While not necessarily as eventful as 2015, 2016 saw courts interpret and build upon major decisions from prior years, and have set up at least one important issue for consideration by the U.S. Supreme Court. 2016 also featured several important legal developments that should continue to impact both private litigation and public enforcement throughout 2017, including:
- SEC Whistleblower Program. By the time the SEC closed its 2016 fiscal year in September, it had filed a record number of enforcement actions. In addition, the SEC’s whistleblower program awarded more than $57 million to 13 whistleblowers during the year, almost as much as in all previous years combined. The big question will be whether the Trump administration will allow this trend to continue.
- Mergers and Acquisitions Litigation. In June, the New York Court of Appeals, in a split decision, ruled that the “common interest doctrine” protected only shared communications relating to a common legal interest in pending or reasonably anticipated litigation. Because parties to a prospective merger often rely on the common interest doctrine to protect certain due diligence discussions from a claim that one or both parties have waived the attorney—client privilege, this decision has significant implications for parties to transactions subject to New York law.
- Director and Officer Liability. Private plaintiffs continue to attempt to hold directors and officers liable for cybersecurity breaches affecting their companies. While in the past such lawsuits have been largely unsuccessful, a recently—filed wave of new lawsuits merits watching.
- Sixth Circuit Securities Law Developments. Among other things, the U.S. Court of Appeals for the Sixth Circuit contributed to an emerging circuit split on whether a private securities plaintiff can rely on a pending class action to toll a statutory repose period. In a case in which Bass, Berry & Sims served as counsel, the Sixth Circuit ruled that plaintiffs’ claims were barred by the respective three- and five-year statutes of repose under the Securities Act of 1933 and the Securities Exchange Act of 1934, and rejected plaintiffs’ argument that they were entitled to rely on the pendency of multiple class actions to toll the statutes’ application.
Throughout this report, attorneys from our Securities and Shareholder Litigation Practice Group analyze the short- and long-term impact of these and other changes on companies and their officers, directors and shareholders, and forecast other challenges likely to affect clients in the year ahead.