Guest Post: Protecting Securities Fraud Recoveries: Investors F… Forum

Michael W. Peregrine and Nathan Barnett In the following guest post, Michael W. Peregrine and Nathan Barnett examine a recent Delaware Chancery Court decision dismissing oversight claims against Boeing directors arising from the January 2024 mid-air door-plug incident. As they explain, the decision provides important guidance on the continuing application of the Delaware courts' Caremark doctrine, reaffirming that bad faith remains the essential prerequisite for oversight liability, clarifying the distinction between compliance risks and business risks, and offering additional insight into what constitutes a true “red flag” for board oversight purposes. The authors also discuss the practical governance lessons boards can draw from the decision and the importance of maintaining a robust compliance framework. Michael Peregrine is a retired lawyer and a fellow of the American College of Governance Counsel, and Nathan Barnett is a partner with McDermott, Will &Schulte LLP. Our thanks to Michael and Nathan for allowing us to publish their article on our site. A recent decision of the Delaware Chancery Court provides welcome clarity to corporate directors regarding fiduciary liability for alleged oversight failures (a “ Caremark” claim), and related expectations of director conduct. [1] More particularly, the decision confirms that “bad faith” remains the fundamental prerequisite for applying Caremark liability, validates the distinction between

The U.S. IPO market has continued its strong resurgence in 2026. According to the latest IPO statistics compiled by Benjamin P. Edwards , Associate Dean for Faculty Development and Research and Professor of Law at the William S. Boyd School of Law at the University of Nevada, Las Vegas (UNLV), and his research team, IPO activity through August reflects a robust issuance environment featuring a mix of traditional operating company IPOs, direct listings, and a surprisingly strong return of SPAC offerings . The SPAC resurgence is particularly noteworthy because it follows a period in which many de-SPAC companies struggled to meet the optimistic projections that helped fuel the prior SPAC boom. And, while sponsors are once again launching blank-check companies, courts continue to issue significant rulings arising from de-SPAC transactions completed during the 2020-2021 SPAC boom. As discussed below, the latest IPO data and the continuing litigation arising from the de-SPAC transaction that took Electric Last Mile Solutions (ELMS) public illustrate two sides of the SPAC story: the resurgence of SPAC issuance as a capital-markets vehicle and the enduring D&O liability risks left in the wake of the prior SPAC boom. IPO Trends Through August 2026 According to Edwards' dataset, there were 260 public-market offerings and listings through August 2026, consisting of 99 operating-company IPOs, 142 SPAC IPOs, 18 direct listings, and one closed-end fund IPO. Excluding direct listings and th

As we have noted on this site in recent years, privacy-related issues have been and remain a significant potential source of D&O risk and liability exposure. In the latest example of the ways that privacy-related concerns can translate into D&O claims, a plaintiff shareholder has filed a shareholder derivative lawsuit against the board and controlling shareholders of company Alphabet alleging that the defendants violated their fiduciary duties by failing to take steps to protect the company from over $4.5 billion in fines, penalties, and settlements arising from alleged privacy violations. A copy of the redacted public version of the September 22, 2026, complaint can be found here . The Derivative Lawsuit Alphabet is the corporate holding company for Google, one of the world's largest technology companies. Google provides its customers free services, and in exchange, according to the complaint, it “mines highly specific information about those customers that it uses to sell targeted ads to advertisers.” The complaint alleges that under the leadership of its controlling shareholders, Larry Page and Sergei Brin, Alphabet has developed as much user data as possible, even if privacy laws and commitments to users were broken in the process. Alphabet, the complaint alleges, has adopted a “pay the speeding ticket” business model, “in violation of Delaware law.” The complaint alleges further that Alphabet's Board was “repeatedly alerted that

As the 2026 proxy season recedes into the rearview mirror, several clear themes have emerged. Perhaps the most notable is that, despite years of intense focus on environmental and social issues, shareholder attention has increasingly returned to traditional governance concerns. Governance proposals not only proved more resilient than other proposal categories, but they also received some of the strongest levels of investor support. The level of backing these proposals received indicates that investors continue to place a premium on board oversight, accountability, and governance frameworks as the first line of defense against emerging risks. At the same time, investors are demonstrating a growing interest in how boards oversee artificial intelligence, reflecting the reality that AI has become both a business opportunity a potential source of operational, regulatory, and litigation risk. These developments are unfolding against a rapidly changing regulatory backdrop. During the 2026 proxy season, the SEC significantly reduced its traditional involvement in the Rule 14a-8 no-action process , leaving issuers with greater responsibility for shareholder proposal exclusion decisions. Meanwhile, the agency has reportedly begun considering rescission of Rule 14a-8 altogether, a move that could shift primary responsibility for shareholder proposal matters back to state law. As discussed in more detail below, these governance trends and changes in the shareholder proposal landscape sug

My overseas assignment for The D&O Diary continued this week with a stop in the Catalan city of Barcelona , nestled between the mountains and the sea in coastal Spain. I was very happy to be back in Barcelona again, because I know from prior experience that the city's combination of great weather, splendid setting, excellent food, and architectural richness is pretty hard to beat. The primary purpose of my most recent visit to Barcelona was to participate in a roundtable with the international Financial Lines underwriting team at Tokio Marine HCC's Barcelona office. It was an enjoyable afternoon session, enhanced by the conference room's view of the Mediterranean Sea. In addition to the 25 or so who attended the session live in the conference room, another 25 or so attended remotely. It was an interesting session and I enjoyed the opportunity to interact with the TMHCC Financial Lines professionals. My thanks to everyone who attended, whether in person or virtually; to Sebastian Gemberg-Wiesike, for organizing the session; and to Pim van der Drift, for inviting me to attend. (Pim was not able to attend the event but his initiative made it happen.) Here's a picture of the live audience at the Tokio Marine HCC event. It was an enjoyable, interactive session, with even the people attending virtually joining in for the exchange of ideas. One feature of the room where the session was held is that it afforded a view of the sea, from the room's rear window. It would be pretty hard t

For both public and private companies and their boards, directors and officers (D&O) insurance continues to be a critical component for mitigating potentially significant financial exposure from litigation. In the following guest post, Scott N. Sherman and Edgar A. Neely IV discuss key D&O policy terms and concepts for directors to know for that selection process. Scott and Edgar are both partners at the Nelson Mullins law firm. We would like to thank Scott and Edgar for allowing us to publish their article on this site. Here is the authors' article. Quick Primer on D&O Policy “Sides” Before turning to particulars, a quick primer on D&O policies. At a high level, coverage is typically broken into three sides: “Side A” covers individual directors and officers for non-indemnifiable personal loss, “Side B” covers reimbursement to the company after it indemnifies individual directors and officers, and “Side C” covers the company for covered claims against it (typically securities claims for public companies). Most D&O policies contain each of these separate coverage components. Understanding these components and ensuring that all three are encompassed by the policy should be the first step for the selection process. For the coverage terms themselves, below are 10 key terms and provisions boards should consider for selecting an appropriate policy. Policy Limits and Order of Payments In addition to selecting the right overall policy l

In our recent round-up of the top D&O stories so far this year, one of the top developments in 2026 we noted is the growing amount of AI-related D&O litigation. The AI-related litigation trend has continued to develop, as new AI-related lawsuits continue to be filed. In recent days, plaintiffs' lawyers have filed two further AI-related securities class action lawsuits, first, against the Chinese Internet company Baidu, and, separately, against the AI-powered Internet advertising firm AppLovin. Both new lawsuits are based on AI-washing type allegations. The new lawsuit against Baidu also reflects the surging levels of securities litigation this year involving Chinese companies, as discussed further below. The Baidu Lawsuit Baidu maintains the most popular Internet search engine in China. In the past, the company has realized most of its revenue from online marketing services. In 2025, the company online marketing services revenue began to decline. However, the recently filed complaint alleges, the company assured investors that “its new core AI-Powered Business growth had, and would continue to, meaningfully mitigate Baidu's Online Marketing Services decline.” In February 2026, when the company reported its fourth quarter and full-year 2025 financial results, the company reporting overall declining revenue, but also reported that “AI-Powered Business” grew 48% year-over-year in its fiscal 2025. In August 2026, when the company reported its 2Q26 financia

The D&O Diary has been following the evolving litigation and management liability issues arising from the Trump Administration's use of the International Emergency Economic Powers Act (IEEPA) to impose tariffs, the subsequent judicial decisions invalidating those tariffs, and the wave of refund litigation that has followed. As these developments have unfolded, tariff-related litigation has expanded beyond refund actions and shareholder claims to include consumer lawsuits alleging that companies improperly passed tariff costs on to customers. One recent example is the litigation filed against Levi Strauss & Co. (Levi's) in California and Louisiana . The allegations against Levi's reflect the continued filing of tariff-related claims at a time when the scope and applicability of U.S. tariffs remain in flux. Although the tariffs imposed under IEEPA were invalidated by the Supreme Court, other tariffs and tariff-related trade measures remain in effect, including recent U.S. tariffs on Canadian imports and Canada's corresponding countermeasures . These continuing trade actions demonstrate how rapidly changing tariff policies can create significant challenges for corporate governance, disclosure practices, and risk management. The discussion below examines the allegations against Levi's, as well as the potential impact of tariff-related business decisions on D&O exposure. The Levi's Litigation On June 18, 2026, plaintiffs filed a putative class action in the United States District

Puerta del Sol, Madrid This past week I was on assignment for The D&O Diary in Madrid, Spain's capital and largest city. It was a return trip to the city for me, although I think I appreciated it much more this time. It is without a doubt a great place and a great place to visit. The primary purpose of my visit to Madrid was to participate as a keynote speaker at the Kennedys law firm's annual Financial Lines Day event. The event, which was held at the Palacio de los Duques de Pastrana , was remarkably well-attended. Over 200 financial lines insurance professionals attended. I would like to congratulate Ignacio (Nacho) Figurol and his Kennedys colleagues for a very successful event. Here's the view from the podium at the conclusion of my keynote address. As you can see, the room is at capacity. I came away from this event with a better appreciation for how broad, deep, and sophisticated the Spanish D&O insurance marketplace now is. I also have to say it was a distinct experience to be in another country where I know few people, but in which everyone knows who I am. I very much appreciated and enjoyed the opportunity to speak to this audience. Here's a picture taken with Nacho Figuerol during the reception following the educational sessions. I am very grateful to Nacho and his colleagues at the Kennedys law firm for inviting me to participate in this excellent event. The event was first class in every respect and I was grateful to be a part of it. One of the great things about

As crypto-related litigation continues to mature, the focus has shifted beyond the threshold question of whether digital assets constitute securities. Increasingly, private plaintiffs are pursuing claims that resemble traditional securities litigation including allegations involving disclosure failures, market misconduct, and investor losses. At the same time, the Clarity Act , legislation that would have established a statutory framework for digital asset regulation and clarified the respective roles of the SEC and CFTC, failed to advance through congress. Yet digital assets continue to move further into the financial mainstream, with reports that major U.S. banks are exploring a joint stablecoin initiative. Against that backdrop, a recent decision in the long-running Jump securities class action arising from Terraform Labs (Terraform) collapse underscores the evolving nature of crypto-related litigation. In a September 2, 2026, opinion , the Northern District of California largely denied motions to dismiss, allowing core securities fraud and market manipulation claims to proceed. Beyond its high-profile factual backdrop, the ruling highlights how crypto litigation is increasingly being analyzed through familiar securities law concepts rather than focusing solely on whether a particular digital asset qualifies as a security. As discussed below, the decision may offer useful insights for D&O underwriters evaluating the evolving nature of crypto-related litigation risk as digi