Experts speaking at the opening session of the Professional Liability Underwriting Society's D&O Symposium last month generally predicted legislative, regulatory and judicial developments that will be bad news for defendant corporations and their directors and officers.
"I think there's one other kind of change that might even be a pro-defendant change that's quite possible," said Columbia University Professor John Coffee.
"If you look six months into the future, we might see an awful lot of banks in federal receivership, or banks in which the federal government owns significant equity blocks or in which there's an awful lot of taxpayer money in the form of bailout funds," he noted.
"At that point, Congress is not going to like the idea that these banks are going to be making payments to settle securities class litigation," he predicted.
"We have already seen corporate executives across America being shocked by the fact that they cannot receive bonuses out of bailout money," he said. "I think the same reaction will occur to the idea that bailout funds might be used to settle securities class-action litigation, which right now is predominately directed at financial institutions, or that substantial amounts will be paid to attorneys in the way of fee awards."
"That is going to elicit the same kind of emotional reaction from Congress that the bonuses have," added. "Once the federal government owns a large block there, I think that whole ballpark will change tremendously, and we'll see a much more parsimonious attitude about bailout funds."
