Del. Supreme Court: Fraudulent Transfer Claim Not a “Securities Claim” | The D&O Diary

Public company D&O insurance policies provide entity coverage (that is, insurance for the benefit of the insured organization) only for “Securities Claims.” But what is a “Securities Claim”? That is the question that Delaware’s courts have grappled with in a long-running dispute between the telecommunications company Verizon and its insurers.

The Delaware Superior Court had held in the ongoing dispute that a litigation trustee’s state law fraudulent transfer claims against Verizon were derivative claims and therefore qualified as a Securities Claim under the applicable policies. In a detailed December 15, 2023, opinion, the Delaware Supreme Court reversed the Superior Court, holding that the fraudulent transfer claim was a direct claim, not a derivative claim, and therefore did not meet the definition of a “Securities Claim.” As discussed below, the Supreme Court’s opinion, while clarifying, also highlights how intricate the question of what is a “Securities Claim” can be. A copy of the Delaware Supreme Court’s opinion can be found here.

Source: Del. Supreme Court: Fraudulent Transfer Claim Not a “Securities Claim” | The D&O Diary