Theranos' Woes May Reshape Private D&O Coverage

By Jeff Sistrunk (October 19, 2016, 6:00 PM EDT) -- An investor's suit accusing Theranos Inc. of misrepresenting its blood-testing technologies and a U.S. Securities and Exchange Commission probe of the startup may lead insurers to broaden exclusions in directors and officers policies to reflect privately held firms' growing exposure to securities law claims, experts say.

In an Oct. 11 complaint filed in Delaware Chancery Court, hedge fund Partners Investments LP is seeking to rescind its agreement to purchase Theranos stock based on alleged misstatements made by the medical testing firm and its principals.

The suit, coupled with the SEC's heightened scrutiny of Theranos and other privately held "unicorns" with valuations...

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