ACE USA, the U.S.-based retail operating division of the ACE Group of Companies, has launched the second in an occasional series of audio “podcasts,” or Internet-distributed audio programs, discussing selected risk management topics.
The most recent podcast is based on a white paper published in The John Liner Review: “Trends in Securities Class Action Litigation and Directors and Officers Liability Insurance,” authored by Carol Zacharias, senior vice president and counsel, ACE Professional Risk. The podcast provides corporate risk managers with an informative overview of the trend toward unprecedented securities litigation settlements, the factors driving it, and the potential consequences to companies thus affected.
“Securities class actions are the most common type of class actions; since 2002, they are also the most costly and time-consuming to resolve; cases proceeding with a concurrent Securities and Exchange Commission (SEC) investigation tend to settle for double the price of those without the SEC proceeding,” said Zacharias.
The white paper examines the number of class actions pending in federal courts from 2002-2005; the allegations involved, including specific accounting allegations; securities judgments, types of plaintiffs; and, the industries targeted. In 2005, it reports, a record-setting $17.9 billion was paid to resolve class action litigation, up threefold from $5.5 billion in 2004. In addition, the paper explores new approaches to minimizing and mitigating directors and officers liability.
Zacharias added, “Securities class actions and securities regulatory prosecutions represent a significant and costly drain on corporate America and a burden to the judicial system. At the same time, the current environment for corporate indemnification of directors and officers is, to some degree, uncertain, spotlighting the criticality of traditional officers and directors liability insurance and creating demand for new forms of coverage.”
To access the 24-minute podcast featuring Zacharias’ discussion of securities class action litigation and directors and officers risk management issues, visit www.ace-ina.com/podcasts.
Source: ACE USA
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