Also known as: securities claim · securities claims · securities litigation
A securities claim alleges that a company or its leadership violated securities laws in connection with the purchase, sale, or offer of the company's stock or other securities, and is usually brought by shareholders, investors, or a regulator such as the SEC.
A securities claim is a legal or regulatory action asserting that a company, its directors, or its officers broke securities laws or regulations when offering, selling, or buying the company's securities, for example by misstating material facts to investors. These claims commonly take the form of shareholder class actions, allegations of misrepresentation in offering or disclosure documents, and investigations or enforcement actions by regulators like the SEC. Securities claims are a core reason companies buy directors and officers (D&O) insurance, and the exposure grows sharply as a startup raises priced rounds, issues stock to employees and investors, and moves toward an IPO. Within a D&O policy, Side C (entity coverage) is the part that responds when the securities claim is brought against the company itself, not just its individual directors and officers. Because securities laws impose strict disclosure duties, even an honest mistake in what you told investors can trigger one.
A securities claim is an allegation that a company or its leaders violated securities laws or regulations in connection with the purchase, sale, or offer of the company's securities. It is typically brought by shareholders or investors who say they were misled, or by a regulator such as the SEC. Common examples include shareholder class actions, claims of misrepresentation in offering documents, and SEC investigations.
Yes. Securities claims are one of the main exposures D&O insurance is designed to address. Defense costs, settlements, and judgments for covered securities claims against directors and officers fall under Side A and Side B, while claims brought against the company itself are covered by Side C, also called entity coverage. The exact scope depends on your policy wording and any exclusions.
The risk rises whenever you sell or issue securities, including priced equity rounds, convertible instruments, and stock granted to employees and investors. It intensifies further as you approach a public offering, because registration and disclosure documents create new grounds for shareholder and regulatory claims. Founders and CFOs often revisit their D&O limits and terms at each of these milestones.
Definitions are educational and may be modified by your specific policy language, endorsements, and state rules. For regulatory guidance, refer to the California Department of Insurance or the NAIC.
Last updated: July 2026.