Brattle was retained to examine allegations by the SEC and the US Department of Justice that a company’s senior management was engaging in earnings manipulation by using reserves and improper revenue recognition to achieve earnings to meet analysts’ consensus estimates. A Brattle team examined senior management’s roles and responsibilities in preparing financial data. A detailed analysis found that the company’s financial statements were presented in accordance with GAAP; the company’s internal controls were operating effectively in accordance with applicable standards; and senior management reasonably relied on subordinates to manage the company’s day-to-day accounting. Performing an intraday event study of the company’s stock price response to announcements of earnings compared to analyst consensus estimates revealed that the alleged earnings manipulation was not material and resulted in de minimis harm to shareholders. The client settled with both regulatory agencies.