Kevin M. LaCroix in his D&O Diary lists the top ten Directors and Officers Liability stories of 2023. The full post with details of individual cases is at https://www.dandodiary.com/2024/01/articles/directors-and-officers-liability/the-top-ten-stories-in-do-of-2023/. This is a summary.
- Federal securities class action lawsuits increased, although not reaching levels of 2017-19 filings. Many of these suits target biotech and hi-tech companies.
- Bank failures disrupted the industry early in 2023, and concerns remain. Moody's and S&P downgraded the credit ratings of a number of banks, and commercial real estate loans may default. Some banks have over-invested in securities.
- Higher interest rates, inflation, and labor and supply chain disruption challenged businesses. These issues led to decreased revenues and shareholder suits.
- Geopolitical risks including conflicts with China, wars in Ukraine and Israel-Hamas are ongoing. 2024 is an election year not just in the United States; roughly two billion people in about 50 countries will be voting. All of these will impact businesses worldwide.
- Environmental, social and governance concerns - ESG - have sparked controversy on both sides of the political spectrum. Pending and existing regulations will require businesses to disclose their activities in these areas.
- The SEC's new cybersecurity disclosure guidelines and enforcement activities require prompt disclosure of material cybersecurity incidents, which may lead to lawsuits alleging insufficient preventive measures.
- The Supreme Court will rule on the constitutionality of SEC administrative tribunals; the decision will affect affect enforcement of federal securities laws.
- Settlements of shareholder derivative lawsuits increasingly include cash payments to individuals.
- Artificial intelligence legal risks and exposures continue to develop. New regulations and disclosure requirements are addressing AI issues. Companies will be liable for failure to address them.
- While the D&O insurance market continues to soften, it is uncertain if his trend will continue. Companies should get the best terms they can now.