Confidential Securities Lending Litigations
Analysis Group has provided consulting and expert support in litigations involving securities lending. Typically in these programs, institutional investors made loans to borrowers who, in return, posted collateral with a financial intermediary. The intermediary then invested the cash collateral. After the market suffered declines during the financial crisis, plaintiffs filed suits alleging breach of fiduciary duty, negligence, and unsuitability of investments. Analysis Group teams, led by Managing Principals Jeffrey Cohen and Andrew Wong, developed a proprietary database of information on a range of securities-lending investors and investments in order to establish benchmarks for common industry practices; access to information and levels of knowledge among investors involved in the programs; and investor characteristics. Working with industry and academic experts, we analyzed issues specific to investment management, due diligence, credit analysis, and portfolio management. We also examined how the contracts governing the programs defined nonperformance, and we assessed investment performance failure in the context of the broader market declines.