A very short class action complaint was filed in New York State Court, Kurtz v. Cayne. Defendants, Bear Stearns and a group of its directors, are alleged to have violated duties of "Candor" and "loyalty." See para. 34. It will be interesting to see how the coverage questions are resolved.
If you predicted that Bear Stearns officers and directors would be sued within “days” of the announced sale to J.P. Morgan you wildly underestimated this conflict. A suit was filed on March 17, 2008, the same day that the J.P. Morgan deal was announced. See Eastside Holdings Inc. v. Bear Stearns Cos., SDNY. Plaintiffs allege that “defendants disseminated or approved … false statements… which they knew … were misleading in that they contained misrepresentations and failed to disclose material facts…. Defendants … employed devices, schemes and artifices to defraud …[and] engaged in acts, practices and a course of business that operated as a fraud or deceit…. See paras. 61-62. You can surely expect the defendants to make D&O claims, and insurers will need to consider their fraud exclusions.
Read Peter Lattman's article in this morning's Wall Street Journal, "Coke Tries New Defense," WSJ, Oct. 22, 2007, A12. Mr. Lattman reports that Coke has asked a federal judge to deny class-action status to a case based upon attorney William Lerach having entered into a plea agreement admitting "criminal conspiracy to obstruct justice in securities cases just like this one."
The defense is interesting not only for its impact in securities cases, but other liability areas in which fraud has become an issue. The areas that leap to mind are asbestos and silica. Extensive fraud has been documented in both areas. The fraud issue is already being raised in some cases. Maybe it will mature into a meaningful defense.
Enter keywords:
