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Regulatory Investigations & Enforcement

When facing high-profile regulatory investigations or enforcement actions that involve securities, commodities, or digital assets, it is always best to consult with the experts. 

Brattle is the industry leader in the detection, analysis, and proof (or disproof) of fraudulent or manipulative behavior in commodity, energy, financial, and securities markets; in consumer protection contexts; and in alleged schemes involving alternative investments.

In these types of matters, Brattle works closely with our clients, which include defense counsel and government agencies, to develop compelling economic arguments that are tailored to the regulatory inquiries, investigations, and enforcement actions at issue. We use the same skill sets to assist plaintiffs and defendants who are involved in attendant civil or criminal matters. We also assist in-house counsel in compliance matters and in conducting internal investigations of matters involving practices and employee conduct that have regulatory compliance implications.

Brattle draws from its deep roster of consultants and experts to put forth the optimal consulting team and testifier(s) for each case. Our team includes leading industry experts, academics, and consultants with experience in financial industry custom and practice, regulatory and compliance processes, large and complex datasets, and accounting standards and financial reporting. Collectively, we provide valuable insight and critical support in all stages of regulatory investigations and enforcement actions.

Our Focus:

  • Algorithmic trading
  • Analysis of corporate disclosures and assessment of materiality
  • Asset tracing
  • Disruptive trading practices
  • Financial reporting and forensic accounting
  • Fraud
  • Internal investigations
  • Market manipulation
  • Regulatory compliance and trade surveillance
  • Trading, underwriting, and distribution of securities
  • Valuation of illiquid securities, including structured finance, private equity, and asset-backed securities

News

Brattle Principal Dr. Rosa M. Abrantes-Metz served as a testifying expert in economics on behalf of FERC, and her findings were cited repeatedly in the Commission’s latest administrative order, as well as in the 2015 order and the 2016 appeal decision.

CASE HIGHLIGHT

In a matter that has been in dispute for nearly a decade, the Federal Energy Regulatory Commission (FERC) in December 2020 upheld its two previous decisions that, in 2008, one of BP’s traders engaged in market manipulation in the natural gas market in Texas. Brattle Principal Dr. Rosa M. Abrantes-Metz served as a testifying expert in economics on behalf of FERC, and her findings were cited repeatedly in the Commission’s latest administrative order, as well as in the 2015 order and the 2016 appeal decision.

Engagements
REPRESENTATIVE ENGAGEMENTS

Below is a list of representative engagements for our Regulatory Investigations & Enforcement practice.

Valuation of illiquid securities

Brattle experts consulted to and testified on behalf of the DOJ in the criminal case, US v. Ahuja, et al. In this matter, hedge fund managers were accused of overstating the value of illiquid structured finance securities. We summarized and analyzed contemporaneous data, including data relative to various pricing benchmarks, to establish that the hedge fund managers selectively relied on a subset of available information about the value of the securities in question to over-value them. Brattle testified at trial to present this analysis to the court and the jury. The hedge fund managers were found guilty, and the court cited Brattle’s analysis and testimony as a key component in this determination and sentencing.

Trading of foreign exchange (FX) derivatives

In US v. Bogucki, Brattle was engaged as the expert team on behalf of Barclays FX options trader Robert Bogucki in his criminal defense of charges of wire fraud for allegedly trading against a large FX options order from Hewlett Packard (HP). DOJ prosecutors alleged that Mr. Bogucki, with the benefit of confidential information, lied to HP and engaged in illegal front-running to push down the value of HP’s options. Brattle analyzed the trades at issue, studied communications between traders and HP, reviewed risk and governance practices concerning firm and regulatory expectations, and examined other aspects of the FX market –including trading volumes and the behavior of other market makers. Mr. Bogucki was acquitted by way of a Rule 29 motion after one week of testimony in front of a jury.

Manipulation of internal controls

The SEC retained Brattle in a matter in which the SEC accused a company’s financial executives of manipulating internal controls to allow improper premature revenue recognition. Brattle supported an accounting and internal controls expert who examined the various controls that the defendants claimed to be effective. The expert opined that the company actually had a material weakness in its internal controls that the defendants failed to disclose to the company’s auditors and in its financial statements. The SEC settled this matter with the defendants.

Confidential investigation of alleged manipulation

Brattle provided economic analyses, reports, and live interaction with the FERC’s Office of Enforcement to assist with the defense of a large energy trading company suspected of using physical power trades to game market rules and manipulate the value of related physical and financial derivatives positions. The analyses demonstrated that the trades at issue were executed in pursuit of stand-alone profits (and thus without fraudulent intent), and that the related positions were not aligned to benefit from the behavior. The investigation was dropped by the regulator.

Experts
Publications
Presentation
Regulation Best Interest Basics
July 2020
Article
Derivatives' Roles in Manipulation
October 2017
Published in the Futures and Derivatives Law Report, Volume 37, Issue 9

The article, published in the October 2017 issue of The Journal of the Law of Investment & Risk Management Products Futures & Derivatives Law Report, discusses the role derivatives play in market manipulation.

Publication
Target Date Funds: Economic, Regulatory And Legal Trends
December 08, 2017
Published in Law360
Report
Target Date Funds: Economic Regulatory, and Legal Trends
September 26, 2017
Published by The Brattle Group, Inc.

In the first of a series of papers examining key economic, regulatory, and legal issues related to target date funds (TDFs), Brattle experts Chris Laursen, Ioannis Gkatzimas, and Branko Jovanovic provide an overview of TDFs, report on significant market trends, and summarize recent related litigation.

Report
Building an Effective Trade Surveillance System: A Framework-Based Approach using Guidance from Two Recent FERC White Papers
March 20, 2017
Published by The Brattle Group, Inc.

The whitepaper outlines a cost-effective, learning-driven approach for companies to develop in-house trade surveillance systems to analyze potentially manipulative behavior.

Presentation
FERC's Market Manipulation Rule: Impact on FTRs and the Virtual Market
March 08, 2016
Presented at the Energy Bar Association Midwest Chapter Annual Meeting
Article
D.C. Circuit Clarifies that SEC Need Not Show Market Impact in Manipulation Cases
December 09, 2015
Published in the ABA's Securities Litigation Journal
Article
Coscia Verdict Highlights Different Approaches to High-Frequency Trading
November 12, 2015
Published in Practice Points, a publication of the ABA's Securities Litigation Committee
Article
A Framework for Analyzing Market Manipulation
September 2012
Published in Review of Law & Economics, Volume 8, No. 1
Article
A Comparison of Anti-Manipulation Rules in U.S. and EU Electricity and Natural Gas Markets: A Proposal for a Common Standard
April 2012
Published in Energy Law Journal
Report
Completing the Puzzle: Defining Manipulation Under REMIT
January 2012
Published by The Brattle Group, Inc.
Report
Defining Market Manipulation in a Post-REMIT World
June 2011
Published by The Brattle Group, Inc.
Report
Losing Money to Increase Profits: A Proposed Framework for Defining Market Manipulation
March 2011
Published by The Brattle Group, Inc.
News & Knowledge
January 29, 2021
Testimony of Brattle Expert Dr. Rosa M. Abrantes-Metz Cited Repeatedly in FERC Market Manipulation Matter

Brattle Principal Dr. Rosa M. Abrantes-Metz served as a testifying expert in economics on behalf of FERC, and her findings were cited repeatedly in the Commission’s latest administrative order, as well as in the 2015 order and the 2016 appeal decision.

June 05, 2020
Shaun Ledgerwood to Discuss Criminal Charges in Commodities Cases at CBA Webinar

Brattle Principal Shaun Ledgerwood will join a panel during the half-day Chicago Bar Association (CBA) webcast, “Futures & Derivatives Law: What’s New and What’s Next?” which will take place on June 5, 11:00 a.m. (PT)/1:00 p.m. (CT)/2:00 p.m. (ET).

October 25, 2018
Shaun Ledgerwood to Present at S&P Global Platts Nodal Trader Conference

Brattle Principal Shaun Ledgerwood will speak at the S&P Global Platts 11th Annual Nodal Trader Conference, to be held October 25-26 in New York, NY.

February 21, 2018
Shaun Ledgerwood and John Tsoukalis to Present at Energy Risk Event on Trade Surveillance & Market Compliance for Energy Trading Organizations

Brattle Principal Shaun Ledgerwood and Senior Associate John Tsoukalis will present at Energy Risk’s training event, “Trade Surveillance & Market Compliance for Energy Trading Organizations,” taking place February 21-22, 2018 in Houston, TX.

January 31, 2018
Matthew Aharonian to Participate in The Knowledge Group Webinar on Securities Litigation

Brattle Senior Associate Matthew Aharonian will participate in The Knowledge Group’s webinar, “Securities Litigation: Defense Strategies in 2018 and Beyond,” taking place January 31, 2018 from 12:00 – 1:30 pm (EST).

January 29, 2018
Shaun Ledgerwood and John Tsoukalis to Present at EUCI Conference on Financial Transmission and Auction Revenue Rights

Brattle Principal Shaun Ledgerwood and Senior Associate John Tsoukalis will present at Electric Utility Consultants, Inc.’s (EUCI) conference, “Financial Transmission and Auction Revenue Rights (FTRs/CRRs/TCRs/ARRs),” taking place January 29-30, 2018 in Washington, DC.

January 17, 2018
Brattle Economists Author Article on Derivatives' Roles in Manipulation

Brattle Principal Shaun Ledgerwood and Senior Associate Jeremy Verlinda have authored an article published in the October 2017 issue of The Journal of the Law of Investment & Risk Management Products Futures & Derivatives Law Report, which discusses the role derivatives play in market manipulation.

October 26, 2017
Shaun Ledgerwood to Present at Platts' 10th Annual Nodal Trader Conference

Brattle Principal Shaun Ledgerwood will present at Platt’s 10th Annual Nodal Trader Conference on FTR Litigation and Risks, Updates on Compliance, and Supporting the Mexican Market, taking place October 26-27, 2017 in New York, NY.

September 26, 2017
Brattle Experts Examine Target Date Funds in New Publication

In the first of a series of papers examining key economic, regulatory, and legal issues related to target date funds (TDFs), Brattle experts Chris Laursen, Ioannis Gkatzimas, and Branko Jovanovic provide an overview of TDFs, report on significant market trends, and summarize recent related litigation.

March 20, 2017
Building an Effective Trade Surveillance System: Guidance from FERC White Papers

Brattle Principal Shaun Ledgerwood and Associate John Tsoukalis have authored a white paper that outlines a cost-effective, learning-driven approach for companies to develop in-house trade surveillance systems to analyze potentially manipulative behavior.

March 15, 2017
Sujay Dave to Present Elements of Securities Litigations on The Knowledge Group's Webinar

Brattle Senior Associate Sujay Dave will present during The Knowledge Group’s webinar, “The Elements of Securities Litigation: Understanding the Basics,” taking place March 15, 2017 from 12-2 pm EST.

February 23, 2017
Shaun Ledgerwood Featured in Risk.net article on FERC Manipulation Standards

Brattle Principal Shaun Ledgerwood has been featured in a Risk.net article that discusses the need for greater clarity around the U.S. Federal Energy Regulatory Commission’s (FERC) anti-manipulation standards.

July 07, 2016
Chris Laursen Contributes to Defendants' Win in TMST Mortgage Case

In the recently decided case SEC v. Goldstone et al, Brattle Principal Chris Laursen submitted an expert report and testified in the jury trial held in the U.S. District Court for the District of New Mexico.

December 09, 2015
Brattle Economists Author Article on Proof of Intent in the SEC

Brattle principals Shaun Ledgerwood and Paul Hinton recently authored the article “D.C. Circuit Clarifies that SEC Need Not Show Market Impact in Manipulation Cases” for the American Bar Association’s Securities Litigation Committee.

November 12, 2015
Brattle Economists Comment on Coscia Verdict and Different Approaches to Enforcement in High-Frequency Trading Markets

Brattle principals Paul Hinton and Shaun Ledgerwood have contributed to Practice Points, a publication of the ABA’s Securities Litigation Committee, on the topic of the recent Coscia verdict and enforcement trends in high-frequency trading markets.

July 28, 2015
Shaun Ledgerwood to Chair Panel on Analysis of Market Manipulation at EUCI FTR Conference

Brattle principal Shaun Ledgerwood will chair a panel titled, “What Trading Organizations Can Do to Proactively Manage Swaps Manipulation Risks” at EUCI’s Conference on Financial Transmission Rights, to take place on Tuesday, July 28, 2015 at the Key Bridge Marriott in Washington, DC.

March 31, 2015
Shaun Ledgerwood to Speak on Market Manipulation in U.S. Electricity Markets at Gulf Coast Power Association Spring Conference

Brattle principal Shaun Ledgerwood will speak on the current state of market manipulation activity in the U.S. electricity markets at the upcoming 29th Annual Gulf Coast Power Association (GCPA) Spring Conference.

December 10, 2014
Shaun Ledgerwood to Speak at EUCI Conference on Integrating Energy Trading, Valuation, Market and Credit Risk Management

Brattle principal Shaun Ledgerwood has been selected to present at an upcoming EUCI conference, “Integrating Energy Trading, Valuation, Market and Credit Risk Management,” taking place December 10-11, 2014 in Scottsdale, AZ.

July 24, 2014
Securities and Commercial Litigation Expert Ioannis Gkatzimas Joins The Brattle Group

Securities and commercial litigation expert Ioannis Gkatzimas has joined the firm’s San Francisco office as a principal. Mr. Gkatzimas has significant experience in a wide range of finance and securities litigation matters.