Fideres is a leading provider of economics and industry expertise for complex disputes in financial markets across various jurisdictions.  We provide consulting and expert witness services in a variety of circumstances, including but not limited to: regulatory investigations, economic evidence for claim filing, damages evaluation, discovery, class certification, and settlement negotiation.

Fideres has a long history acting as consulting and testifying experts for various landmark financial litigation, covering different types of misconducts (fraud, mis-representation, benchmark and market manipulation), financial markets (equities, interest rates, foreign exchange and commodities) and financial instruments (stocks, bonds, futures, options and other OTC derivatives). Our expert engagements involve different players in the financial market, including:

  • Commercial and investment banks, broker-dealers, proprietary trading firms
  • Mutual funds, ETFs, Pension funds, hedge funds
  • Securities and commodity exchanges
  • Multinational corporations

Our partners and team of economists have in depth experience and knowledge in providing expert opinions on various matters related to financial markets. This allows us to effectively implement sophisticated models and large datasets with in-house infrastructure and technology.

Fideres provides direct and unbiased advice firmly grounded in the data and factual evidence available to us. Our opinions are formed based on the results of rigorous economic models that are well researched in academic literature. We communicate our ideas and results in a way that is easy to understand and to the point. 

Our financial markets practice focuses on:

  • Damages arising from market and benchmark manipulation
  • Valuation and risk analyses of structured financial derivatives
  • Trading policies and protocols
  • Fund manager misconduct/ misrepresentation
  • Financial benchmark design
  • Class certification issues
  • Market size and class-wide damages estimation
  • Market definition in litigations
  • Market practice and market power
  • Plus factors

Click here to download a copy of our Financial Litigation brochure.

ISDAfix Class Action Litigation

Problem

  • Identify manipulative transactions resulting in ISDAfix benchmark manipulation
  • Calculate damages based on both defendants’ and plaintiffs’ transactional data
  • Evaluate feasibility of plan of allocation

Solution

  • Fideres developed pricing models for different types of products affected by ISDAfix manipulation (e.g. swap, swaption, constant maturity swaps, Treasuries)
  • We developed screening tools to identify instances of benchmark manipulation
  • Fideres calculated class-wide trading volumes of various relevant products to estimate the distribution across different baskets of products based on various assumptions
  • We also reviewed defendants’ chatroom communications and matched them to the trading records to match documentary evidence of price manipulation to actual transactions data

Result

  • Fideres’s proprietary research led to the filing of a class action in the US
  • We provided a preliminary class-wide damages estimation
  • We designed a simplified plan of allocation based on notional traded and other sensitivity factors that significantly reduced the burden of data collection and the cost of settlement fund allocation
  • We estimated class-wide damages as well as damages broken down by the relevant financial products involved
  • The plan of allocation was successfully approved by the judge

Swap Mis-selling Cases

Problem

  • In the years leading up to the Great Financial Crisis, many UK businesses were sold interest rate swaps or other derivative instruments which ill suited their need to hedge their interest rate or financial exchange risks
  • Fideres was retained by counsels to advise numerous corporate claimants on the suitability of swap transactions, alternative hedging strategies, market practice aspects and damages calculations

Solution

  • Fideres relied on its partners’ direct market experience and expertise in the structuring and pricing of OTC derivatives, to model and price swap transactions and alternative hedging strategies
  • We reviewed transaction documentation and marketing material with respect to the relevant circumstances

Result

  • We identified alternative suitable hedging strategies
  • We provided estimates of damages suffered by claimants under different scenarios and at different points in time, for the purpose of the pleadings
  • Fideres also identified failures by defendants in complying with good market practice standards and regulatory principles

Closet Indexers

Problem

  • Develop a methodology to identify closet index funds in Europe and North America (these are funds which advertise as actively managed but, in reality, track a benchmark)
  • Provide detailed analysis and a report on the methodology used and results

Solution

  • Fideres filtered the universe of actively managed funds for the same criteria used by ESMA to produce a sample of over 1000 funds
  • We classified the sub-sample of funds into category-based thresholds for each key statistical metric, such as Active Share, Tracking Error and R-Squared

Result

  • Fideres found that over 16% of European UCITS funds of the sample analyzed show characteristics that may indicate they are potential closet indexers
  • The study was mentioned in a Financial Times article
  • Results of the study closely approximated the results published by ESMA

E-mini Futures Spoofing Class Action

Problem

  • Market manipulation of financial products can occur through a variety of ways. In the e-mini futures class action, Fideres investigated allegations of market spoofing
  • Spoofing transactions occur in a very short period of time, which require high-frequency trading data in order to identify anomalous manipulative transactions
  • Fideres was tasked with identifying the frequency and price impact of spoofs including whether this had a lasting impact on the market

Solution

  • Fideres built screening tools to identify price anomalies in the order book of e-mini futures. The model was calibrated using known spoofs published in regulatory fines
  • Fideres negotiated with the defendant on data coverage of early discovery and identified potential spoofs using discovery data
  • Fideres quantified the impact of order book spoofs on transaction prices and estimated class-wide impact on relevant products

Result

  • We demonstrated the lasting impact of defendant’s spoofing transactions and provided class-wide damages arising from the manipulative conduct
  • The class action complaint filed with our analysis and the defendant ultimately led to a settlement on the case
  • The judge preliminarily approved counsel’s plan of allocation

FX Manipulation

Problem

  • Determine in which ways and at what times market manipulation may have been taking place in foreign exchange (FX) markets
  • Estimate the amount of damages caused by FX manipulation and which categories of plaintiffs were impacted by the alleged misconduct

Solution

  • Fideres built a statistical model to capture FX dynamics and determine anomalous market movements around the daily 4pm WM/Reuters fixing that could have been caused by manipulative behavior, such as front-running, banging the close or painting the screen
  • We analyzed 27 currency pairs. These include all major G10 currency pairs as well as a selection of emerging market currencies
  • Fideres extended damage theories to include manipulation of other fixings, (such as the ECB fixing) manipulation of bid/ask spreads as well as manipulation in the futures market

Result

  • We estimated frequency and quantum of alleged manipulation across a basket of the most frequently traded currencies
  • We assessed damages on both a class-wide basis, as well as for a selection of large institutional investors, arising from manipulation of the WM/Reuters fixing, the ECB fixing, bid/ask spreads in the spot as well as  the futures market

Gold Price Manipulation Litigation

Problem

  • Identify signs of market manipulation and benchmark rigging in precious metal markets including gold, silver, platinum and palladium

Solution

  • Fideres developed new methodologies, including traditional collusion filters and financial market models, to analyze trading data in the physical and futures markets and identify anomalous market behaviour/trading patterns
  • We applied game theory methodology to analyze benchmark panel members’ submissions and identify collusive patterns

Result

  • Fideres’s market manipulation findings were used in class action complaints filed in the US on gold, silver, platinum and palladium cases

RBS Rights Issue Shareholder Dispute

Problem

  • During the financial crisis, RBS raised a large amount of new capital
  • Very shortly after, the share price tumbled and investors lost large sums of money
  • English counsel for a large group of institutional investors sought help from Fideres to identify missing or misleading financial information in the rights-issue prospectus issued by the defendant

Solution

  • Fideres cross-referenced information disclosed by the defendant in the rights-issue prospectus with other sources to identify potential inconsistences, missing disclosure and miscategorization of financial liabilities and write-down provisions
  • We identified numerous missing or misleading statements related to RBS’s exposure to subprime loans in the US, conduits, SIVs and other distressed asset classes

Result

  • Fideres’s findings featured prominently in the particulars of claim issued by the claimants. These factual findings formed the basis for the litigation, which eventually resulted in a large settlement

We have provided expert economic advice in most of the prominent international financial market cases of the last decade.

Benchmark Manipulation

  • Gold, silver and other precious metals fixing
  • VIX manipulation
  • Foreign Exchange Manipulation

Regulatory Investigations

  • Australian Securities and Investments Commission’s investigation into Bank Bill Swap Rate
  • South African Competition Commission's investigation into FX manipulation

Fund Management

  • Closet-indexers excessive management fees
  • Misrepresentation of fund’s liquidity prior to suspension
  • Conflict of interest

Structured Product & Derivatives

  • Constant Proportion Portfolio Insurance (CPPI) mis-selling
  • Constant Swap hedging suitability

Damages Modelling

  • Interest-rate swap mis-selling claims
  • Cross-currency swap mis-selling claims

Class Certification & Plan of Allocation

  • ISDAfix expert report and plan of allocation
  • USD LIBOR expert report and plan of allocation

Click here to download a copy of our Financial Litigation brochure.

Robert Chang

Head of Financial Litigation

Director

Prof. Carol Alexander

Affiliate Academic Expert

Prof. Linda Allen

Affiliate Academic Expert

Prof. Myron Glucksman

Affiliate Academic Expert

Prof. Robert Webb

Affiliate Academic Expert

Prof. Wolfgang Schmidt

Affiliate Academic Expert

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