Insurers of directors backdating claims face ben chung dating yuri tag
However, the list of potential claimants in a private company D&O claim is not limited just to shareholders or owners.
As the memo’s authors note, “directors and officers of privately held companies are vulnerable to legal actions in their managerial capacities, including employment suits, suits by creditors, suits by business competitors and customers, and actions brought by regulatory agencies.” In any of these kinds of claims, the lawsuit may name both the private company and the individual directors and officers as defendants.
Susan Beck writes an insightful piece on the Broadcome settlement and how the attorneys for both sides are likely to end up the only winners in this derivative suit alleging backdating which settled for 8M: We're still scratching our heads over this one.
Last week, Broadcom announced in an 8K filing https://webmail.missionpharmacal.net/owa/redir.aspx?
Before the settlement, the insurers had paid just .3 million of the more than 0 million sought by Broadcom.However, long experience tells me that D&O insurance should be a part of every organization’s insurance program, regardless of its ownership.As discussed in a July 17, 2017 memo written by Douglas Rappaport, Jacqueline Yecies, and Timothy Shepherd of the Akin Gump law firm and Sarah Katz Downey and Nirali Shah of Marsh and entitled “Why Private Companies Shouldn’t Overlook the Benefits of Directors and Officers Liability Insurance” (here), “it is critical for privately held organizations to closely consider the purchase of D&O insurance to protect both individual directors and officers as well as the company itself.” D&O insurance does of course protecting company officials against litigation brought by investors.For private company officials skeptical of their company’s need for D&O insurance should appreciate that in addition to their company’s exposure to risks of this magnitude, the officials themselves are vulnerable to claims as well.As the memo’s authors note, directors and officers of privately held companies are more likely to be closely involved with all aspects of the company’s business and thus likelier to be named individually in any kind of litigation.