D&O Digest: January 30, 2026

A former director of a Florida-based weapon screening technology maker has asked the Delaware Chancery Court to determine who actually controls the company. He brought a summary proceeding challenging his recent removal from the board following "what he described as an invalid stockholder vote grounded in a deeply flawed capitalization table."

The company at the center of the dispute is a maker of weapon screening technology. The former director claims his removal from the board was the result of an invalid stockholder vote stemming from issues with the company's capitalization table.

The case is now before the Delaware Chancery Court, which will have to determine who has control of the company. The former director is seeking to have the court resolve the dispute over the control of the company.

Executives of a now-bankrupt data intelligence company face U.S. Securities and Exchange Commission claims that they conspired with one of the company's biggest customers on a so-called round-trip accounting scheme. The SEC alleges the scheme was used to overstate the company's revenue and make it a more attractive target for a special purpose acquisition company.

The SEC complaint accuses the executives and the customer of engaging in fictitious sales transactions to inflate the company's reported revenue. "The defendants allegedly engaged in a scheme to artificially inflate [the company's] reported revenue through a series of sham transactions," said Carolyn Welshhans, an associate director in the SEC's Enforcement Division.

The data intelligence company filed for Chapter 11 bankruptcy in 2021. The SEC's complaint seeks civil monetary penalties and injunctions against the executives and the customer.

Investors who settled with The Charles Schwab Corp. in an antitrust suit over the company's merger with TD Ameritrade have urged the Fifth Circuit to dismiss an appeal filed by the state of Iowa. Iowa had previously objected to the settlement's lack of monetary benefit to the class and proposed attorney payouts.

"The approval of the settlement was proper, and the state's objections were properly overruled," said the investors.

Schwab and TD Ameritrade announced their $26 billion merger in 2019, which the U.S. Department of Justice approved in 2020 with certain divestitures. However, Iowa and other states had challenged the settlement, arguing it did not provide enough compensation to class members.

The Securities and Exchange Commission has filed charges against Archer-Daniels-Midland Company (ADM) and three of its former executives for accounting and disclosure fraud. ADM and its former executives Vince Macciocchi and Ray Young have agreed to settle the charges, while the SEC has filed a litigated action against former executive Vikram Luthar.

"ADM and its former executives failed to properly account for and disclose the company's financial results," said Gurbir S. Grewal, Director of the SEC's Division of Enforcement. "Investors deserve accurate and complete information when making investment decisions, and we will continue to hold companies and individuals accountable when they fall short of these obligations."

The SEC's charges allege that the defendants engaged in a scheme to overstate ADM's consolidated financial results from 2012 to 2014, including by improperly deferring expenses and recording unsupported year-end adjustments. The SEC further alleges that the defendants made false and misleading statements to investors about ADM's financial performance during this period.

A venture capital firm has filed a lawsuit alleging that three law firms, including Husch Blackwell, Morrison & Foerster, and Nelson Mullins, misled the firm on securities law. The defendants include Husch Blackwell's former chair Catherine Hanaway, who is now Missouri's attorney general.

The lawsuit claims the law firms provided "false and misleading" advice regarding securities regulations, which resulted in the venture capital firm incurring significant financial losses. "The law firms failed to properly advise the venture capital firm and misled them on the applicable securities laws," said a spokesperson for the plaintiff.

The lawsuit is seeking unspecified damages from the three law firms. Representatives for Husch Blackwell, Morrison & Foerster, and Nelson Mullins have not yet commented on the allegations.

Directors and officers (D&O) insurance, which protects company leaders from legal liability, is facing rising losses and broader coverage demands from venture capitalists (VCs). Brokers need to understand this growing challenge.

Venture-backed companies are seeing increased D&O claims, driven by factors like regulatory scrutiny and shareholder lawsuits. "There's a lot more litigation risk than there has been historically," said one insurance executive.

VCs are pushing for more comprehensive D&O policies to protect their portfolio companies. "The demands from VCs for broader coverage continue to increase," noted another industry expert.

However, insurers are struggling to price this rising risk, leading to higher D&O premiums. "Carriers have had to be more disciplined and selective in the risks they're willing to take on," said the insurance executive.

Brokers must carefully navigate this evolving D&O landscape to provide the coverage VCs require while managing costs for their clients.

The number of securities class actions filed in federal and state courts fell 8.4% to 207 last year. However, the dollar value of alleged losses jumped more than 60% to $694 billion, according to a report issued Wednesday by Cornerstone Research.

"The sharp increase in alleged investor losses is notable, especially given the overall decline in the number of filings," said Erin Hershkowitz, senior vice president at Cornerstone Research.

The report found that a large settlement contributed significantly to the increase in total alleged losses. "A single settlement valued at $230 billion represented one-third of the total investor losses in 2022," said Hershkowitz.

WTW has completed the acquisition of Newfront, a top 40 U.S. broker. The acquisition is expected to expand WTW's middle-market reach in specialties such as technology, fintech, and life sciences. "The acquisition of Newfront is an important milestone in WTW's strategy to expand our specialty capabilities and enhance our client offerings," said Carl Hess, WTW's Global Head.

Newfront is a broker that combines deep specialty expertise and cutting-edge technology. "Newfront's strong specialty capabilities, innovative technology and client-centric culture make it an excellent fit with WTW," said Hess.

The terms of the acquisition were not disclosed. WTW is a leading global advisory, broking and solutions company.

A U.S. District Judge has allowed Hewlett Packard Enterprise's (HPE) merger with Juniper Networks to proceed while the parties litigate the merits of a proposed divestiture settlement with the U.S. Justice Department. The judge ruled that the 13 intervening state attorneys general failed to demonstrate a likelihood of irreparable injury to competition, and thus refused to pause the integration activities between the two companies. "US Judge Allows HPE-Juniper Merger to Proceed Pending Final Settlement Ruling," said the article.

The proposed divestiture settlement with the Justice Department is still being litigated. The judge's decision allows HPE and Juniper to continue their integration process during this period. The article notes that the judge's ruling does not indicate the final outcome of the merger, which will depend on the final settlement ruling.

The Delaware Supreme Court has handed a significant victory to directors and officers (D&O) insurance policyholders, affirming a ruling that requires insurers to cover a $28 million claim. According to Business Insurance, the court rejected the argument that a "bump-up" exclusion precluded coverage for the technology company's claim.

"'The ruling sets a demanding standard for carriers seeking to deny M&A-related claims,'" said the Insurance Business America article. The bump-up exclusion is a common provision that insurers have used to deny coverage for claims related to mergers and acquisitions. However, the Delaware court has now made it more difficult for insurers to successfully invoke this exclusion.

Per Business Insurance, the case centered on a technology company's D&O insurance claim, which the insurer had sought to deny based on the bump-up exclusion. "The Delaware Supreme Court on Tuesday affirmed a ruling requiring insurers to cover a technology company's $28 million directors and officers liability insurance claim, rejecting the argument that a 'bump-up' exclusion precluded coverage."

This decision is expected to have significant implications for the D&O insurance market, as it sets a precedent that could make it harder for insurers to avoid paying out claims related to M&A transactions. The ruling underscores the importance of carefully drafting and interpreting these exclusions to ensure that policyholders receive the coverage they expect.

The SEC instituted settled cease-and-desist proceedings against former Spero Therapeutics CEO Ankit Mahadevia and former CFO Satyavrat Shukla for misleading statements and omissions about feedback from the FDA on their lead drug candidate tebipenem.

In October 2021, Spero reported that its Phase 3 trial for tebipenem met its primary endpoint. However, the SEC found that Mahadevia and Shukla failed to disclose that the FDA had raised "serious concerns" about the trial's efficacy. "The FDA's issues raised 'serious concerns' about efficacy," the SEC found.

Despite the FDA's concerns, Spero's March 2022 10-K stated the trial "achieved its primary objective as specified in the protocol," without disclosing the FDA's feedback. "The Phase 3 trial 'achieved its primary objective as specified in the protocol,'" the 10-K stated.

Without admitting or denying the charges, Mahadevia and Shukla consented to a cease-and-desist order and civil penalties of $112,500 and $75,000 respectively. Notably, Spero itself was not charged in the enforcement action.