Securities class actions and M&A “merger objection” cases are being filed at record rates. Directors’ and Officers’ Liability (“D&O”) insurance can provide companies and their management with critical protection against the costs of defending and settling these claims. Companies should seek the latest enhancements to their D&O insurance programs to ensure that directors and officers are fully protected against personal liability in all capacities, and should review their existing D&O insurance carefully to avoid common pitfalls.
Cornerstone Research, Stanford University’s Securities Class Action Clearinghouse, and NERA Economic Reporting predict that 2017 may see the highest level of securities filings in more than two decades. In the first half of 2017, more M&A “merger objection” cases have been filed in federal court than in any single year in the past decade, and may represent one-fifth of all securities cases filed in 2017. The rise in securities litigation has hit all major industries, including financial, communications, biotech, pharmaceutical, and health care companies. Cornerstone predicts that one in 11 companies listed on a major U.S. exchange can expect to be the subject of a class action. And the United States is not alone: filings against European-headquartered firms were nearly triple the historical semiannual average and rose 83 percent in the second half of 2016; 2017 has seen almost as many filings against Canadian firms as in all of 2016.