Complex Financial Analysis and Quantum

We have been involved with several high-profile cases that have required the calculation of complex financial instruments, often involving derivatives, futures and other leveraged structured products.

It is critical to break a product into its constituent parts to determine how it worked – or did not work.  Only then can the less quantitative questions can be reviewed, such as the contemporary market environment, the type of selling process, and the suitability of the client for the product. 

Derivative products tend often to incorporate a large number of separate structured products bundled into a product.  Clients may buy many such products.  It is thus extremely difficult to understand the consolidate position in real time.  Our Experts can break these down to analyse what happened at what particular stage of the process.  The maths pre se often isn’t difficult – it is the complexity of the bundling process that makes it so.

A quantum – or range of quanta – are often required to be derived by the Expert to prove the damages involved.  The calculation of these is an art in itself and only through experience can the right assumptions and methodologies be developed for the Courts to consider.

 

CASE STUDIES

GOME

A Chinese electronics retailer bought shares from a Director in a relationship that was alleged not to be at arm’s length.

Richard Harris says, “I  refer you to this very successful case where I was appointed by the electronics distributor, GOME, following my original report for the SFC.  I therefore acted for both sides as a Single Expert.  The quantum was agreed by both sides and the damages were paid to the shareholders.  The annual general meeting was a very successful event for all concerned”.

The SFC’s press release regarding this case is available on their website: HERE.

The announcement by GOME to the HK Stock Exchange contains the Independent Expert Witness report and is here (see Appendix II): GOME case settlement with HK SFC 2014

 

 

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