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Brattle experts have assisted in numerous broker-dealer disputes in forums ranging from FINRA arbitrations to Federal Court.

Broker-dealer investment recommendations are generally required to meet various suitability standards. These standards include “reasonable basis,” “customer specific,” and “quantitative suitability” obligations. Often these standards require assessments of numerous factors including a financial product’s design and costs, the state of relevant markets, and a specific customer’s investment profile (e.g., investment objectives, financial situation, risk tolerance, tax status).

Experts in broker-dealer disputes must have the knowledge to analyze broker-dealer operations, explain complex products and markets, and opine on suitability, disclosures, valuation, and damages. Many cases require dealing with hindsight bias issues that arise subsequent to the under-performance of particular investments or portfolios. The application of sound financial and statistical techniques is often the best approach for overcoming hindsight bias and Brattle experts have the industry, regulatory, and financial experience to properly address all of these issues.

Engagements
REPRESENTATIVE ENGAGEMENTS

Below is a list of representative engagements for our Broker-Dealers practice.

Complex municipal bond issuance

A Brattle expert testified for defendants in connection with a complex municipal bond financing package that included bond insurance, a remarketing agreement, a non-vanilla interest rate swap, and a swap counterparty surety bond. Testimony topics included contemporaneous municipal bond valuation and pricing, market custom and practice, foreseeability of various market events, municipal credit ratings, and municipal bond insurance.

Retail pension-to-defined benefit conversion cases

A Brattle expert testified for respondents in several disputes involving purported broker recommendations to convert pension plans into defined contribution plans. The testimony involved statistical analyses of the potential financial outcomes for specific claimants, quantification and analysis of market and credit risks, and appropriateness of various disclosures.

Structured notes and principal protected notes

A Brattle expert testified in several disputes involving high net worth individuals’ investments in various structured notes, including “principal protected notes.” Testimony topics included product market risks, issuer credit risk, and foreseeability of a note issuer’s (Lehman Brothers) demise; the 2007-2009 financial market crisis and the Federal Government response to the crisis; and product specific disclosures.

Alleged investment suitability violations

On behalf of a leading broker-dealer alleging investment suitability violations in a FINRA arbitration matter, Brattle identified and supported two experts: a custom and practice expert in the duties and responsibilities of a clearing broker and an economist providing damages testimony.

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