Uncompleted ICO Draws Securities Class Action Lawsuit

In the latest of what is beginning to look like a wave of ICO-related securities lawsuit filings, would-be investors who made pre-offering investments in Monkey Capital’s promised but uncompleted ICO have filed a securities class action lawsuit in the Southern District of Florida against the company and its principals, alleging that the company’s pre-offering sale of options to purchase coins or tokens in the offering represented the sale unregistered securities in violation of the federal securities laws. A copy of the plaintiffs’ December 19, 2017 complaint can be found here. Continue Reading

Guest Post: Directors Beware: The EU’s General Data Protection Regulation Is Upon Us!

Keith B. Daniels, Jr.

The European Union General Data Protection Regulation (GDPR) is scheduled to go into effect in May 2018. This directive has significant implications for any company that offers product or services to EU residents. In the following guest post, Keith B. Daniels, Jr., Esq., an attorney and the founder of CyberCounsel, takes a detailed look at the EU directive and reviews its implications for affected companies and their insurers. I would like to thank Keith for allowing me to publish his article on my site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Keith’s article. Continue Reading

The Increasing Importance of Reps and Warranties Insurance in M&A Deals

As I have previously noted (most recently here), Reps and Warranties Insurance is an increasingly indispensable part of M&A deals.  While this observation has been true for some time now, a competitive marketplace for Reps and Warranties Insurance has increased the relevance and significance of the insurance as part of corporate deal-making. An interesting December 11, 2017 Harvard Law School Forum on Corporate Governance and Financial Regulation article entitled “Representations and Warranties Insurance in M&A Transactions” (here) takes a look at the current state of play for Reps & Warranties Insurance in the M&A arena and examines the benefits the insurance affords for M&A transaction parties. The article also examines the insurance’s limitations as well as possible ways to address these constraints. Continue Reading

D&O Insurance: Coverage Carve-Backs in the Insured vs. Insured Exclusion

A standard exclusion found in most private company directors and officers insurance policies precludes coverage for claims brought by one insured against another insured – the so-called Insured vs. Insured exclusion. The exclusion typically includes several coverage carve-backs preserving coverage for certain types of claims for which the exclusion would otherwise preclude coverage. One relatively standard coverage carve-back preserves coverage for claims brought by a former director or officer after the individual’s service to the company terminated. While the inclusion of this type of coverage carve-back is fairly standard, the wording of the carve-back can and sometimes does vary in ways that can significantly affect whether or not coverage is available for particular claims.

 

In a December 13, 2017 decision (here), Central District of California Dean D. Pregerson concluded that an underlying dispute between a former director and his former company did not fall within the coverage carve-back to the Insured vs. Insured exclusion in the company’s D&O insurance policy and therefore that there was no coverage under policy for the underlying claim. The decision highlights the importance of the specific language used in the coverage carve-back. Continue Reading

Another ICO Draws a Securities Class Action Lawsuit

According to news reports, the amount raised through Initial Coin Offerings (ICOs) in 2017 now exceeds $4 billion. This surge of activity has drawn the attention of regulators. The SEC is clearly stepping up its ICO-related enforcement activity. ICOs are also drawing the attention of securities class action plaintiffs’ attorneys. As I noted in a prior post, plaintiffs’ attorneys have filed several securities class action lawsuits in connection with the Tezos ICO early this year. Now plaintiff attorneys have filed yet another ICO-related securities class action lawsuit, in this case involving the high-profile and controversial Centra Tech ICO.
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Yet Another Data Breach-Related Securities Suit Filed

While commentators (like me) were predicting a blitz of data breach-related D&O litigation, the anticipated onslaught failed to materialize. The few cases that were filed –in the form of shareholder derivative suits — were unsuccessful. More recently, however, plaintiffs’ lawyers have been taking a different approach to data breach-related D&O lawsuits, filing their cases in the form of securities class action lawsuits. These more recent suits involve cases against Equifax (about which refer here) and PayPal (here). Now plaintiffs’ lawyers have filed yet another data breach-related securities suit, this one against Qudian, a Chinese company that just completed its IPO in October 2017.    Continue Reading

Guest Post: Which ICOs are Next to Get Caught up in the SEC’s ICO Dragnet?

John Reed Stark

One of the most interesting and arresting business stories of 2017 has been the astonishing proliferation of initial coin offerings (ICOs), as I discussed in a prior post (here). Readers who have been watching this story develop undoubtedly are aware that things have been moving very quickly recently on the regulatory front with respect to ICOs. ICOs suddenly are facing a very different regulatory environment. In the following guest post, John Reed Stark, President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement, takes a look the recent regulatory developments and examines their implications. A version of this article originally appeared on Securities Docket. I would like to thank John for his willingness to allow me to publish his guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is John’s guest post. Continue Reading

Key D&O Insurance Policy Wording Issues and Coverage Concerns

Over the course of several years in which the marketplace for D&O insurance has been highly competitive, the scope of coverage available has continued to evolve and expand.  Terms and conditions are available today that were not available even a short time ago, as carriers attempt to distinguish themselves in a crowded marketplace. The marketplace is a buyer’s market, but in order to ensure that corporate insurance buyers obtain the best coverage available, it is important for them to understand the options available. In an interesting December 6, 2017 Law 360 column entitled “D&O Insurance Coverage Tips for Financial Institutions” (here) Robert Long and Nanci Weissgold of the Alston & Bird law firm examined the issues and options involving several key areas of D&O liability insurance coverage. Continue Reading

U.S. Supreme Court Grants Cert in Yet Another Case Securities Law Case

I have had this perception for several years now that the U.S. Supreme Court recently has been particularly keen to take up securities cases. It turns out that this perception has a basis in objective fact. A recent paper by University of Toledo law school Professor Eric Chafee confirms that since John Roberts became Chief Justice in 2005, the Court has averaged two securities opinions per court term, twice the number of the prior Rehnquist Court. Indeed, as the number of cases overall on which the Court has granted cert has continued to shrink, the securities cases have become an increasingly significant component of the Court’s docket. The current term is no exception; the Court began the term with three securities cases on its docket (although a recent settlement in one of the cases reduced the number to two).

 

The Court is showing its securities law proclivities once again. On Friday, December 8, 2017, the Court granted cert in yet another securities law case. The Court’s December 8, 2017 Order granting the petition for a writ of certiorari in China Agritech Inc. v. Resh can be found here. As Professor Chafee notes in his recent paper, many of the securities cases the Roberts court has taken up in recent years have involved issues “at the periphery of securities laws.” The new case the Court has taken up arguably is no exception to this generalization. The China Agritech case is in fact the second case the Court has taken up in successive terms involving statute of limitations tolling issues under the Court’s American Pipe tolling doctrine. Continue Reading

Resort Company Hit with Follow-On Securities Suit in Australia

In numerous prior posts, I have noted the phenomenon of securities suits following on in the wake of governmental regulatory or enforcement action. This phenomenon is well-established in the U.S.  Now it apparently is catching on outside the U.S. as well. Earlier this week, an Australia plaintiffs’ law firm filed a securities suit in an Australian court against Crown Resorts, Ltd. relating to the decline in the company’s share price that followed after Chinese authorities arrested several company employees on gambling- related charges. Continue Reading

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