Claims examples: Public companies Chubb Specialty Insurance
Lender claim Following expansion into the USA and refinancing for this purpose, a large UK food supply group went into liquidation. The
group’s lending bankers accused the parent’s directors of negligently providing inaccurate statements of the financial and
trading position of several subsidiaries. The bankers sued and the eventual settlement and defence costs came to £7,000,000.
Fraud prosecution Directors of a large retailer were investigated by the Serious Fraud Office and then prosecuted for the alleged fraudulent
recording of sales which had not yet been achieved. The inflation of reported profits would influence the directors’ rewards.
The directors were acquitted in a trial lasting over six months. It cost £20,000,000 to defend them.
Imprisonment for misleading statement The Financial Services Authority brought criminal proceedings against the finance director and the chairman/CEO of a publicly
traded software company for a misleading trading statement designed to induce others to buy shares in the company. They were
found not guilty of knowing it was misleading, but their large expenditure on defence costs did not prevent them from being
found guilty of making the statement recklessly. One was jailed for two years; the other for three and a half.
Shareholder class action in the USA An article in the Wall Street Journal led to a fall of over 60% in the share price of a European drugs company traded on the
New York Stock Exchange. The article examined the company’s accounting practices. In a class action against the company and
some of its executives, shareholders alleged that false information had been disseminated about investments in business ventures,
licence fees and research revenues. The action was settled for $75,000,000.
Director sues other directors for libel A non-executive director of a publicly traded waste recycling company sued the chief executive and the finance director for
libel. They had written a letter to the chairman, outlining allegations of impropriety on the part of the claimant. At much
expense the case reached the High Court which found the allegations to be unjustified. However under the law of libel the
letter was privileged so only those acting out of malice could be liable.The court concluded that the chief executive acted
out of malice and was therefore liable for damages. The finance director had not been malicious and was not liable.
Cartel investigation As part of an industry-wide price-fixing investigation into the healthcare industry, the Serious Fraud Office raided the homes
of a company’s directors. In the formal investigation which followed, the directors incurred £180,000 in legal representation