Over-the-Counter Derivatives

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 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 financial economics experts: Professors William. Sharpe of Stanford University; Mark Rubinstein of the University of California, Berkeley; and René Stulz of The Ohio State University.

With Professor Sharpe we developed an overview of derivatives and how corporations use them in managing risk; with Professor Rubinstein we developed models to determine the prices of certain derivatives; and with Professor Stulz we examined risk management activities undertaken by the plaintiff and assessed various pricing models for the derivatives in question. In a series of pre-trial rulings, the court dismissed most of the plaintiff’s claims against our client. The case settled.