Perspectives from the shareholder plaintiffs’ bar
The Financial, Executive & Professional Risks Practice (FINEX) of Willis, a WTW business, collaborates with professionals throughout the directors & officers liability (D&O) insurance industry to gain perspective into the many facets of our business. In our “D&O Professionals Series,” we feature professionals from various corners of the industry, from executive D&O underwriters to securities litigators to coverage counsel and others. Our objective is to spotlight the many perspectives of those in our industry to foster a broader discussion of D&O risk, securities litigation and our business as a whole.
In this edition, we feature Darren J. Robbins, a founding partner of Robbins Geller Rudman & Dowd LLP. Darren has represented shareholder plaintiffs in many of the largest, most high profile securities litigation matters over the last 20+ years. Darren brings strong opinions and a perspective which is quite different from the defense lawyers that we often feature, which makes his insight all the more potentially valuable. We thank Darren for his contribution to our series and for offering us his views on the current state of securities litigation and what we may anticipate going forward.
Willis: Looking ahead, do you think that filing volume of securities class actions will go up, down or stay relatively consistent? Do you think that filing volume meaningfully reflects shifts in corporate risks, or something else?
Darren Robbins: We saw a slight uptick in securities class action filings in 2024. While it is relatively early in the year, it seems likely that we will see an increase in core ’34 Act filings in 2025. Recent developments associated with so-called “Liberation Day” have increased pressure on C-suite executives to fulfill their late 2024 and early 2025 public representations about company performance. And, it is unclear whether this pressure will relent. As I write this, we are experiencing an ever-changing phalanx of tariffs and reciprocal trade measures being erected, paused, and then resurrected which is wreaking turmoil on businesses. The tariff announcements and market movements are eerily reminiscent of the 1920s and 1930s. Most hope that the tariff roller coaster subsides and corporate executives respond to the pressures therefrom honestly and transparently with their investors. Past experience, however, suggests that this type of exogenous pressure often leads to corporate chicanery, including what I’ll generously refer to as “creative accounting.” More corporate fraud often means more private actions.
Willis: Strategically, do you consider that there are rules of thumb about how to juggle and resolve concurrent securities class actions, derivative suits and government investigations?
DR: The U.S. legal system is supposed to ensure that justice is served by “secur[ing] the just, speedy, and inexpensive determination of every action.” Yet, we know that incredibly talented defense lawyers are paid thousands of dollars per hour (some almost $50 per minute) to advance any argument that could assist a securities fraud defendant in evading liability. And, plaintiffs bear the burden of proof, which means the more memories fade, the more difficult it is for us to compile the necessary evidence to carry that burden. That’s a potent cocktail for defendants to exploit every opportunity to prolong litigation.
In securities fraud matters, defense counsel navigate between and among prosecutors, regulators and private plaintiffs to enable their clients to evade liability for securities fraud. Although seemingly a gross misallocation of societal resources, delaying a determination on the merits, or avoiding it altogether, is viewed as a victory from a corporate wrongdoer’s perspective. From that perspective, the goal is to resolve the government investigation with no findings and minimal information provided that might be used in a civil case. Where that’s not possible, the goal is an early dismissal in the civil case without discovery, so the alleged fraudster can fight the government investigation on a single front.
But sometimes defense tactics result in an own-goal. In a recent high-profile securities fraud case involving a pull-forward revenue recognition scheme, the defense secured a complete dismissal of the class action suit on behalf of investors. We appealed the dismissal. While on appeal, one of the individual defendants settled with the SEC and paid a penalty of less than $10 million. The SEC’s action was based on the precise facts alleged in our class action. The defense, I suspect, felt that the matter was in an ideal posture because they only settled with the SEC after obtaining dismissal of the class action, such that class action plaintiffs would not be able to re-open the case before the district court. Fortunately, that was incorrect. We revived the case and prosecuted it to the eve of trial, ultimately recovering in excess of $430 million (or almost 50 times the SEC penalty) for investors on what had been a dismissed case.
Willis: What do you think will be the effect of the Jarkesy decision in the short and long runs?
DR: The SEC’s in-house administrative enforcement forum (which was at issue in Jarkesy) is not the most significant tool to protect investors. From a compensatory standpoint, private securities litigation recovers far more for investors than SEC enforcement activity. This has become even more pronounced as the SEC’s resources are reduced and its enforcement mandate curtailed and re-focused. The stark reality is that private litigation has now become the primary anti-fraud enforcement tool for public markets in the United States. Free-market advocates looking for support need look no further than the sizeable gap between private-action fraud recoveries and SEC recoveries. The combination of the Jarkesy decision and a new administration committed to downsizing government should widen this gap. It’s also something that has caused asset managers who’ve been historically reluctant to take leadership roles in private litigation to reconsider in the face of what inevitably will be even fewer SEC actions.
Now, to be clear, the potential implications of the Jarkesy ruling are significant; Justice Sotomayor outlined some of them in her dissent. If the Court extends Jarkesy’s reasoning, there may be far-reaching effects in all kinds of contexts, and you may see enforcement activity hobbled across the board. We are not there yet, but the reasoning in Jarkesy was quite muscular and certainly something to keep a wary eye on.
Willis: How much effect do you think the death of Chevron deference will have on SEC enforcement efforts?
DR: Chevron’s impact is secondary to the immediate and long-term impact of the sweeping funding and policy changes underway right now at the SEC. Through cuts and attrition, we are witnessing an unprecedented exodus of talent and a curtailment of the SEC’s oversight and enforcement mandates.
Arguments can be made in favor of laissez-faire securities markets – where regulators are neutered or non-existent and slick-suited financiers hawk get-rich schemes, use unfettered leverage, and raise money via the sale of equity in “blank check” companies. Such markets existed in the United States a hundred years ago. They still exist in many places around the world. Yet, it is no coincidence that since the dark depths of the 1930s, the U.S. financial markets have led the world in market capitalization growth and initial public offerings, generating trillions of dollars in wealth for investors around the globe. This is because our markets have been protected by twin sentinels – a thoughtful regulatory agency in the form of the SEC and a legal regime that provides for private enforcement of the securities laws. Our markets are (or were, until very recently) the envy of the world precisely because they are transparent and well regulated by this combination of efficient regulatory oversight and private enforcement efforts.
While I think a number of companies will privately applaud the curtailment of the SEC, this is a bad development for the U.S. economy. Neutering a storied agency whose mission is “protecting investors, maintaining fair, orderly and efficient markets, and facilitating capital formation” is nothing to celebrate. Neither is the demise of Chevron deference in the context of a 340 million-person society. Perhaps if we were still a nation of 5 or 10 million people, limiting governmental action solely to laws considered and enacted by the legislative branch would be workable. We must not ignore that when regulatory oversight is eviscerated, corporations that adhere to traditional American concepts of honesty, integrity and fair dealing (think Berkshire Hathaway and many others) will find themselves at a distinct competitive disadvantage in an environment where corporate fraud is not merely tolerated, but implicitly encouraged via structural changes and messaging.
Willis: Your firm has had a few trial in recent years. What are the factors that cause some cases to go to trial rather than settle earlier?
DR: Yes, post-trial, mid-trial and eve-of-trial resolutions in securities fraud class actions are on the rise and have yielded our clients several billion-dollar plus recoveries in recent years. The manner in which we prepare our securities cases for trial is critical to our clients’ track record of success. The preparation of a complex PSLRA class action for trial is difficult and resource-intensive. In the last 18 months alone, we have dispatched a half-dozen securities class action trial teams around the country to cities such as Baltimore, San Francisco, and Houston. This includes high-profile cases such as Apple and Under Armour, which settled in the weeks leading up to jury selection. It also includes Alta Mesa, the first SPAC class action to be tried to a jury.
We have a tradition where our trial team – partners, associates, paralegals and trial technology specialists – establishes a “war room” and then hunkers down in the city where trial will take place for an intense period of final preparation in the months leading up to trial. Our internal culture around trial excellence is a very important part of what helps our clients regularly achieve extraordinary results.
The number one factor in causing cases to go to trial is the ability to win cases at trial. Many defense firms, defendants, and D&O insurers have managed their expectations based on a securities bar that is too often ill-equipped to try cases. Defense counsel know all too well whether a case is being prepared for trial or if the other side is just going through the motions (literally and figuratively). We have a deep bench of former state and federal prosecutors and public defenders. They look at and prepare every case from a trial perspective; they’d rather try their case than accept industry-average recoveries of a few cents on the dollar. That attitude is contagious and their knowledge is teachable, so our firm’s culture is one where we’d rather risk a loss at trial than guarantee a loss with an inadequate settlement.
WTW hopes you found the general information provided here informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, WTW offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).
Darren Robbins is a founding partner of Robbins Geller Rudman & Dowd LLP. Over the last two decades, Darren has served as lead counsel in more than 100 securities class actions and has recovered billions of dollars for investors.
Darren has been recognized as one of the nation’s top securities litigators by numerous organizations and publications, including The American Lawyer, which commended him for helping “set the pace for [his] peers,” and Chambers USA, which called him “a prominent figure in the field of securities litigation” and “one of the leaders of the plaintiff Bar.” Darren was also recognized as a Litigator of the Week by The American Lawyer for his work in In re Valeant Pharms. Int’l, Inc. Sec. Litig. Darren was awarded California Lawyer of the Year by the Daily Journal for 2022, and Lawyer of the Year by Best Lawyers® for 2023 and 2025.
