- Lawsuits alleging stock price drops as a result of Director and Officer liability action – Sarbanes-Oxley has increased the statute of limitations for Securities Fraud cases, increasing companies’ potential exposure to suits.
- Continuing diversification of securities litigation – M&A challenges and corporative derivative suits pose significant risks for directors and officers.
- Increased government enforcement actions – Enforcement has reached record levels at significant cost to corporations.
- Increased bankruptcies and related securities fraud suits – Companies outside the financial services arena are being affected and sued by shareholders and others as a result of the credit crisis.
- Anti-corporate sentiment – Plaintiff firms have become increasingly successful at winning cases against corporations.
In this environment, it’s imperative to understand your company’s management liability risk, especially the risk to your directors and officers. You must know the ins and outs of your Director and Officers (D&O) Liability Insurance policies, what they cover (or, more importantly, what they don’t), and your insurance company’s track record with claims advocacy.