Experience > Damage Analysis > Securities Disputes
Securities allegations can involve either publicly-traded companies, or investments in private firms. Either way, these disputes require Fulcrum’s core skills of (i) assessing the fairness of accounting presentations, (ii) analyzing of damages associated with capital markets, and (iii) valuing of businesses and intangible assets.
- Determined economic losses suffered by lenders on security interests in a company whose financial statements had been falsified. Estimated the value of the company, which then determined the implied value of the security interest at issue in the case under the assumption that proper financial disclosures had been made at earlier dates. Company value estimates were at different dates based on a variety of factors including: actual market transactions, change in financial conditions, analysis of importance of various financial results to the market place, and statistical evidence.
- Estimated economic losses suffered by a bondholder whose bonds’ value fell allegedly as a result of the inadequacies of the bonds’ servicer. Estimated the value of the bonds under the assumption that the bonds had been serviced properly. Bond-value estimates were based on a variety of factors including: actual market transactions, change in market and financial conditions during the relevant time period, comparable bond values, analysis of the relative importance of various economic and financial results to the market place, and other statistical evidence.
- On behalf of a class of purchasers of a publicly traded stock on national and international stock exchanges, used advanced econometric methods (e.g., Dickey-Fuller tests) to determine whether the market for the stock shares during the class period reflected and incorporated information – whether or not the stock exchanges were efficient markets for the stock (i.e., tested if the stock followed a “random walk” commonly used as evidence of an efficient underlying market).
- A class of owners of a large public hospital stock alleged that “but-for” the hospital’s independent auditors failure to disclose the relatively large Medicare “outlier” payments on the hospitals public financial statements, the class would not have bought the stock resulting in a loss. To determine whether it is customary for independent auditors of U.S. hospitals to disclose hospital Medicare “outlier” revenues, analyzed CMS’s (Center for Medicare and Medicaid) HCFA (Health Care Financing Administration) database and other public hospital databases, identified top 200 hospitals and analyzed their financials.
- Determined the intrinsic value of a Fortune 500 company’s stock price for a securities litigation case. Created multiple models under various scenarios. Performed industry and company specific research. Utilized discounted cash flow analysis, guideline company multiples, and transaction multiples as indications of value.