SP Syntax (Silver Point Capital, L.P.) v. Ernst & Young, LLP
In this matter involving alleged professional negligence, SP Syntax sought $40 million in damages in connection with a $130 million credit facility, or loan, it had extended to Syntax-Brillian Corporation (SBC) and failed to collect when SBC filed for bankruptcy in 2008. SP Syntax alleged that SBC's auditor, Ernst & Young (EY), made negligent misrepresentations associated with SBC's financial statements, and that SP Syntax had relied upon these financial statements when entering into the credit facility. Analysis Group Managing Principal Keith R. Ugone was retained by Morrison & Foerster LLP, counsel for EY, to opine on economic causality and damages-related issues.
Dr. Ugone and the Analysis Group case team, Vice Presidents Na L. Dawson and Minh P. Doan, examined voluminous documents produced by both parties in this case, and identified the known or knowable risks associated with providing a credit facility to SBC. These included, but were not limited to, certain accounts receivable collection risks and market softness risks. Dr. Ugone opined that it was the materialization of these known and knowable risks that caused SP Syntax's claimed losses.
Analysis Group provided economics and damages support to EY and Morrison & Foerster relating to discovery, various economic and financial analyses, depositions, and trial preparation. Dr. Ugone provided deposition testimony regarding economic causality and damages issues. After a three-week trial, the jury found that EY was not negligent in its preparation of SBC's financial statements.
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