Seven Lessons For Boards From Securities Lawsuits

As litigators who defend lawsuits arising from stock price declines and debt downgrades and defaults, we have seen what can go wrong with securities offerings. Lawsuits can arise from legitimate corporate scandals, but also from industry-wide market events like the 2008 credit crisis. And the ground rules are constantly shifting; a pending Supreme Court case, Omnicare, could hold directors liable for a statement of the company’s opinion (like a valuation or statement about legal compliance) even if they honestly believed it but lacked a reasonable basis. To avoid being blindsided, directors of public companies should heed these lessons from prior lawsuits.