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Delaware Court of Chancery Decision Protects Directors from Liability, But Increases Litigation Risk to Corporate Officers

The recent Delaware Court of Chancery decision in Morrison v. Berry illustrates the protections provided to directors in connection with strategic transactions and related public filings and the corresponding risks facing corporate officers in those same transactions. The decision is the latest in the Fresh Market litigation, which saw Vice Chancellor Glasscock’s initial decision dismissing the litigation on Corwin grounds reversed by the Delaware Supreme Court last year.

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Bifurcated Settlements Offer Advantages to Individuals Facing an Officer and Director Bar in SEC Enforcement Proceedings


Time to Read: 1 minutes Practices: Corporate & Securities Litigation, Securities & Public Companies

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Increasingly, individuals in SEC enforcement actions faced with the threat of imposition of a bar to their ability to serve as an officer or director of a public company are turning to bifurcated settlements. These bifurcated settlements with the SEC allow individual defendants to settle most components of an action, but reserve the question of whether they should be subjected to an O&D bar to the court. This approach gives individual defendants the flexibility to argue their case on the applicability of an O&D bar to a court, without risking a negative judicial ruling on liability. Given the SEC's somewhat rigid imposition of O&D bars in settlements, resorting to the judicial system, where courts have demonstrated a willingness to adopt a fact-specific and highly individualized analysis to whether an O&D bar should be imposed, can provide significant dividends to individual defendants.

In the attached article "Bifurcated Settlements: A New Approach to O&D Bars," Ropes & Gray counsel R. Daniel O'Connor, a former senior trial counsel at the SEC, and associate Annmarie A. Tenn discuss the novel use of bifurcated settlements to challenge the application of O&D bars. To view this article, please click here.

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