Sidley Discusses a Unique Caremark Twist Amidst Bankruptcy
Securities and Shareholder Litigation partner Alex J. Kaplan analyzes the Delaware Court of Chancery’s decision in Giuliano v. Grenfell-Gardner, which addresses Caremark oversight claims in the wake of a company’s bankruptcy. The court dismissed red flag claims against the directors but allowed allegations to proceed that the board failed to implement adequate reporting and compliance systems, while sustaining certain red flag claims against two officers based on internal communications. (more…)
When a Whistleblower Complaint Becomes a Board-Level “Red Flag”
In a recent Caremark decision, the Delaware Court of Chancery largely denied a motion to dismiss, holding that most of Regions Bank’s board purportedly ignored red flags raised in a whistleblower report concerning the bank’s unlawful overdraft practices — practices that later led to the company paying US$191 million in penalties and remediation to the Consumer Financial Protection Bureau (CFPB). (more…)
