Dechert Counsel, David Geffen, has published an article taking a look at what happens when fund directors are sued, and laying out some key things independent fund directors should know about fund litigation. Geffen looks at the most common types of fund litigation, excessive fees, disclosure, suits targeting closed-end funds, as well as suits sparked by regulatory investigations and enforcement proceedings. In each instance, Mr. Geffen takes a look at how directors may factor into the litigation, and the potential that boards may be found to be liable.
Geffen also discusses some basic facts about derivative suits and direct law suits against funds, and the role of special litigation committees in derivative suits. The article covers the basics of attorney-client privilege, as well as insurance and indemnification, and a brief description of the principles directors should understand about payment of settlement costs.
The piece provides a succinct and straightforward primer on fund litigation for directors, and should be read by newer and seasoned fund directors alike.
The full text of David Geffen's article is available at: http://blogs.law.harvard.edu/corpgov/2010/09/09/when-fund-directors-get-sued/