Aon's Financial Services Group: 2018 D&O Year in Review

Aon’s Financial Services Group is pleased to present our fifteenth annual Year in Review. It is again organized by subject matter, summarizing legal developments in insurance coverage cases relating to management liability, as well as cases dealing with the U.S. Securities laws, corporate governance and other issues. We also review recent trends in securities class action litigation.

The securities class action environment once again saw near-record levels of filings in federal courts, more than 200% above the average annual number of filings in the past twenty years. The chart below shows the filings since 2009 and also depicts the median and average settlement amounts for those years. It is interesting to note that since 2017, the average and median settlement amounts have more than doubled. In 2018, there were five settlements of at least $100 million.

In 2018, the United States Supreme Court issued its much-anticipated decision in Cyan, Inc., v. Beaver County Employees Retirement Fund (discussed herein, page 38) in which it held that state courts have concurrent jurisdiction for cases brought under the Securities Act of 1933. This gives rise to a more complicated litigation scenario for IPO-related litigation.

A rising trend is what has been termed “event-driven” litigation, in which securities lawsuits are filed after an event negatively affects a company’s stock price. Such lawsuits have been filed after a data breach, the California wildfires, or other newsworthy events. Shareholder derivative litigation is also on the rise, sometimes from these same events, or, where an event has occurred, but the stock price has not appreciably declined. Examples of this type of litigation can be found related again to a data breach, or, for example, companies facing #MeToo movement issues.

The 2018 Year in Review also addresses several insurance coverage issues that arise in the management liability arena, including those related to the definition of claim, or whether claims are related for purposes of the insurance coverage. Other cases address the definition of “professional services,” capacity issues, and whether an exclusion is applicable, based on prior acts, prior knowledge, prior litigation or prior notice of a claim. We continue to see and review cases involving social engineering matters, and how a fidelity policy’s computer fraud provision or the concept of direct loss affects coverage.

We hope you enjoy the 2018 Year in Review. We look forward to advising on the issues and trends of 2019. Thank you for your interest and support.

Best Regards,

Robbyn S. Reichman, Esq.
Managing Director & Practice Leader
Legal & Claims Practice
Financial Services Group

Jacqueline A. Waters, Esq.
Managing Director & Practice Leader
Legal & Claims Practice
Financial Services Group

Christine A. Williams
Chief Executive Officer
Financial Services Group