Securities & Financial Economics

AlixPartners experts have been retained in some of the highest-profile matters in the areas of financial economics, valuation, and quantum and risk management practices in the U.S., U.K., Europe, and other geographies.

Our team of financial economists have assisted financial institutions, hedge funds, regulators, commodities firms, trading exchanges, cryptocurrency platforms, and high net-worth individuals involved in all stages of litigation and arbitration, as well as in regulatory and internal investigations. We also help financial institutions and trading clients proactively prevent and detect future sources of potential regulatory scrutiny.
 
We leverage our deep understanding of financial markets and the tools of financial economics to assist clients in “when it really matters” situations. Our economists regularly submit compelling expert reports and provide oral testimony to courts and arbitration panels. We routinely advise on alleged damages, including developing damages estimates and responding to damages estimates put forth by other experts. We specialize in matters involving valuation of financial instruments and transactions, forensic trade reconstruction and analysis, and examination of trading and risk management strategies. We employ sophisticated statistical and modelling techniques along with large-scale data analytics to help clients before, during, and after the investigation process, whether internally or externally driven.

Analysis of Trading and Risk Management Strategies

Our financial economists leverage their trading and risk management expertise to assist clients in disputes and investigations, including addressing issues such as whether: 

• Trading strategies were consistent with: a) stated investment objectives, mandate, and policies and b) past trading patterns as well as current market conditions
• Risk management strategies were appropriately implemented and risk reports convey relevant and accurate information on key risk indicators and measures
• The timing and manner of a portfolio liquidation, generally due to a failure to meet margin calls, was appropriate
• Damage estimates reflect economic theory, as well as the facts and circumstances of the case

Internal Investigations and Regulatory Enforcement

Our financial economists have extensive experience in assisting clients with internal investigations, parallel investigations, and contentious regulatory investigations. Our experts have worked for regulators and have also worked for institutions and individuals facing regulatory enforcement from regulators such as the SEC, CFTC, DOJ, FERC, SFO, and FCA, as well as exchange and FINRA actions. We assist clients in responding to data requests from regulators and communicate the results of our analyses to regulators. We also regularly assist clients with any follow-on civil litigation resulting from enforcement actions.
 
Examples of our work in supporting internal investigations and enforcement actions include analysis of:

• Valuations of positions held in investment portfolios
• Evaluation of market, credit and liquidity risks in investment portfolios
• Mis-selling claims
• Alleged market abuse

Analysis of Alleged Market Manipulation and Misconduct

In cases involving allegations of market manipulation, our financial economists leverage quantitative and statistical techniques and analyze big data (including HFT datasets) to replicate and examine complex trading strategies such as “spoofing,” “front running,” “wash trading,” and “banging the close.” We examine alleged trading sequences and conduct market event studies and impact analyses. Examples of markets analyzed include:

• Benchmarks such as LIBOR, ISDAFIX, and WM/Reuters; Platts commodity indices; and credit default indices, such as CDX and iTraxx
• Equity markets and corporate bond markets
• Equity derivatives markets, such as futures and options on equity and volatility indices
• Commodities markets, including physical and derivatives in base and precious metals, energy and agriculture products
• Interest rate products such as US Treasuries and Treasury futures
• Cryptocurrency and digital assets

Valuation of Financial Instruments and Transactions

Our financial economists use their in-depth knowledge of economics, finance, statistics, and financial and econometric modelling to assist clients facing challenges related to the valuation of financial instruments and transactions, including complex derivatives (often in derivatives close-out disputes), structured products and financing transactions (for example, cross-border financings, repo agreements, and securities lending transactions).

Commercial Disputes and International Arbitration

Our experts use the tools of financial economics to assist clients involved in commercial disputes and international arbitration. Our experts provide consulting support and submit expert evidence on issues including causation and the quantification of alleged damages. Our financial economists have provided expert witness testimony before various courts (including U.S. state and federal courts and U.K. High Court) and arbitral tribunals (including FINRA, ICC, ICSID).

Class and Group Actions

Our financial economists are often retained as consultants and expert witnesses in class and group actions involving financial products and the markets in which they trade. Our experts address issues including class certification, materiality, loss causation, and damages. Our analyses are used to assess potential damages claims and to assist with settlement negotiations in a variety of jurisdictions, including the U.S., the U.K., and continental Europe.