ABC Corporation appeared to be a successful business. The stock increased significantly in value during a five year period as the company reported record earnings. However, it turned out that the earnings were falsely inflated on financial reports by the board in order to keep the stock price rising. When this was discovered, the stock price went from $51.00 per share to $.51 per share in one week.

All of the employees were terminated without receiving any notice.

 

Indicate whether the following would be covered under a typical D&O liability policy and/or a typical EPL policy. Explain your answer.

 

Shareholders make a claim against the directors and officers for their loss on the stock.

 

The employees make a claim that they should receive severance pay.

Answer rating: 100% (QA)

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