The high risks and potential benefits—to both companies and investors—of taking securities fraud class actions to a jury were on full display in three rare trials that concluded over two recent months. Verdicts left Vaxart Inc. investors empty-handed in their suit against a hedge fund that sold its majority stake in the vaccine developer, and denied recovery to Exxon Mobil…
For several years, cybersecurity has been a perennial D&O liability issue. Although there has never quite been the volume of cybersecurity-related D&O litigation that some anticipated, cybersecurity-related D&O claims do continue to arise. In the latest example, last week a plaintiff shareholder filed a securities suit against cloud data storage company Snowflake, alleging, among many other things, that the company…
A Texas jury on Wednesday found Exxon Mobil (XOM.N), opens new tab not ?liable on claims it defrauded ?investors through disclosures tied to its Canadian oil sands and Rocky ?Mountain gas operations.
The ?investors said they bought ?Exxon ?shares at artificially inflated prices because the company concealed material information ?about ?its reserve valuations ?and accounting practices.
The 2016 ?lawsuit alleged Exxon concealed that ?its Canadian bitumen operations were ?losing money, failed to properly ?incorporate carbon-cost assumptions into reserve valuations, and delayed recognizing impairment charges tied to ?Rocky Mountain dry gas assets.
Investors who acquired Exxon common stock between ?February ?24, 2016 and October 28, 2016 failed to prove that the company misled them, according ?to a ?jury ?verdict sheet filed in Dallas federal court.
Source: Exxon Mobil not liable to investors over Canadian oil sands, gas assets, jury says | Reuters
The U.S. Supreme Court’s June 2024 decision in SEC v. Jarkesy continues to generate follow-on litigation, as regulated entities increasingly challenge the constitutionality of administrative enforcement proceedings. As D&O Diary readers will recall, Jarkesy held that when the SEC seeks civil penalties for securities fraud, claims the Court characterized as “legal in nature,” defendants are entitled to a jury trial under the Seventh Amendment. That ruling is now fueling a growing wave of challenges to state administrative regimes, including a pending appeal in Delaware and a closely watched case before the Arizona Supreme Court.
These emerging cases raise the question of whether state regulators, like their federal counterparts, can continue to pursue monetary penalties through in-house proceedings, or whether such claims must instead be brought in courts of law before juries. The following discusses the cases pending before the Delaware and Arizona Supreme Courts and D&O implications.
Source: Recent Jarkesy Developments and D&O Impact | The D&O Diary
In a rare trial in a securities class action lawsuit, a federal jury has ruled that hedge fund Armistice Capital and certain of its executives had not, as the plaintiffs alleged, committed insider trading or engaged in a pump-and-dump scheme in selling over $200 million in vaccine company Vaxart stock during the COVID-19 pandemic. The jury specifically held that the plaintiffs had not proven that the defendants had engaged in a scheme to defraud and had not proven their insider trading allegations.
The April 28, 2026, verdict form in the case can be found here.
Source: Rare Securities Class Action Lawsuit Trial Results in Defense Verdict | The D&O Diary
One risk factor the company notes in the SpaceX prospectus is that shareholders may not be able to pursue certain legal claims because of a “requirement for mandatory arbitration.”
We talked about this idea last year: Now companies can basically forbid shareholders from suing them, by requiring all shareholder claims to be brought in mandatory arbitration. As far as I can tell, no one has done it yet. Now SpaceX might. SpaceX is sort of obviously the best company to do it: Elon Musk is going to do a bunch of wild stuff that does not meet traditional standards of corporate governance, and that’s what shareholders are signing up for, and if they don’t like it they shouldn’t buy the stock. SpaceX is a gamble that the entirety of Musk — the visions of space data centers and Mars colonies, the energy, the wild flouting of governance norms — will pay off for shareholders, as it mostly has in the past. Quibbling about the governance norms is stupid.
But if SpaceX does it and it works, then 100 companies that are not run by Elon Musk are going to try.
Source: SpaceX super-voting
CrowdStrike Holdings Inc. executives and board members were freed from a stockholder lawsuit alleging they misled investors before a glitch in its cybersecurity software platform caused shutdowns globally in the summer of 2024.
The shareholders’ agreement to drop the consolidated derivative action Tuesday came after Judge Robert Pitman dismissed a proposed class lawsuit hurling similar accusations against the cybersecurity company and top leaders. No appeal was filed within the statutory deadline of his dismissal, they told the US District Court for the Western District of Texas.
Source: CrowdStrike Shareholders Drop Board Suit Over Massive IT Outage
Elon Musk has suffered the worst streak of courtroom losses in a career punctuated by legal battles, showing the pitfalls of his aggressive litigation tactics and polarising public persona ahead of a showdown with Sam Altman and OpenAI later this month.
Since January, Musk has faced setbacks in cases about OpenAI allegedly stealing secrets from his xAI start-up, advertisers’ boycott of X and two suits about his 2022 takeover of the social media group, then called Twitter, including a fraud verdict that could cost him billions of dollars.
The billionaire’s legal team has responded by complaining about “bias” against the world’s richest man. They have objected to a Delaware judge “liking” a LinkedIn post critical of Musk and challenged the Twitter verdict over what they called a “bizarre and highly questionable” joke involving the marijuana reference “4.20” in a jury document.
As he prepares for the trial against OpenAI later this month in Oakland, California, in which Musk claims the AI start-up sold out its charitable purpose, the seemingly endless courtroom battles have exposed Musk to embarrassing questions and irked his own staff.
Source: Elon Musk hits legal losing streak ahead of showdown with OpenAI’s Sam Altman
Twitter shareholders gained traction in another lawsuit against Elon Musk over the run up to his 2022 buyout of the social media platform, with a judge granting class-action status to the investors.
The investors claim they were harmed when Musk secretly amassed more than 13 million in Twitter shares over 11 days starting on March 25, 2022. US District Judge Andrew Carter in New York ruled the investors can sue together in a single case, amplifying their leverage to force a settlement or go forward to trial.
The judge cited the investors’ claims of his late filings to the US Securities and Exchange Commission, his alleged posting of “misleading tweets about Twitter’s future” and “a coordinated trading strategy to silently build up” his position in the social media company. The case was filed in April 2022.
Source: Musk Faces Class-Action Lawsuit From Twitter Investors Over 2022 Buyout – Bloomberg
The rise of Artificial Intelligence (AI)-based tools and applications has also meant the rise in AI-related infrastructure, such as data centers and power generation support. And just as we have seen the rise of securities litigation relating to companies’ adoption of AI tools and processes, we have also seen securities suits relating to AI infrastructure development.
In the latest example of this kind of AI infrastructure-related litigation, on March 20, 2026, a plaintiff shareholder filed a securities class action lawsuit against the engine and power systems company Power Solutions International, alleging that the company’s new strategy of providing power generation solutions for AI data centers had fallen short of the company’s representations. A copy of the new complaint against Power Solutions can be found here.
Source: Power Supply Company Hit with AI-Related Securities Suit | The D&O Diary