Overdraft Fee Litigations

Class Actions Related to Overdraft Charges

Cambridge Finance Partners is involved in a number of overdraft fee litigations. These data-intensive cases require significant technical expertise as well as knowledge of bank data processing methods. We have the ability to manage vast amounts of customer transaction data, to re-post daily transactions for bank customers, and to estimate the impact of posting order on fees. We have developed the storage and computing capability to apply analytical tools for banks with millions of customers, years of data, and billions of transactions, and without the limitations of sampling. Our work in these matters is ongoing.

RMBS Litigations

Residential Mortgage Backed Securities Litigation

Cambridge Finance Partners is involved in numerous litigations related to issuance of RMBS securities, related underwriting, and subsequent investor losses. These matters are ongoing and involve private and government actions as well as class actions.

Losses Related to Foreign Currency Hedging

Middlesex Retirement System v. Boston Safe Deposit and Trust Company et al

CFP’s Dr. Noah worked with defendant Mellon Financial Corp. and counsel to analyze losses related to a foreign currency overlay program implemented by a third party manager hired by Middlesex Retirement. We provided daily value calculations for a portfolio of hundreds of bilateral purchased and written foreign currency options contracts. Our analysis included calculation of portfolio sensitivities to market conditions as well as identification of periods of improper trading behavior given basic hedging concepts and written trading guidelines provided to the manager. Our work both measured historical losses as they occurred and allowed our clients to see exactly when improper trading took place. Additionally, we estimated total trading costs and compared these costs to those of a properly implemented hedging program. The case settled prior to trial.

Enron Securities Litigation

Consulting Experts in Securities Class Action

In one of the largest securities cases in U.S. history, Cambridge Finance Partners provided consulting services to counsel for a top-10 international bank in addition to assisting a testifying expert. This multi-year litigation, with plaintiffs’ total damages claim nearing $50 billion, involved a wide array of finance and economic research efforts. Typical for a 10b(5) securities case, we conducted a day-by-day event study, constructed trading models in order to replicate and critique plaintiffs’ damages claims, and analyzed financial reports, analysts’ reports, stock, bond, and options trading data, and other public information in order to identify curative disclosure events. We developed indices of industry performance that transformed over time along with the firm’s underlying business segments. We constructed bottom-up measures of enterprise value. In addition to these analyses, we assisted counsel in a multi-defendant coordinated defense effort, and we provided analysis and explanation of several financial structures including securitizations, swaps, derivatives, and other complex structures.

Forward Markets for Energy

Valuation of a Terminated Forward Power Contract

In a dispute between a major power generator and an investor-owned utility, CFP’s Dr. Fenn, working with the law firm of Simpson Thacher, offered testimony regarding the valuation of a large forward power contract that had been lawfully terminated.  The difference between the two sides’ valuations was in the tens of millions of dollars.

Over the course of a one week arbitration in Los Angeles, CA, Dr. Fenn testified for nearly a full day before retired federal judge John Martin.  Dr. Fenn offered testimony on the distinction between price-takers and market-makers in forward energy markets, the price-impact of large trades, and the relationship between trading activity and price volatility.  Following arbitration the parties entered into a confidential settlement.

Analysis of Claims Trading Order

Dana Corp. Bankruptcy

In proceedings in U.S. Bankruptcy Court in Manhattan, investor Carl Icahn’s effort to assert greater control over Dana Corp. was based, in part, on how a court-issued trading order impacted the market for the company’s debt. Attorneys for Dana Corp. asked Robert Noah of Cambridge Finance Partners to analyze the impact of a Bankruptcy Court issued claims trading order. Leading up to a scheduled hearing in August, 2006, Dr. Noah analyzed tick-by-tick trading in Dana Corp. bonds both before and after the issued trading order. In addition, he performed the same analysis for several comparable firms that had been through bankruptcy under claims trading orders. An agreement between Icahn’s group and Dana Corp. was reached shortly before the scheduled hearing.

Risk Management Consulting

Improving Internal and External Communications

Careful communications about a corporation’s financial risk management program can be as important as the design of the program itself. Cambridge Finance Partners worked with a major merchant power generator to better communicate its hedging strategy, internally and externally. For example, we stressed education about the dynamic nature of hedging and the dissemination of relevant performance metrics.

California Energy Crisis

Analysis of Market Manipulation

For two years Cambridge Finance Partners helped Duke Energy respond to allegations arising out of the California energy crisis of 2000 and 2001. The energy crisis was characterized by record prices and rolling blackouts and resulted in the bankruptcy of one of California’s three investor-owned utilities. Power generators and energy marketers were alleged to have caused the crisis by physically and economically withholding energy.

As part of this engagement, CFP analyzed numerous aspects of the Western energy markets including capacity utilization, pricing, and bidding behavior. We worked closely with both Duke and outside counsel to prepare extensive testimony and economic analysis given before the Federal Energy Regulatory Commission, the California Senate, and offices of the State’s Attorney General. At the conclusion of the engagement, lead outside counsel offered this endorsement: “On a matter of extraordinary length and complexity, Cambridge Finance Partners provided our client with outstanding service. Their ability to frame clear and compelling narratives from large amounts of data is impressive. I highly recommend them.”

Event Study and Valuation Related to Acquisition

Sprint-Nextel Merger

Cambridge Finance Partners assisted counsel for Sprint-Nextel in a matter related to a contractual obligation to acquire Nextel Partners. The purchase obligation was triggered by the Sprint-Nextel merger, and at issue was the purchase price for shares of Nextel Partners not already owned by Sprint-Nextel. While publicly traded, Nextel Partners’ share price was affected by a price-markup provisions of an existing purchase agreement as well as by expectations of acquisition. Cambridge Finance Partners provided event study analysis related to the share price of Nextel Partners and assisted counsel with determination of the impact of expectations of acquisition and the existing purchase agreement on share price.

Long-Term Capital

Long-Term Capital Holdings, et al. v. United States of America

At one time, Long-Term Capital was the largest hedge fund in history with more than $100 billion in assets. Its partners included legendary bond trader John Meriwether, and Nobel Prize-winning economists Robert Merton and Myron Scholes. Following Long-Term’s demise, its partners sued the U.S. government over a substantial tax dispute. Cambridge Finance Partners was retained by the U.S. Department of Justice to provide economics and finance consulting services in this highly publicized matter. CFP assembled a team of experts, including Nobel Prize winner Joseph Stiglitz, and assisted the government attorneys with all aspects of the case. Following a four and one-half week trial, the Court subsequently ruled in favor of the United States. [Read more about this case.]