Aon Financial Services Group: 2016 Year in Review

Aon Financial Services Group: 2016 D&O Year in Review


Aon Financial Services Group (FSG) is pleased to present the thirteenth annual Year in Review. In 2016, FSG tracked executive liability exposures and trends, including the increase in securities lawsuit filings, changes in merger objection litigation, SEC enforcement actions and the whistleblower program, as well as continued developments in cyber-related matters.

Securities class action lawsuits were filed at record levels in 2016; the filing activity in the second half of the year being the highest for any semiannual period in the last twenty years.

The industries hardest hit include healthcare, biotechnology and pharmaceuticals. We also saw federal merger objection litigation increase, in part due to certain state court rulings unfavorable to plaintiffs with respect to disclosure-only settlements, including the Trulia case decided in January. But, federal cases continued to be filed even after the Seventh Circuit’s decision in Walgreen’s in August, in which the court adopted the Delaware position on disclosure-only settlements with a strongly-worded opinion critical of the plaintiffs’ bar.

On the cyber front we saw developments with respect to an individual’s standing to sue, as Spokeo, Inc. v. Robins was decided by the Supreme Court. While the Court took a middle ground on the case itself, it did recognize that “intangible injuries can nevertheless be concrete.” This notion was carried forward into other litigation where data breach lawsuits have survived motions to dismiss on the basis that the substantial risk of future harm is sufficient to confer standing. We expect further developments in this evolving aspect of the law throughout the year. We also saw additional data breach-related D&O lawsuits, however, the plaintiffs have been less than successful in their approach thus far. We anticipate that the plaintiffs’ bar will continue to press forward in an effort to develop a sustainable legal theory.

With respect to the regulatory landscape, we continued to see increased SEC enforcement activity and the increase of whistleblower awards. During fiscal 2016, according to the SEC’s report, it had awarded more than $111 million cumulatively, $57 million of that total being awarded in fiscal 2016. Since the program’s inception in fiscal 2012, the number of annual tips has increased by over 40%. With the new administration, the future of Dodd-Frank is uncertain, although there is an assumption that since the whistleblower program has proved effective, it would remain in place.

In 2016 we also reported on coverage matters involving related claims, the interpretation of policy exclusions, notice and whether certain matters qualified as “claims” under the relevant policy.

We hope you enjoy the 2016 Year in Review. We look forward to advising on the trends and events of 2017. Thank you for your interest and support.

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Robbyn Reichman, Esq.
t +1.212.441.2309

Jacqueline Waters, Esq.
t +1.312.381.4563