Stanford Financial Group executive Laura Pendergest-Holt filed a $20 million legal malpractice lawsuit Friday against a lawyer she said caused her wrongfully to be accused of a crime.

Pendergest-Holt, chief investment officer of Stanford Financial, sued Thomas Sjoblom, who practices in New York and Washington, accusing him of legal malpractice and breach of fiduciary duty.

Pendergest-Holt faces a federal felony charge alleging she obstructed a Securities and Exchange Commission investigation into her employer by withholding information about her knowledge of company assets and her preparation for interviews by investigators.

Sjoblom accompanied Pendergest-Holt to a Feb. 10 meeting with the SEC that is central to the criminal charge. He was also at earlier meetings in Miami to discuss company assets before she spoke to the SEC.

REad the full story here on the Houston Chronicle website.

The lawsuit, filed in Federal District Court in Brooklyn late Thursday, contends that Bank of America “established, equipped and staffed” a branch office in the headquarters of Mr. Cosmo’s firm, Agape Merchant Advance. As a result, the lawsuit contends that the bank knowingly “assisted, facilitated and furthered” Mr. Cosmo’s fraudulent scheme.

“Bank of America was at the epicenter of this scheme,” said the lawsuit, which seeks $400 million in damages from the bank and other defendants. “Without Bank of America’s participation, the scheme would not have succeeded and grown to such an enormous size."

Read the full story here on the New York Times website.

A lawsuit filed on behalf of American International Group shareholders by the nonprofit group FreedomWatch charges that "gross mismanagement" cost shareholders to lose "in excess of $200 billion" in equity over more than nine years.

The lawsuit, which seeks class-action status, asks for unspecified damages and removal of AIG's top management for "breach of fiduciary duty, gross mismanagement (and) corporate waste."

Read the full story here on the Trading Markets website.

Corporate directors should be afforded significant latitude and discretion in deciding whether to accept a merger offer, the Delaware Supreme Court said in a recent ruling.

Corporate-law experts say the decision could make it harder for disgruntled shareholders to recover damages when a merger goes through at a price shareholders view as unacceptably low.

Though the ruling applies only to state law, the Delaware courts are influential in corporate law because so many companies are incorporated in the state. Therefore, the ruling is expected to be noted in other jurisdictions.

Patrick Daniels, partner at Coughlin Stoia Geller Rudman & Robbins, said that while the door to becoming a lead plaintiff in a class action against the Royal Bank of Scotland (RBS) is now closed, he was certain cases would next be brought against struggling US insurer AIG.

“I can’t even count how many class actions there already are against AIG,” said Daniels. “AIG is one big litigation machine, it’s an unbelievable mess.”

He said that while he’s not involved with putting UK pension funds into a class action against AIG yet, he would be in the future.

Daniels is leading the securities case against RBS on behalf of three lead plaintiffs: Merseyside Pension Fund, North Yorkshire Pension Fund and Dutch fund manager MN Services.

His case hinges on the actions of RBS Greenwich Capital, a US-based subsidiary that housed the majority of RBS’s US sub-prime mortgage assets and used them to raise the capital to buy ABN Amro.

Dozens of media firms are questioning a federal appeals court ruling that concluded truth is not an absolute defense against libel in a case concerning an e-mail sent in the firing of an office products salesman.

Fifty-one news organizations last week sought a rehearing of a 1st U.S. Circuit Court of Appeals decision that relied on a 1902 Massachusetts law that says truthful statements can be libelous if there also is malicious intent.

The decision in Alan S. Noonan vs. Staples Inc. exposes a "dusty old corner of libel laws" in Massachusetts that "truth is not an absolute protection" in a libel action, said Jeremy Feigelson, an attorney with Debevoise & Plimpton L.L.P. in New York.

Read the full story here on the Business Insurance website.

The Obama administration Tuesday mounted a full-scale push for government authority to shut down troubled institutions like insurer AIG to avoid the need for future bailouts.

U.S. Treasury Secretary Timothy Geithner, testifying before lawmakers still fuming about big bonuses for executives at bailout recipient American International Group (AIG), called on Congress for new powers to take over big non-bank financial firms that run amok.

Federal Reserve Chairman Ben Bernanke strongly backed Geithner in testimony before the same committee, and President Barack Obama took the case public during a televised news conference Tuesday evening.

"Keep in mind that it is precisely because of the lack of this authority that the AIG situation has gotten worse," Obama said. "We should've obtained it much earlier so that any institution that poses a systemic risk that could bring down the financial system, we can handle, and we can do it in an orderly fashion that quarantines it from other institutions."

Rarely are clients immediately aware of the wrongful or erroneous actions of the "professional" they trusted to perform specific duties or services; mainly because "professional" acts or errors do not or only seldom cause immediate injury. A "professional's" wrongful acts or errors may not manifest in client injury until long after the act is perpetrated or the error is committed.

Because of the time lag between the wrongful act or error, the resulting injury and the ultimate claim or lawsuit, Joe D'Alessandro in 1964 deduced that there was a better way to insure a "professional." Secondarily, D'Alessandro postulated that there had to be a way to provide greater actuarial certainty that there would be no further claim activity following the close of the policy period (eliminating the "incurred but not reported" (IBNR) problem). This creative thinking led to the development of the first "claims made" policy wording.

While D'Alessandro's initial thinking was accurate, 45 years of history has shown the goal of achieving actuarial certainty to be elusive at best. The stability and evolution of the "claims made" policy has also been threatened during its history by poor form standardization, court decisions and shoddy policy form draftsmanship.

Standing in his driveway, the AIG executive was asked by a New York Times reporter about his life since the AIG bonuses were disclosed. The Times offered this account of his answer: "'You have to understand,' he said, 'there are kids involved, there have been death threats....' His voice trailed off. It looked as if he was fighting back tears. 'I didn’t have anything to do with those credit problems,' said James Haas, 47. 'I told [AIG chief executive Edward M. Liddy] I would rescind my retention contract.' He ended the conversation with a request: 'Leave my neighbors alone.'"

The article puts a human face on the the much reviled, bonus-blessed executives of bailed-out financial firms. Clearly, some don't see the bonuses as a blessing. Haas, labeled "Jackpot Jimmy" by the New York Post, is not the only bonus recipient who has offered to give the money back.

If Congress has its way, he and other "bonus babies" (another label from the ever-colorful Post)Times column today, David Brooks suggested the government was paying too much attention to the bonus backlash: "The Washington political class has spent the past week going into made-for-TV hysterics over $165 million in AIG bonuses. We’re in the middle of a mult-itrillion-dollar crisis, and our political masters -- always willing to throw themselves into any issue that is understandable on cable television -- have decided to risk destroying the entire bank-rescue plan because of bonuses that account for 0.001% of the annual GDP."

Medical malpractice overhauls have died many deaths in Congress over the years, often at the hands of Democratic lawmakers backed by trial lawyers. Attempts to change the system may be getting new life.

As they search for savings to redo the nation's $2.4 trillion health system, key congressional Democrats and administration officials, from President Barack Obama on down, are indicating they're open to changing a system that's a burden for doctors but a boon to attorneys and some victims of medical error.

"The cost issue is the thing that we actually think is the big driver in this whole debate,'' Obama told business leaders last week.

At our 2009 PLUS D&O Symposium New York State Insurance Superintendent Eric Dinallo announced for the first time an intent to clarify the Department’s position on the contentious duty to defend issue in New York through the issuance of a new regulation. The Superintendent invited PLUS to help shape the new regulation.

If your company is interested in pursuing this opportunity, please forward this memo to the appropriate party and ask them to contact PLUS Executive Director Derek Hazeltine at dhazeltine@plusweb.org. We will then forward the draft regulation proposal. The deadline for comments to be received is Monday March 23, so if your company would like to participate, please move quickly.

Superintendent Dinallo invited PLUS and our members to participate in this process because your contributions through PLUS form the thought leadership that drives our business. PLUS is pleased to offer its assistance as an information conduit for our members in this effort and will not attempt to reconcile differing opinions between member companies.

Thank you for your continued support of PLUS and the betterment of the professional liability insurance industry.

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The value and number of federal securities class action settlements declined in 2008, according to Securities Class Action Settlements: 2008 Review and Analysis, an annual report by Cornerstone Research. The average settlement value fell by slightly more than 50% from $62.7 million in 2007 to $31.2 million in 2008. This decline reflects a sharp drop in multi-billion-dollar “megasettlements,” which have been far more common in recent years. The decline in the total number of settlements was a more modest 10%, from 110 in 2007 to 99 in 2008. This decline is unlikely to signal a continuing trend. The ongoing financial crisis has caused an increase in litigation activity that could have an impact on settlement volume within the next year or two as cases associated with the subprime collapse and liquidity crisis begin to be resolved.

Comments from Co-Authors Joseph Grundfest and Laura Simmons, as well as the full report, can be downloaded here from the Cornerstone Website.

In this interview conducted by Andy Simpson of the Insurance Journal during the 2009 PLUS D&O Symposium, Mike Smith, President of AIG Executive Liability, discusses the D&O market for financial and non-financial firms and the importance of brokers, underwriters and relationships.

In a precedent-shattering decision, the New York State Insurance Department's Office of General Counsel ruled that newly issued Directors & Officers ("D&O") policies may not place the duty to defend upon the insured rather than the insurer.

A typical feature of D&O policies provides that "it shall be the duty of the insureds and not the duty of the insurer to defend claims." Instead of providing for a duty to defend, D&O policies have instead required insurers to pay defense costs, which are advanced to insureds before an ultimate determination of coverage for claims made against directors and officers.

D&O insurers have argued that the mere duty to pay defense costs is not subject to the same "potential for coverage" standard as the duty to defend, but that the duty to pay defense costs requires a covered claim rather than a claim that is merely potentially covered. D&O insurers also have argued in the past that they did not have a duty to investigate claims, choose defense attorneys, negotiate settlements, and otherwise administer to the defense of claims made against directors and officers.

With this new opinion, D&O insurers no longer will be able to avoid providing a full defense, including the payment of defense costs for potentially covered claims against directors and officers, as well as undertaking all of the other duties associated with the duty to defend.

PLUS is pleased to announce that registration for the 2009 PLUS University sessions is now open!

In addition to four full days studying a professional liability curriculum, students will hear from – and be able to interact with – senior industry professionals and PLUS leaders, both in the classroom and during scheduled evening functions. The program is filed for almost 30 hours of Continuing Education credits.

To facilitate the registration process this year, we will be accepting registrations for both PLUS University Chicago and PLUS University Philadelphia at this time. Both programs provide a broad overview of the key concepts and disciplines found in the professional liability industry, so you can make your plans to attend whichever program fits your schedule and is convenient to your location!

Lodging for the evenings of May 18 through May 21 and most meals are included.

Click here for PLUS University Chicago Information and Registration:

Lodging for the evenings of August 3 through August 6 and most meals are included.

Click here for PLUS University Philadelphia Information and Registration:

Please note that the class size is limited and previous PLUS University sessions have sold out. So, register early to save your spot and assure that you may participate.

A New Jersey jury has awarded a Flemington man $1 million after finding that his bosses at United Parcel Service retaliated against him after he complained that managers were violating company policies.

In his lawsuit, 51-year-old Michael Battaglia said he was demoted and assigned to the night shift after lodging his complaints in October 2005.

Following a monthlong trial in state Superior Court in New Brunswick, a jury found that UPS violated New Jersey's anti-discrimination and whistleblower protection laws.

Read the full story here on the MSNBC website.

Lawsuits stemming from the subprime mortgage crisis and subsequent tightening of credit continue to increase as new categories of defendants are targeted, experts say.

As those suits generate claims against directors and officers insurance policies, insurers' losses will increase on top of several years of slow growth in premium volume and downward pressure on rates.

The challenges that lie ahead for directors and officers and their insurers are hard to forecast, experts say.

Originally, suits were predominantly against U.S. lenders who approved mortgages without regard to a borrower's creditworthiness, leading to defaults and foreclosures that have had a domino effect on economies around the world. More recent suits challenge entities involved with securitized mortgages.

New York Insurance Superintendent Eric Dinallo was a Keynote Presenter at the 2009 PLUS D&O Symposium.  He has been in the middle of the AIG bailout, bond insurance and federal regulation crises and debates. But he has also dealt with producer compensation, workers’ comp reforms, contract certainty and other matters.

In this exclusive interview with Insurance Journal’s Ken St. Onge, Dinallo discusses the last 12 months and how his department has managed.