To date, the record number of initial public offerings (IPOs) this year has eclipsed that of 2020 — and the year isn’t over yet. While an IPO offers several financial benefits to a company, the change in structure also creates new risk exposures, including liabilities that can impact a company’s executives, directors and officers.
A review of federal securities class actions revealed that there were 97 new D&O class action securities cases filed against life science companies in 2019, accounting for nearly 24% of all new filings that year — a 13% increase from 2018. In fact, 2019 saw the fifth-highest number of D&O filings since 1996.
Not every business has the financial resources to defend their directors and officers over management decisions that lead to a costly lawsuit. Having a D&O insurance policy can help mitigate this risk. D&O insurance is also helpful for startups that are trying to secure funding from investors, as well as companies looking to attract qualified directors and executives.
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