Securities class action (SCA) claims against the management and directors of public entities have increased at a record pace for the period 2017 through 2019 relative to prior years . Among the contributing factors are legal allegations resulting from the #MeToo movement, cybersecurity breaches, environmental, social, and governance (ESG) failings, and workplace violence (e.g., mass shootings).
The coronavirus pandemic is likely to add to the number of SCAs brought against public companies. At least two such actions were initiated in March 2020.
SCA claims are generally covered by Directors and Officers (D&O) liability insurance for both the expenses defending such claims and the cost of settlements or verdicts. It’s probable that additional SCAs will be filed as the effects of the virus on businesses continue manifesting themselves.