Alleged failure to manage risks is of course is a hot topic today in the wake of the financial fiasco. The topic was previously explored in this post focused on insightful comments by Delaware Chancellor Leo Strine regarding intra-company conflicts of interest in corporate management. Today, the news is that as a result of the oil spill, BP’s directors and officers face class actions claims for alleged failures in managing the company’s risks. One prior complaint regarding the spill is here. TheFirpo case alleges breaches of duty on managing risks, and was covered by Bloomberg. According to Law.com on the Firpo case:
"The first such lawsuit — Firpo v. Hayward, a shareholder derivative suit brought by a Pennsylvania investor — was filed on May 7 in New Orleans federal court. It alleges BP executives and its board of directors "recklessly disregarded accidents and safety warnings for years" related to the Deepwater Horizon rig. The lawsuit accuses the defendants of breaching their fiduciary duties by, among other things, causing BP to violate safety and environmental laws, exposing the company to criminal and tort liability, and subjecting BP to adverse publicity and impaired earnings."
And, BP and its officers and directors also must keep in mind the risk of future lawsuits regarding the adequacy of its current SEC disclosures regarding the spill, a type of claim explained in this prior post that links to a good post from Kevin LaCroix at D & O Diary.