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Priya Cherian Huskins: On SPACs, D&O Insurance and Federal Forum Charter Provisions.
Episode 42
Published 4 years, 8 months ago
Description
- Intro.
- (1:24) - Start of interview.
- (1:54) - Priya's "origin story". She was born in India and grew up in Louisville, Kentucky. She went to Harvard college and studied law at Chicago Law School. After graduation she clerked for Judge Frank Magill (U.S. Court of Appeals for the Eighth Circuit, in North Dakota). She later joined WSGR as a corporate securities attorney during the dot com boom in Silicon Valley. In 2003, she joined Woodruff Sawyer to specialize in D&O insurance.
- (5:42) - On why she joined Woodruff Sawyer in 2003.
- (8:44) - On her experience joining the board of directors of public companies such as Realty Income Corporation, NMI Holdings, and Anzu Special Acquisition Corp I (a SPAC).
- (11:26) - Priya's take on the evolution of the D&O insurance market since she started working in this industry in 2003. Current costs for IPOs, and SPACs ("the cost has gone up 4-5x in the last year or two").
- (16:58) - Her response to the increasing cost of D&O insurance (particularly for public offerings).
- (19:51) - On D&O insurance for private companies: "There is a cohort of carriers that will underwrite D&O insurance for smaller private companies almost on a fully automated basis, but firms come to see us when they reach ~$100 million in revenues (or typically at or after series C and D VC financings)." "Private companies do need D&O insurance, particularly if they want to attract good directors. It's important to highlight that private companies are also subject to the fraud provisions of the federal securities laws." [Note: last week, the Department of Justice announced the arrest of Manish Lachwani, co-founder and former CEO of HeadSpin Inc., a Silicon Valley-based private technology company, on charges of securities fraud and wire fraud perpetrated to raise money from investors. The SEC separately charged Lachwani with defrauding investors.] Litigation risks arise both from public enforcement (such as from the DOJ and SEC) and private enforcement (such as from shareholder litigation).
- (24:11) - Her take when a wealthy individual, not D&O insurance, indemnifies directors (a la Elon Musk). "It happens more in private companies than in public companies."
- (27:44) - Her take on the evolving litigation risks with SPACs (from regulators and plaintiff attorneys). "The SEC has been abundantly clear that they expect directors and officers of SPACs to do a lot of diligence." She highlights the SEC enforcement action in Ability Inc (2019). The number of securities class actions in SPACs is also on the rise. "There have been around ~110 De-SPAC transactions, and about 17% of them have been sued ["that seems high until you note that about 27% of the IPO cohort of 2018 has bee