Justices' Corporate Disclosure Ruling Dodges D&O Upheaval

Colin Watson’s commentary was included in a Law360 article examining a Supreme Court decision that limited when securities fraud claims can be brought for a failure to disclose information. Colin discusses how the ruling will affect SEC enforcement and litigation for directors and officers policies.

Colin points out that pure omission cases are not a significant part of securities class action litigations, and that a reasonably competent plaintiff’s attorney can pretty easily turn such a case into an arguably actionable false statement case. "If you're a securities plaintiff’s lawyer, you don't look at this case and say, 'Oh, no, some important part of my business is gone,'" he said. "If you're a D&O insurer, you don't look at this and say, 'I get to change the way I assess public company securities fraud risks.'"

Colin added that he agreed with some critics that the [SEC] is constrained by its priorities and resources and that the plaintiffs' bar is the primary force for policing disclosure rules, but that "there still is that SEC backstop for whatever it might be worth."