Investments

Cornerstone Research has worked with leading experts in the field and analyzed a wide range of topics related to mutual funds, including fund fees, NAV repricing and calculations of cash flows to holders under alternative NAVs, and factors influencing fund performance. Our experience also covers mutual funds of different asset types, including equity, bond, and financial derivatives. We have:

• Assessed the reasonableness of a mutual fund’s fee-setting process
• Evaluated the appropriateness of a mutual fund’s process for determining daily net asset values (NAV)
• Analyzed factors that led to the decline in NAV of a proprietary ultrashort bond mutual fund during the financial crisis
• Analyzed the performance of and shareholder voting in closed-end funds targeted by an activist hedge fund
• Evaluated allegations related to closet indexing by actively managed mutual funds
• Analyzed whether markets for mutual funds are competitive and investors respond to changes in fees

We have worked on hedge fund matters related to investment strategies and performance, position and portfolio valuation, risk management, fund fees, subscriptions and redemptions, capital structure, hedge fund partner value, insider trading, market manipulation, and Ponzi schemes. We have analyzed financial instruments such as equities, bonds, money market securities, currencies, commodities, derivatives, and exotic structured products. We have:

• Assessed fund performance relative to benchmarks and peers and how investment practices and portfolio exposure adapt to changing market conditions
• Conducted valuation of illiquid and bespoke instruments and mark-to-market positions, including complex derivatives
• Assessed the effectiveness of risk management efforts and the evolution of risk management practices
• Evaluated the nature of the risks taken by the funds, including assessing the ex-ante probability of an adverse price movement
• Assessed fee structures, such as performance incentives for managers and pricing structures for investors, investment flows, capital structure, and the use of leverage

Cornerstone Research has worked on issues related to the structure and trading of exchange-traded funds (ETFs), including leveraged and inverse ETFs. We have:

• Analyzed whether trading in ETF shares by affiliated parties impacted the closing price of the ETFs relative to the NAV
• Examined the alleged manipulation of the NAV of fixed-income ETFs through trading in the market for the underlying bonds
• Assisted with internal investigation of investor trading activity and gains/losses in leveraged and inverse ETFs

Our consultants and experts work on matters related to registered investment advisers and broker-dealers, including issues related to fees, discretionary trading, suitability, and fiduciary duties. We have:

• Analyzed allegations of breach of fiduciary duty related to cash sweep programs
• Examined discretionary trading strategies and suitability of strategies, including those involving complex products (e.g., annuities, structured products)
• Analyzed large transaction-level and participant-level datasets in the context of reverse-churning allegations
• Evaluated alleged violations regarding front running of client trades
• Analyzed disputes between customers and brokerage firms related to margin liquidations and risk management following failure to meet a margin call
• Analyzed the reasonableness of investment advisory fees and brokerage commissions

We have evaluated the investment performance of ETFs, mutual funds, and other investment advisors and analyzed whether the investment strategy and performance was consistent with stated targets or guidelines. We have extensive experience in analyzing transaction-level and holdings-level data in various asset classes to analyze investment strategies and behavior. We have:

• Analyzed fund performance and risk versus comparable funds and market benchmarks
• Examined the trade decisions and the execution of trades made by portfolio managers
• Analyzed large transaction-level and participant-level datasets, as well as investments and investment decisions in the context of pensions, annuities, and defined contribution retirement plans

Our team of consultants and experts is frequently retained by counsel representing a variety of clients in the private equity and venture capital sectors, including general and limited partners, acquisition targets, banks, founders, and more. We have a wealth of experience working alongside these legal professionals to support cases in various venues, including the Delaware Court of Chancery and other state and federal courts. Our expertise is invaluable to counsel as they navigate complex legal matters on behalf of their clients.