Director Liability: Boards are on the hot seat over data breaches, illegal sales practices and more.

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Directors and officers might want to start 2018 by doubling down on their oversight systems.

Last year, boards and senior managers at several large corporations faced significant shareholder lawsuits over allegations they were not minding the store when their companies suffered high-profile traumas surrounding data breaches, sexual harassment and discrimination scandals or Improper sales practices.

"What I've seen in these cases is there were a lot of red flags out there and the board just Ignored them," says Jorge Amador, an attorney representing shareholders in a case against Wells Fargo & Co. over phony customer accounts.

In addition to Wells Fargo, directors and top leaders at Home Depot Inc. and Twenty-First Century Fox Inc. found themselves on the hot seat after Investors filed derivative cases seeking to...