D&O Insurance: Not a “Securities Claim” If No Securities of the “Company” Involved

Key Takeaways

• Maryland court ruled antitrust claim not a Securities Claim
• Policy phrase “issued by the Company” determined coverage outcome
• Entity coverage limited to securities claims fuels litigation strategies
• Courts prioritize exact policy language over broader claim classifications
• Similar rulings have excluded antitrust, bankruptcy and appraisal claims

Summary

A Maryland district court dismissed Supernus Pharmaceuticals' attempt to secure D&O insurance coverage for an antitrust lawsuit, holding the claim did not qualify as a “Securities Claim” under the policy. The court focused on the policy’s definition, which requires the claim to arise from securities issued by the company or its subsidiaries – a condition not met because the disputed acquisition involved cash and pre‑existing securities of the target. Supernus argued subsidiary status should suffice, but the judge emphasized the timing of securities issuance. The ruling underscores how precise policy language can dictate coverage outcomes.

Pulse Analysis

Directors and officers (D&O) insurance for public companies often includes a narrow entity coverage trigger: a "Securities Claim." This trigger ties coverage to disputes that arise from the purchase, sale, or offer to purchase securities issued by the insured or its subsidiaries. Because the language is typically concise, insurers can deny coverage when a claim falls outside that narrow definition, leaving the corporation to shoulder defense costs. The Supernus case illustrates how insurers leverage these definitions, forcing courts to interpret the exact wording rather than the broader nature of the underlying lawsuit.

In the March 24, 2026 opinion, Judge Adam B. Abelson applied Maryland law to conclude that Supernus' antitrust suit did not involve securities issued by the company. The acquisition of Enterprises was a cash transaction, and any securities involved were issued before Supernus gained control. The court therefore found the policy’s "issued by the Company" clause unmet, dismissing the insurer's motion to deny coverage. This outcome signals to corporate legal teams that merely being a subsidiary at the time of litigation is insufficient; the securities must be issued by the insured entity during the relevant period. Companies must therefore assess the factual matrix of each claim against the precise policy language before invoking D&O coverage.

The ruling fits a broader judicial trend where courts consistently reject expansive readings of "Securities Claim" to include antitrust, bankruptcy, appraisal, or fiduciary‑duty disputes. Prior decisions from Delaware and the Ninth Circuit have similarly limited coverage, emphasizing that policy definitions, not the substantive allegations, drive outcomes. For risk managers, this underscores the importance of negotiating clear, perhaps broader, definitions in D&O contracts and maintaining meticulous documentation of transaction structures. Aligning corporate acquisition strategies with insurance language can mitigate unexpected exposure and reduce the likelihood of costly coverage litigation.