Financial experts may be required before plaintiffs file a securities fraud allegation
In the fall-out of subprime fiasco, securities fraud cases are focusing on whether companies accurately wrote-down these “toxic” assets according to then-applicable fair value accounting standards (FAS 157 and 115). As BV analysts and fair value experts know, these fair value determinations are especially complex due to the lack of an observable market. Now a [...]
Don May on hedge fund GPs; and the use of M&A valuation methods
Don points out these articles are available free in his posting this morning to the Valuation Professionals site on LinkedIn.
Supply-side ERP more reliable, says Delaware Chancery
In the latest “must read” statutory fair value appraisal from the Delaware Chancery Court, the decision (by V.C. Strine) tackles such critical valuation topics as deference to the market price, determination of the terminal growth rate, historic versus supply-side equity risk premium (ERP), and selection of appropriate beta. In a case that was “largely [...]
Damodaran on the grilling of Goldman Sachs : “mixed feelings”
“While I understand the urge to bring the mighty back to earth, I think that failing to support Goldman at this time is a huge mistake,” admits Professor Aswath Damodaran (NYU Stern School of Business) in his blog Musings on Markets. “To me, this case reveals everything that is wrong with both politics and law [...]
The government may need more complete analyses from its financial experts in criminal securities fraud cases
United States v. Schiff, 2010 WL 1338141 (C. A. 3 (N.J.))(April 7, 2010) Since the U.S. Supreme Court’s decision in Dura Pharmaceuticals v. Broudo, 544 U.S. 336 (2005), federal courts have required shareholders in civil securities litigation to use financial experts to prove loss causation. That is, the plaintiffs will likely need an expert event study [...]
Valuing asset backed securities can often be counter-intuitive, Kahn tells ASA
“The price of senior tranches in asset-backed securities tends to go up as the default rate, and the severity of the defaults, increases,” Daniel Kahn (National Leader, Complex Securities Valuation, Ernst & Young) told attendees at today’s NYC ASA Business Valuation Conference. “This seems illogical, but the senior tranches are not exposed to reasonable losses, [...]
Business appraisers should watch the growing “secondary market” for private securities for opportunities
“The public capital markets are broken,” Adam Oliveri, Managing Director for SecondMarket, told commercial lawyers at the ABA Business Law Sections annual meeting in Denver last weekend. SecondMarket is one of the new centralized sales platforms for illiquid assets. Here are some indicators of what’s wrong with the capital markets now: The number of public [...]
Litigation “crisis” leads to more business courts (besides Delaware Chancery Court)
“Even relatively few lawyers know that there are now business courts specifically designed to handle complex litigation,” the Honorable Ben Tennille (North Carolina) commented at last weeks’ spring meeting of the ABA Business Law Section in Denver, Colorado. As Chief Special Superior Court Judge for Complex Business Cases, Tennille has witnessed the nationwide and now [...]
Valuations from securities and limited partnership litigations may be waning
As many predicted, a wave of securities litigation followed the credit market crash: In 2009, 7,137 claims were filed with FINRA, a 43% increase compared with 2008 (4,982 cases filed). Most of the disputes asserted breaches of fiduciary duty, misrepresentation/fraud, negligence, and breach of contract related to common stock and mutual funds. However, cases concerning [...]
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