Following are just a few examples of the damage that a single directors and officers liability case can cause.

Securities Fraud

A grand jury and the Securities and Exchange Commission indicted the former CEO of a company that produces and imports specialty foods. According to the indictment, the former CEO allegedly planned a scheme to defraud shareholders by creating appearance of market interest in the company’s stock so that it would trade above $1 and avoid delisting. It also was alleged that the CEO received kickbacks for referring an investment firm to a second corporation also in need of capital. Because the specialty foods company filed bankruptcy, no retention applied. Monitor has paid approximately $100,000 in costs to defend the CEO.

Misrepresentation

Shareholders for a company that markets fitness, health and beauty products filed suit. The claimants alleged that the company and its officers and directors made misrepresentations in a proxy filed with the SEC, upon which shareholders relied in determining to vote in favor of a merger. Shareholders were unwilling to settle for less than $5 million. Monitor defended the case through trial, and the insureds were found not guilty. Monitor paid approximately $2.5 million in defense costs.

Misappropriation/Unfair Competition

A claimant alleged that he had developed patented processes for the mass production of specific biopharmaceutical applications. He also alleged that the insured, a bio-pharmaceutical company, had engaged in false advertising, misappropriation of trade secrets, tortious interference and unfair competition. The claimant sought a declaration of the ownership of certain patents. Monitor paid $2 million in defense costs to successfully defend its client.