined the property damage exclusion did not apply, finding the subject allegations did not pertain to damage or destruction of tangible property. Moreover, since the relief sought in the underlying action could have existed irrespective of the easement, the court held the policy’s breach of contract exclusion did not bar coverage. Turning its analysis to the prior acts exclusion, the court determined the initial action did not include any allegations regarding noise or throwing food and trash, and as such, was not related to the underlying action, which had been filed after the prior acts date. Lastly, the court found that the settlement of the second matter was not limited to claims asserted in the second amended complaint and did not attribute any settlement payment to any specific claim. Thus, no allocation was necessary.
Cyber Corner
WAR EXCLUSION IN “ALL RISKS” PROPERTY POLICY INAPPLICABLE TO CYBER LOSS
Merck & Co. Inc., et al. v. ACE Am. Ins. Co., et al., No. UNN-L-2682-18 (N.J. Super. Ct. Jan. 13, 2022)
This matter arose after a pharmaceutical company was the victim of a cyberattack in which its computer systems were infected by malware, causing more than $1.4 billion in damage.
HEALTH INSURER SCORES TEMPORARY VICTORY IN DATA BREACH CASE
In re: Horizon Healthcare Servs., Inc. Data Breach Litig., No. 2:13-CV-07418 (D.N.J. Dec. 21, 2021)
A federal judge recently dismissed a lawsuit seeking class action status, which arose out of the theft of two company computers from a health insurer’s headquarters several years previously, and its subsequent notice to plan members that personally identifiable information may have been compromised as a result.
EMPLOYMENT-RELATED PRACTICES EXCLUSION IN BUSINESSOWNERS POLICY BARS COVERAGE FOR BIPA SUIT
Am. Family Mut. Ins. Co. S.I. v. Caremel Inc., No. 1:20-cv-00637 (N.D. Ill. Jan. 7, 2022)
A fast-food chain operator with multiple locations in Illinois was sued in a putative class action by one of its employees for allegedly violating the Illinois Biometric Information Privacy Act (“BIPA”) in collecting his and other employees' fingerprints to track work hours without their consent.
SEC Corner
SEC’S SHADOW TRADING CASE MOVES FORWARD
SEC v. Panuwat, No. 4:21-cv-06322-WHO (N.D. Cal., Jan. 14, 2022)
In furtherance of his role in business development for a mid-cap biopharmaceutical company, an employee received non-public information concerning the company’s merger discussions.
SEC PROPOSES NEW DISCLOSURE MANDATES FOR PRIVATE MARKET PARTICIPANTS
SEC STARTS 2022 WITH SIGNIFICANT WHISTLEBLOWER AWARDS
January 2022 Noteworthy Enforcement Actions Filed
|
Director/Officer |
Role |
Company |
|
George K. Witherspoon |
President |
Bóveda Asset Management, Inc. |
|
Paul A. Garcia |
CFO |
Gold Hawgs Development Corp. |
January 2022 Noteworthy Settlements and Judgments
|
Amount |
Director/Officer |
Role |
Company |
|
$6,086,547.00 |
Gary Pryor |
CEO |
ZipRemit, Inc.; Lendaily, Inc. |
|
$800,712.00 |
Nicole Birch | Former CEO | Transatlantic Real Estate, LLC |
|
$270,000.00 |
Ajay Tandon | CEO | SeeThruEquity, LLC |
|
$250,000.00 |
Amit Tandon | Director of Research | SeeThruEquity, LLC |
|
$9,700.00 |
Vincent Petrescu | CEO | TruCrowd, Inc. |
Source: U.S. Securities and Exchange Commission
Shareholder Corner
SECURITIES CLASS ACTION FILINGS DECLINE IN 2021
In 2021, there were 218 new securities class action filings in federal and state court, a 35% decrease from 2020 and nearly 5% below the 1997-2020 average of 228. According to Cornerstone Research’s “Securities Class Action Filings–2021 Year in Review,” federal M&A and core federal Rule 10b-5 filings without Section 11 allegations had their largest percentage declines in the last decade. Federal class action filings involving M&A transactions with Section 14 claims decreased by 82% in 2021 to just 18, compared to 99 in 2020. Plaintiff’s lawyers continued to file merger objection suits, but filed them as individual actions rather than class actions, causing the class action number to decline while overall litigation activity remained largely unchanged.
Conversely, core filings related to special purpose acquisition companies (“SPACs”) saw a major rise, with 32 such filings in 2021 compared to just 5 in 2020. Significantly, 34% of SPAC filings in 2021 involved the auto industry. Despite nearly all SPAC filings in 2019 being M&A filings, all but 1 SPAC filing in 2021 contained Rule 10b-5 allegations, a trend that continued from 2020.
JANUARY 2022 SECURITIES CLASS ACTION FILINGS
Goldman Sachs Group Inc.
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Claims Attorney
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Claims Advocate
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Claims Attorney
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Senior Claims Advocate
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Senior Claims Advocate
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Robert Aratingi
Senior Claims Advocate
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Robert Hershkowitz, Esq.
Claims Attorney
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Steve Levine, Esq.
Claims Attorney
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Vanessa Gonzalez
Senior Claims Advocate
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