The first panel of the 2012 PLUS D&O Symposium discussed some of the latest trends in securities litigation and opined on potential future developments which may impact the D&O industry.

The panel noted that securities litigation filings in 2011 were at the same levels as in recent years, though the number of settlements have decreased.  The panel also pointed out that approximately 85% of mergers and acquisitions in excess of $100 million were embroiled in litigation, a significant increase from five years ago.  One panelist predicted that there would be an increase in the quantity and quality of cases challenging M&A’s for pure monetary damages rather than merely for injunctive relief.

The panel pointed out that lawsuits against China-based issuers comprised 17% of the securities cases filed in 2011, though most of them were filed in the first half of 2011.  Most of the panelists shared the view that these “reverse-merger” suits may be on the decline because of how difficult it is to conduct due diligence and discovery into the wrongdoing of issuers based in China.

The panel also discussed derivative suits against companies that lose “say-on-pay” votes regarding executive compensation.  One panelist opined that the number of “quality” cases on this issue have declined and will continue to decline on a significant basis.

In assessing current and future developments which may impact the D&O industry, one panelist predicted that the worst is behind the industry in terms of “serious” securities cases based on 10(b)-5 violations.  Another panelist believed that the financial crisis cases, some of which are headed to trial in the next one to two years, could have major ramifications.  Yet another panelist believed that the next big challenge to the D&O industry is the current wave of IPOs which may result in Section 11 cases based on overly “rich” valuations.  Lastly, the panel also believed that the whistleblower protections afforded by the Dodd-Frank Act may result in an increase in securities litigation over the next few years.