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Law360 Interviews Tae Andrews on Supreme Court Corporate Disclosure Ruling – A Win for Policyholders

Apr. 25, 2024
A U.S. Supreme Court decision undid a Second Circuit ruling for shareholder Moab Partners LP, which alleged that Macquarie Infrastructure Corp. misled investors by failing to disclose how an upcoming global ban on high-sulfur fuels would affect its oil storage operations.  The decision limits how securities fraud claims can be brought for failure to disclose information. In an interview with Law360, Counsel Tae Andrews explained that D&O policies typically cover suits like the Moab complaint against Macquarie alleging a “wrongful act,” which are usually defined to include actual or alleged errors, misstatements, misleading statements, omissions, neglect or breaches of duty. “From the policyholder perspective, this is absolutely the kind of claim that these policies are designed to cover,” he commented. Law360 noted that disclosures are also crucial for D&O purposes.  Many D&O policy applications and renewals require policyholders to disclose a variety of facts, risks, or circumstances that could lead to a potential coverage claim. That broad scope could make disclosing upcoming regulatory changes during underwriting a challenge. “Policyholders face this very — I would say scary — but certainly dynamic situation where there’s always new laws being passed, and there’s always future regulatory risks coming over the horizon, and that can take all different shapes and forms,” Andrews said. “Recent years have seen an uptick in insurers attempting to rescind policies, and policyholders are increasingly paying more attention to disclosures and adding qualifying language, like ‘to the best of the applicant’s knowledge at the time of application.’” “Depending on the nature of the insureds’ business, the regulatory landscape changes a lot: there are new regulations, new statutes. So, getting that hedging language can be really important. You only have an obligation to answer the questions asked. And that’s on the insurer because they’re pricing out the risk,” he added. Read the full story here. (Subscription required)
Tae Andrews
Named a Rising Star by Super Lawyers in 2022

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