Seeking shelter: investigations of investment bank practices likely will trigger a wave of D&O claims.(Regulatory/Law: Directors and Officers)(directors and officers liability )

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There has been a great deal of interest recently in the new wave of lawsuits against investment banks, especially those relating to financial products tied to the repayment of mortgages.

Some complaints have alleged that the risks associated with these products were not disclosed accurately. New York State Attorney General Andrew Cuomo reportedly is investigating whether investment banks misled the rating agencies to inflate the ratings of financial products.

The proceeding that has received the most attention is a suit by the Securities and Exchange Commission against Goldman Sachs & Co. and a Goldman Sachs employee. (Goldman settled with the SEC July 15 for a record $550 million. The settlement did not apply to the employee.)

Private lawsuits are already following the filing of the SEC's action. Two shareholder derivative suits have been filed against Goldman Sachs in a New York state court in Manhattan, and at least one putative class action complaint has been filed against Goldman Sachs and some of its officers.

Ultimately, the directors and officers named in all such suits will seek coverage under their directors and officers insurance policies, and the list of defendants will almost surely go beyond Goldman Sachs (the SEC is also reportedly investigating J.P Morgan's transactions).

Because the complaint against Goldman Sachs is filed and available, it provides a useful reference …