The Brattle Group has provided expert testimony in all phases of Rule 10b-5 and Section 11 and 12 claim matters. We have substantial experience concerning analyses of loss causation, market efficiency, and trading behavior to support successful arguments on class certification. We work with clients during the early phase of securities class actions and help to evaluate whether a case should proceed. At the class certification phase, our experts assist clients in determining whether the securities traded in an efficient market and the extent of conflicts among class members. Using well-developed arguments and approaches to evaluate per-share damages scenarios, we help clients assess potential liability. Additionally, we identify economic arguments in favor of, or against, defendant liability.
Our staff and affiliated experts have developed innovative methods involving issues of class certification, loss causation, and damages in numerous cases across a wide range of industries. Using plaintiff-style damage calculation methodologies, we help our clients from the beginning of a case. We also estimate the exposure and the amount defendants are likely to pay if the case settles.
In litigation involving a privately held software company being acquired in a stock transaction by a larger, publicly held software company, we calculated economic damages as a result of the acquisition being transacted at an artificially inflated stock price. The defendant, a large public accounting firm, was alleged to have failed in its duties to the public markets because of disregard for Generally Accepted Auditing Standards (GAAS), Generally Accepted Accounting Principles (GAAP), and other misrepresentations. Our analysis estimated the impact that specific accounting misstatements had on auditing negligence on the public accounting firm's part, and calculated the relevant stock price “but for” these misstatements.
On behalf of Deutsche Bank in the Enron class action, The Brattle Group supported Prof. Suresh Sundaresan from Columbia Business School in analyzing the informational market efficiency of Enron bonds under the Bell/Unger Factors. Using Enron’s credit default swaps (CDSs) and Moody’s expected default frequencies (EDFs) as benchmarks, Professor Sundaresan concluded that markets for Enron bonds were not efficient. His conclusion was based primarily on the findings that (1) Enron bond prices stayed the same for weeks upon announcements of Enron-specific material bad news whereas the same news caused almost immediate responses in Enron CDS spreads and EDFs; and (2) Enron bonds were not traded as frequently as the CDSs during the class period.
The Brattle Group analyzed the financial impact of inventory overstatements in a securities fraud case in the health care industry. Our analysis demonstrated that inventory misstatements were an inconsequential part of the overall scheme of the fraud, and that they did not cause material artificial inflation in the stock price or material damage to shareholders.
In securities litigation for a national managed care provider, we analyzed economic loss causation, modeled various damage scenarios, and provided a critique of the defendant’s expert reports. Our work assisted counsel for the class in preparing for settlement negotiations. The case settled for $300 million.