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Is Your D&O Policy Ready For The Halliburton Decision?

Any day now the United States Supreme Court will announce its decision in Halliburton Co. v. Erica P. John Fund, Inc. If the Supreme Court rules to neither reject nor affirm “fraud on the market,” the importance of event studies will significantly increase going forward as defendants will have more opportunity to prevent class certification. AIG is already ahead of the Halliburton decision by announcing late last week new coverage for their publically traded insureds. AIG now offers coverage for an event study regarding any issues of fact relevant to a court’s decision to grant class certification.  As with all policy forms and endorsements, this new endorsement contains defined terms that policyholders should review with their insurance advisors. But in light of the upcoming Halliburton decision, it may be time for publicly traded companies to take a closer look at their policy language and scope of coverage.

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Heidi Lawson