D&O Liability

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Section 984 of the “Discussion Draft” of the new financial regulation legislation sponsored by Senate Banking Committee Chairman Christoper Dodd (D-Conn) proposes to amend the Private Securities Litigation Reform Act of 1995 (“PSLRA”) to allow investors a private right of action to sue “any person that knowingly or recklessly provides substantial assistance to another person in violation of [the Securities Exchange Act of 1934].” 

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Read More Proposed Financial Regulation Bill Would Allow Investors to Sue “Aiders and Abettors”

The U.S. Court of Appeals for the First Circuit recently held that coverage under a directors and officers liability insurance policy is not available for claims against unnamed officers or directors. 

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Read More First Circuit: No Coverage Under a D&O Policy Where The Underlying Complaint Does Not Specifically Name an Officer or Director

In a recent decision by the United States District Court for the Northern District of California, the court held that an insurer does not have to provide D&O insurance coverage to a group of bondholders who took on the responsibilities of the bankrupt insured.  The ruling was based on the insured’s failure to disclose in the policy application a written demand letter alleging a breach of fiduciary duties. 

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Read More California Federal Court Holds That D&O Insurer is Permitted to Rescind Policy Based on Nondisclosure in Application

The U.S. District Court for the Eastern District of Pennsylvania, applying Pennsylvania law, recently held that the fraudulent acts/willful violation exclusion contained in the subject Executive Protection Portfolio policy (the “Policy”) precluded coverage of defense costs for a criminal action and related derivative and securities lawsuits against an insured CEO.  The court also ruled that the insurer was entitled to recoup defense costs advanced. 

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Read More Pennsylvania Federal Court Rules That Fraudulent Acts/Willful Violation Exclusion Bars Coverage Based on CEO’s Guilty Plea and Insurer Entitled to Recoupment of Defense Costs

By orders dated September 1, 2009 and October 15, 2009, the U.S. District Court for the Southern District of New York granted in part, and denied in part, the defendants motion to dismiss in Abu Dhabi Commercial Bank et al v. Morgan Stanley et al, which names as defendants Moody’s Corporation (“Moody’s”) and McGraw Hill Companies (“McGraw Hill”) (collectively, the “Rating Agencies”). 

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Read More Southern District Grants in Part and Denies in Part the Rating Agencies’ Motion to Dismiss in Subprime Suit

The New York Court of Appeals recently overturned an Appellate Division decision denying excess insurers summary judgment based on prior knowledge exclusions contained in professional liability policies issued to the insured law firm. …
Read More New York Court of Appeals Determines that the Prior Knowledge Exclusion Applies Under Pennsylvania Law Where Insured has Knowledge of a Client’s Wrongful Conduct that is Likely to Result in a Claim Against the Insured

On July 30, 2009, the US District Court for the Eastern District of New York approved a $37.25 million settlement of a subprime-related securities class action styled, In re American Home Mortgage Securities Litigation. …
Read More Court Approves American Home Mortgage’s Settlement of a Subprime Securities Class Action

On July 15, 2009, the US District Court for the Eastern District of Pennsylvania preliminarily approved a $32 million settlement of a subprime related securities class action against RAIT Financial Trust, RAIT’s directors and officers, Grant Thornton, and Piper Jaffray. …
Read More Court Gives Preliminary Approval to RAIT’s Settlement of a Subprime Related Securities Class Action