Savings and Loans

A savings and loan sought recovery for damages after certain accounting practices previously guaranteed by the government were later disallowed by the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). Cornerstone Research initially identified and supported rebuttal experts. Our role later expanded to include supporting the plaintiff's experts as they developed their damage theories, providing analyses and exhibits for both fact and expert witnesses, and helping attorneys prepare their cross-examination and rebuttal of government experts. After a fourteen-month trial and two appeals, the Federal Circuit affirmed a judgment of $381 million to our client.

Securities Firms

Counsel for codefendant market makers retained Cornerstone Research to assess allegations of "tacit collusion" among securities dealers that spawned private and regulatory antitrust actions. The research concluded that collusion was "extraordinarily unlikely" given the market structure and there was "no responsible scientific basis for drawing a conclusion of collusion."

Insurance

A property-casualty insurer and a large corporate client were engaged in a dispute over approximately $100 million in settlement costs and legal fees incurred in nearly two dozen product liability suits brought by industrial customers against the corporate client. Counsel for the insurer retained Cornerstone Research to assess the economics of the original product liability cases and of the corporate client's claim against the insurer. We analyzed opposing experts' findings, applied a variety of models to predict product failure, and assessed the impact of product warranty terms on claimed damages. Counsel used our findings in depositions of opposing witnesses and in settlement negotiations. The case settled favorably.

Banks

In a dispute between a bank and a former corporate client, counsel for the bank retained Cornerstone Research in a matter involving over-the-counter derivatives transactions. In preparation for trial we worked with three finance experts on several issues, including developing an overview of derivatives and how corporations use them in managing risk, developing models to determine the prices of certain derivatives, examining risk management activities undertaken by the plaintiff, and assessing various pricing models for the derivatives in question. In a series of pretrial rulings, the court dismissed most of the plaintiff's claims against our client. The case settled shortly thereafter.

Asset Management

Cornerstone Research was retained by attorneys representing a custodial bank that was sued by three pension funds whose asset portfolios had disappointing returns because of a decline in certain real estate markets. The funds claimed the bank should have alerted them to the declining performance of their investments. Cornerstone Research analyzed delinquency rates within the portfolios and more broadly. We then identified and supported several experts to assess real estate market conditions, real estate investment allocation within pension funds, and the fiduciary obligations of custodial banks. The case settled favorably.

Private Equity

A leveraged buyout fund sued a venture capital firm, claiming an operating company sold to the plaintiff had been valued inappropriately and alleging failure to disclose material information about the operating company. Cornerstone Research worked with a finance expert to assess the practice of due diligence in venture capital transactions, to consider the materiality of information in such transactions, and to examine the valuation analysis prepared by the plaintiff's expert. After both experts submitted reports and were deposed, the case settled on terms favorable to our client.

Market Timing

Cornerstone Research has worked with a number of clients to investigate issues relating to "market timing" of mutual funds and insurance products. Working with leading experts, Cornerstone Research has assisted mutual fund and insurance complexes in internal investigations, negotiations with the Securities and Exchange Commission and state attorneys general, the distribution of settlement funds, and shareholder class-action lawsuits.