First Marblehead Corporation v. Gregory House
Analysis Group worked on behalf of the defendant, First Marblehead Corporation, in a case involving stock options granted to an individual. Former First Marblehead employee Gregory House attempted to exercise his stock options nearly six years after leaving the company -- which went public several years after Mr. House's departure. When Mr. House discovered that his options had expired 90 days after leaving First Marblehead, he sought damages in US District Court for not being informed of the time limit, and for the loss of what would have been the increased value of his shares. First Marblehead counsel Adler Pollack & Sheehan retained Analysis Group to determine (a) whether a reasonable investor in the former employee's position would have exercised incentive stock options during the three-month period following his departure; and (b) whether he was damaged by allegedly not being informed of the 90-day time limit to act.
After an Analysis Group team of Affiliate Robert A. Sherwin and Managing Principal Mark Howrey examined First Marblehead's audited financials, the Grant of Incentive Stock Options to Mr. House, and other key documents, Mr. Sherwin testified that no reasonable investor in the plaintiff's position would have sought both to borrow funds and to otherwise convert liquid assets (cash) into the relatively illiquid asset of First Marblehead's then nonpublicly traded stock, and that Mr. House would have been made worse off in the process.
A jury found that First Marblehead had failed in its duty to inform the former employee of the three-month expiration of his options, but, consistent with Mr. Sherwin's financial evaluation of the situation, awarded no damages.