In a recent Law360 article, Principal Sujay Davé and Senior Associates Nguyet Nguyen and Yingzhen Li discuss how experts should approach using the event study methodology in crypto litigation, given the unique features of crypto markets and individual assets. The coauthors highlight five considerations experts and counsel should be aware of, including those related to market efficiency, models of expected return, the first disclosure, the event window, and pricing data given simultaneous trading across exchanges.

The full article, “How Event Studies Can Be Applied to Crypto Markets,” is available below.

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“With his extensive expertise in securities trading, valuation, and causation, Drew is a robust addition to our firm’s Securities team,” said Brattle Interim President & Principal David J. Hutchings. “His testifying experience and ability to help parties understand risk in complex portfolios involving options will be a major asset to Brattle’s clients.”

With more than 15 years of litigation consulting experience at top consultancies, Dr. Roper has served as a testifying expert in several high-profile commercial litigation matters, including as a class action certification expert. He has consulted on matters involving options trading, claims relating to risk management, fixed and variable rate annuities, and more.

Dr. Roper’s consulting experience is supported by a strong background in academia. He has held research and teaching positions focused on corporate finance at the Stanford Law School, the University of Wisconsin-Madison, and Duke University’s Sanford School of Public Policy. His work has been published in several leading economic and financial journals.

“I look forward to continuing to build the Brattle brand in securities litigation,” said Dr. Roper. “With the deep bench of expertise already in place and opportunities to invest going forward, Brattle should be on the top of the short list for clients looking for experienced securities experts that use innovative approaches.”

Before joining Brattle, Dr. Roper founded his own litigation consulting firm Catalyst Economic Consulting, and gained prior experience as an Executive Vice President and a Vice President, respectively, at two global economics consultancies.

To learn more about Dr. Roper, please see his full bio.

The post Financial Economist Andrew Roper Joins The Brattle Group as Principal appeared first on Brattle.

Cryptocurrency tracing – which requires tracing blockchain activity and the internal transactions of crypto businesses – is essential to support creditor asset recovery efforts and clawbacks in cryptocurrency platform bankruptcies such as the ongoing Celsius saga. Mr. Hinton details how tracing methods can differ depending on whether crypto is held on account-based or unspent transaction output (UXTO)-based blockchains, and examines the potential recovery avenues for investors in Celsius’s Custody and Borrow accounts. Such efforts will likely be a test case for investors considering similar actions in other crypto business bankruptcies, including those of FTX, Voyager Digital, and Genesis.

The full article, “How Celsius Customers May Use Tracing to Recover Deposits,” is available below (subscription required).

The post Cryptocurrency Tracing Goes off the Chain: Principal Paul Hinton Discusses How Tracing Crypto Currency Still Requires Traditional Methods in Recent <i>Law360</i> Article appeared first on Brattle.

The winners of the 2022 Brattle Group Prize in Corporate Finance are:

First Prize, $25,000: Andreas Fuster, Paul Goldsmith-Pinkham, Tarun Ramadorai, and Ansgar Walther
Predictably Unequal? The Effects of Machine Learning on Credit Markets
The Journal of Finance, February 2022

Distinguished Paper, $10,000: Asaf Bernstein
Negative Home Equity and Household Labor Supply
The Journal of Finance, December 2021

Distinguished Paper, $10,000: Isaac Hacamo and Kristoph Kleiner
Forced Entrepreneurs
The Journal of Finance, February 2022

The Brattle Group has funded this annual award for more than 20 years. These prizes are presented at the AFA’s annual meeting, and this year’s awards were announced at the AFA’s Annual Meeting 2023, which took place January 6–8 in New Orleans, LA. All papers published in issues of The Journal of Finance from the first five issues of the given year, and December of the previous year, are eligible. We congratulate the winners on their achievements!

View a complete list of past winners

More about the AFA

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This issue has come into sharper focus with the 2022 bankruptcies of Celsius Network LLC – a company that offered interest-bearing crypto accounts – and crypto exchanges FTX and BlockFi. All three entities froze customer assets upon filing for bankruptcy and left customers without a clear sense of how, or even if, they could recover their assets. In the article, the authors evaluate how asset protections afforded to customers of traditional financial institutions compare to similar businesses in the crypto space. They also highlight past instances where crypto customers have attempted to recover assets in bankruptcy and discuss how asset protections in the crypto space may evolve in the future.

The full article, “Crypto Bankruptcies Reveal Fault Lines in Asset Recovery,” is available below.

The post Brattle Principal Co-authors Article on Asset Recovery Amidst Rising Crypto Bankruptcies appeared first on Brattle.

Brattle Principal Paul Hinton has coauthored a recent Bloomberg Law article with former Assistant US Attorney Sid Kamaraju of Pryor Cashman detailing some of the sanctions compliance challenges that both traditional finance and the crypto industry face. The article also identifies the limitations of surveillance strategies centered on list-based screening and examines how past regulatory investigations demonstrate the need for a sophisticated implementation of a risk-based approach to avoid enforcement actions. 

The full article, “Navigating Russia Sanctions Compliance in the Crypto Space,” is available below.

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Dr. Goldstein will also continue in his capacity as Professor of Finance at Babson College, where he holds the Donald P. Babson Chair in Applied Investments. He specializes in examining the structure of equity and bond markets and does work in climate change, dividend policy, asset pricing, real estate, and privatization.

We wish Dr. Goldstein all the best in this new role.

The post Brattle Congratulates Academic Advisor Dr. Michael Goldstein on Appointment as Secretary/Treasurer of the Financial Management Association appeared first on Brattle.

First Prize, $25,000: Peter M. DeMarzo and Zhiguo He
Leverage Dynamics without Commitment
The Journal of Finance, December 2020

Distinguished Paper, $10,000: Itamar Drechsler, Alexi Savov, and Philipp Schnabl
Banking on Deposits: Maturity Transformation without Interest Rate Risk
The Journal of Finance, February 2021

Distinguished Paper, $10,000: Pat Akey and Ian Appel
The Limits of Limited Liability: Evidence from Industrial Pollution
The Journal of Finance, February 2021

The Brattle Group has funded this yearly award for more than 20 years. These prizes are presented at the AFA’s annual meeting, and this year’s awards were announced at the virtual 2022 ASSA/American Finance Association’s (AFA) Annual Meeting on January 7–9. All papers published in the prior year’s issues of The Journal of Finance are eligible. We congratulate the winners on their achievement!

View a Complete List of Past Winners

More about the AFA

The post American Finance Association Announces 2021 Recipients of The Brattle Group Prize appeared first on Brattle.

The Depository Trust Clearing Corporation (DTCC) and a cryptocurrency startup, Paxos Trust LLC, are both exploring the blockchain-based approach for settling equity trades – known as distributed leader technology (DLT). This new approach has the potential to increase settlement speed, reduce risk, and allow for faster access to funds and reduced costs compared to the traditional centralized approach. However, DLT also comes with its own unique security risks and capacity questions, which the DTCC and Paxos pilot projects are seeking to answer.

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The post Brattle Experts Discuss Applying Blockchain Technology to Equity Trade Settlement in Law360 Article appeared first on Brattle.

The article, “How Blockchain Could Rescue 10b-5 Damages,” outlines the current difficulties associated with identifying damaged investors in the indirect ownership system, and details how blockchain may provide a solution. The primary challenge results from the creation of “artificial shares” by short sellers. Under the current share recording system, both the investor whose share was lent and the buyer of the artificial share believe they have beneficial ownership leaving it unclear who is eligible to receive damages.

The authors note that blockchain distributed ledger technology (DLT) may solve ownership recording problems, though this prospect may need more development. In a blockchain-based transactions record system, each physical share would have an assigned token. The token would instantaneously record the shares transaction history. With this record it would be possible to know who had the beneficial share ownership at any given time and therefore who would be qualified to make 10b-5 damages claims. While DLT appears to be advantageous given today’s high-frequency trading environment, this system also has its own challenges. For example, there is uncertainty as to how much information such a system would be able to process with trades for single companies in the multi-millions of shares per day.

According to the authors, while the indirect ownership system was an improvement to prior paper-based recording systems, it is no longer adequate for current markets. As blockchain technology develops, it may prove a viable solution in recording share transaction records and resolving issues associated with 10b-5 damages distribution.

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