Activist Short Selling and the Mining Sector: Implications for Directors and Officers Liability Insurance Programs

A short-selling campaign can be highly damaging to the target company, with effects ranging from a fall in share price and initial reputational damage to longer-term, broader-ranging implications from which recovery can be protracted.

Recent years have seen an increase in activist short selling. While this has most often been observed in the US, the practice is increasing in other regions, including Canada.

In this report we consider some of the factors that can exacerbate the potential risk of short selling for mining companies, how management liability insurance might respond in such an event, and discuss some of the important insurance policy considerations.