Corporate directors can be personally vulnerable when a company has a data breach, cautioned member Heidi Lawson and associate Daniel Harary in a post on Mintz, Levin, Cohn, Ferris, Glovsky and Popeo’s Privacy and Security Matters blog. “The SEC may direct its investigation at the directors and subpoena the directors’ document and records,” they said. And that’s only the beginning.
Depending on the insurance policy, there may not be coverage for the directors in all cases. “Even if the SEC declines to investigate a data breach, directors nevertheless face exposure to shareholder litigation and, in some cases, investigation by state authorities,” they said. For example, at least two shareholder derivative suits have been filed against Target Corp.’s directors and officers, and recently a similar suit has been filed against certain directors and officers at Wyndham International. And these suits “present a large exposure to directors,” they said.
