securitiesMSG provides consulting services relating to all aspects of the creation, valuation, and analysis of debt, equity, derivative, and hybrid securities. We combine the latest academic research with extensive practical experience to provide timely and effective analyses of securities issues, as well as cogent testimony when required. Our experts regularly offer expert opinions in well-publicized Rule 10b-5, Section 11 and Section 12 cases, using modern financial theory and advanced statistical techniques to assess market efficiency, liability, and damages resulting from alleged securities violations. In addition to cases related to publicly-traded securities, our senior experts have provided consulting and expert testimony in numerous engagements involving private entities and government agencies.


Market Efficiency

An information services company was accused of reporting revenues and earnings figures that were materially false. The company was alleged to have improperly deferred income and accrued royalties, resulting in the overstatement of revenue and understatement of expenses. A shareholder lawsuit was brought claiming damages for the alleged fraud. MSG was retained to determine whether the company’s stock traded in an efficient market and to analyze the issue of loss causation.

Loss Causation

A manufacturer of consumer electronic accessories was alleged to have misled investors by prematurely recording revenues, incorrectly valuing inventory, and failing to disclose production difficulties that threatened the company’s ability to retain and service its customers. MSG was engaged to analyze the issue of loss causation and determine the damages, if any, suffered by the company’s shareholders.


A semiconductor technology firm engaged in stock-option backdating, thereby providing employees with lower stock-option exercise prices. A lawsuit was filed alleging that the company had misled investors regarding the compensation of employees, compliance with GAAP, and its financial results. MSG was retained to calculate the damages, if any, to investors.

Sections 11 and 12

A leading developer, producer and marketer of professional salon products announced that it had to restate three years of earnings, resulting in losses for each of the three years. Upon news of the earnings restatement, the price of the company’s bonds plummeted, precipitating a securities lawsuit. MSG was engaged to quantify damages, if any, under Sections 11 and 12 of the Securities Act of 1933.

Analyst Coverage

A publicly-traded women’s specialty retailer filed for bankruptcy protection and soon found that it and the primary stock analyst covering the company were embroiled in a securities class action lawsuit. The lawsuit alleged that the stock analyst representing a major brokerage firm failed to meet industry standards of due diligence in preparing analyst reports on the company. The retailer falsified its disclosures to the investing public by fraudulently claiming it had significant sales of cosmetic products in addition to its main line of clothes. Leading up to the point of the bankruptcy filing, the analyst continued to write glowing reports about the company. MSG was retained to assess the disclosures made by the company as well as the quality of the due diligence performed by the stock analyst and to calculate damages, if any.


A Fortune 500 pharmaceutical company failed to receive Food & Drug Administration (FDA) approval for a new drug it was seeking to market. Following the announcement of this news, the company’s stock price declined. A lawsuit was filed alleging that the company had failed to make timely disclosure of manufacturing and quality deficiencies that had caused the FDA to withhold its approval of the new drug. MSG was retained to calculate damages, if any, to shareholders.

Rule 10b-5

In a class action lawsuit filed on behalf of shareholders of a publicly-traded manufacturer of laser-based medical instruments, the shareholders alleged that the company failed to adequately disclose the size of the market for its lasers. When equity analysts and others following the company learned of the firm’s “true” market potential, the stock price fell on the reported news. MSG performed a detailed review of the disclosures made by the company, as well as reports written on the company and on the market for the company’s lasers. While our primary focus quantified damages suffered by shareholders under Rule 10b-5, the analysis also included a quantification of Section 11 and 12 secondary offering damages as well as Section 20A insider trading damages.


A telecommunications equipment manufacturer provided vendor financing to a foreign customer that ultimately defaulted on its obligations to the company. Following public disclosure of this news, the company’s stock price fell. A lawsuit was filed alleging that the company’s disclosures regarding vendor financing had been inadequate, in that the company did not disclose the amount or the name of the customer to which it was extended. MSG was retained to assess the market efficiency of the company’s securities, determine whether the allegedly fraudulent conduct caused investors to suffer losses, and to quantify damages, if any, to both equity and debt investors.

Short Selling

In a class action lawsuit, a manufacturer of digital imaging and printing plate technologies was accused of issuing false and misleading financial statements. The class action complaint also alleged that directors and officers shorted stock in the company while having material non-public information. MSG was engaged to determine damages, if any, that incorporated the effects of the short selling.

Class Action

A diversified publicly-traded holding company operating a snack goods distribution business and hair care salons became financially distressed, primarily as a result of declining profitability. Ultimately, the company filed for bankruptcy protection. Shareholders filed a lawsuit alleging that the company and its management failed to adequately disclose the company’s deteriorating financial condition. MSG was retained to evaluate the appropriateness of the company’s disclosures. The analysis included a review of financial statements, press releases, and other disclosures. We also analyzed the materiality of certain issues which had not been disclosed by the company.


Investors in a series of oil and gas limited partnerships filed a RICO class action suit against the organizers and promoters of the partnerships. The plaintiffs alleged that the defendants sold the partnership interests in a fraudulent manner by misrepresenting the risk and expected return of the investments. The plaintiffs also claimed that the defendants schemed to induce the investors into later selling their partnership interests at below true market values. MSG was retained to evaluate and critique the damage estimates prepared by the class expert. We developed an analysis of reasonable market expectations as well as a critique of the class expert’s damage report.

Loss Causation

A global brand beverage company took inventory write-downs. A lawsuit was filed under Rule 10b-5 of the Securities Exchange Act of 1934 alleging that the company had overstated its revenues by channel stuffing that later led to the write-downs of the returned product. MSG was engaged to assess loss causation and calculate damages, if any, on both a per-share and aggregate basis.

Class Certification

In a highly publicized matter, a provider of telecommunications services to carriers and commercial enterprises worldwide disclosed that it had revenue recognition irregularities. Following the announcement, the company’s market capitalization plummeted, leading to several class action lawsuits and ultimately to the company’s filing for bankruptcy protection. MSG evaluated whether preferred stockholders had conflicting interests with the common stockholders.


A large European communications equipment manufacturer acquired another communications firm in a stock-for-stock transaction. Approximately a week after the transaction closed, the acquirer announced a downward revision of sales and earnings. Shares of the acquirer fell sharply following the announcement, precipitating a class action lawsuit. MSG was engaged to quantify damages, if any, under Sections 11 and 12 of the Securities Act of 1933. We used statistical models and performed other analyses to determine the damages.