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Managing Director, White Collar, Regulatory and Internal Investigations
Alex Russell is the Managing Director of White Collar, Regulatory and Internal Investigations for Bates Group, where he is responsible for managing cases related to institutional disputes involving trust or banking entities, or cases related to investment banking or sales & trading, as well as those involving ultra-high net worth individuals. In addition, Mr. Russell is responsible for managing matters involving the assessment of economic damages. Mr. Russell also serves as the co-leader of Bates Group’s Big Data Analytics segment, with a particular focus on the use of data analytics in market manipulation or fraud cases. Mr. Russell provides expert witness testimony related to valuation, economic damages, quantitative financial modeling, trading systems, and derivative strategies and products within both the retail and institutional securities litigation practice areas. He is an adjunct professor of finance at both Linfield College and in the Graduate School of Management at Willamette University.
Mr. Russell was previously the head of Bates Group’s Research division, where he was responsible for managing, researching and writing reports that provide analytic coverage of the fixed income, equity, and structured product markets.
Before joining Bates Group, Mr. Russell was a Consultant with LECG where he used his experience in accounting, finance, and the securities industry to provide support in forensic investigatory engagements mainly related to financial litigation cases.
Prior to LECG, Mr. Russell was an auditor with the Oregon Department of Revenue, where he reviewed the filings of both individual and corporate filers. He has previously worked as a research analyst for Merrill Lynch and as an analytic consultant to Willamette University’s endowment.
Retained by counsel to provide mathematical modeling support and analysis of other experts’ Markov process model, including responding to the expert report in a damages case against a public company (healthcare). Quality of life and dollar cost impact of utilizing one type of heart valve over another were modeled in detail.
Retained by counsel to address the suitability of various venture capital investments. Worked in association with testifying expert to compile financial analysis and comparable company analysis in order to determine whether or not suitability requirements were met. Created testimony exhibits and other various analyses.
Retained by counsel to assist in the representation of a large mutual fund company in numerous (100+) FINRA arbitrations relating to its short term bond fund. Prepared damages models, and conducted various fixed income specific analysis relating to credit spreads, housing prices, duration and investment concentration requirements. Conducted in depth research into numerous complex securities such as CDOs, ABS and CMOs. Responded to other expert reports and analysis, as well as preparing and refining testimony exhibits. Modeled NAV for the fund based on different hypothetical concentration requirements.
Retained by a Swiss Bank to investigate its prime brokerage relationship with a large hedge fund. Specifically at issue was the options writing strategy utilized by the hedge fund, and the pattern of margin calls that this strategy had generated. A detailed review and recreation of the trading strategy was conducted, and a final report submitted.
Retained by counsel to provide analysis and evaluation concerning option strategies for use within a portfolio. Evaluated structured products proposed to the group by bulge bracket Investment Banks. Modeling of all products, historical analysis, and simulation techniques used to estimate impact on the portfolio of including these derivative securities.
Retained on behalf of a national broker-dealer in FINRA arbitration in San Francisco. A software error was alleged to have inflated the likelihood that claimants could retire at the age they wished, with their desired level of spending and an acceptable risk of running out of capital in retirement. Evaluated the ability of claimants to retire on time, subject to the above conditions, using various simulation techniques, including Monte Carlo, Stochastic Present Value and Exponential Reciprocal Gamma solutions. Damages mitigating calculations were also offered via testimony. Assisted counsel in analyzing other expert material, and provided questions for cross examination.
Retained on behalf of a multinational financial services corporation in FINRA arbitration in Dallas, regarding damages caused by a temporary error in the online trading platform provided to a day trading entity. Cost basis, wash sales, and trade matching considerations were covered, in addition to damages models. Responded to damage theories put forward by the opposing expert in settlement negotiations.
Retained on behalf of a medical group, hospital, and emergency room physicians in Nevada State Court, regarding economic damages, including but not limited to future lost wages and loss of support damages, resulting from medical malpractice.
Retained on behalf of a national corporation in Washington State Court, in a securities class action lawsuit subsequent to a restatement of financials. Simultaneous inquiry from the SEC, and a derivative shareholder case (Pennsylvania) were also filed. Testimony areas include the calculation of 10b-5 damages under various theories of share price inflation, event study analysis to identify significant movements in stock price, and statistical analysis of short selling activity as a driver of stock returns.
Retained on behalf of a global asset management firm in Arizona State Court to provide a forensic accounting of the activity that occurred within a Trust account wherein potential fraud had occurred with respect to a Trust beneficiary of diminished mental capacity. Provided a full accounting of the activity, as well as a rebuttal of plaintiff's expert's theory of damages. A written report was provided.
Retained on behalf of an individual in Washington State Court to provide an analysis of the economic damages suffered as a result of alleged improper termination. After an extensive review of his personal documentation, an analysis of the economic damages was created, covering the loss in income, benefits, and retirement account contributions and asset growth within those accounts. Modeling was conducted and damages were estimated under multiple different scenarios, including different retirement ages. A written report was provided.
Retained on behalf of a leading global provider of insurance, annuities and employee benefit programs in FINRA arbitration to opine on a reallocation from one set of funds, to a different sub-allocation of funds within a variable annuity in a particular client's account. Modeled the economic impact of the reallocation on both the death benefit and total guaranteed withdrawal amount riders associated with the annuity, as well as on the account value over all as a result of the change. Hypothetical scenarios assuming the allocation had not been changed were also presented.
Retained on behalf of a global asset manager in relation to a regulatory enforcement action initiated by the Department of Labor. The allegations concerned trade crossing within protected accounts, and counsel requested an analysis of the DOL's theory of damages. Pricing and subsequent performance of fixed income and equity securities was examined, as well as establishing correct benchmarks based on client account objectives. Multiple scenarios were generated addressing the DOL's critiques, and an alternative theory of damages was put forth that rebutted the DOL's critiques related to mispricing, subsequent performance on trades, and trade execution.
Retained by special counsel of the special committee of the board of directors of a public company (semiconductor) to perform a forensic investigation of the company’s historical stock option granting practices to determine if backdating of stock options had occurred and to opine on the correct accounting treatment of stock option grants with regard to the company’s restatement.
Retained by special counsel of the nominating and governance committee of the board of directors of a public company (wireless devices) to perform a forensic accounting investigation of the company’s historical stock option granting practices to determine if backdating its stock options had occurred and to opine on the correct accounting treatment of option grants with regard to the company’s restatement. Retained by the company to evaluate the financial results related to its stock option restatement in accordance with GAAP.
Retained by counsel to investigate the activities of a large conglomerate company in relation to its Australian uranium export activity. Analysis included detailed reconciliation of thousands of shipping documents, end user agreements, and transfer pricing analysis. IASB and Australian regulatory issues were also examined.
Retained by counsel to examine the financial relationship between a major US investment Bank and a large Italian dairy conglomerate. Analysis focused on the treatment of numerous complex derivative agreements entered into over the course of a decade. Advised on proper accounting treatment of agreements under both GAAP and IASB standards.
In a well-publicized bankruptcy involving a broker-dealer, managed millions of data points across competing databases. Managed our IT team and in-house programmers to efficiently search each database and succeeded in tracing the movement of the firm’s assets under management (customer funds) in the weeks prior to bankruptcy. In turn, this made it possible to identify and illustrate when assets had been used inappropriately. Summary analysis was prepared using Python.
Retained on behalf of the regulatory division of a major broker/dealer to respond to an SEC inquiry that focused on investment allocation in a group of mutual funds. Spanning 30 funds that were traded across 1,200 accounts, traced the activity on the 1,000+ purchases that were at issue. Allocating the trading and account transfer activity between those purchases/sales which were at issue (as opposed to those which were not) proved to be the paramount task. With the assistance of our in-house programming team and the use of our proprietary programs, successfully navigated through the hundreds of thousands of lines of transactions to ultimately arrive at a clear and concise summary that the client relied upon to respond to the SEC.
Worked directly with a financial services firm’s inside counsel to prepare an economic benefit analysis showing the impact of a large number of variable annuity switches. The analysis used internal reports as well as Morningstar to evaluate the switches at policy, benefit and fund levels. Analyses included review of surrender charges and premium enhancements to evaluate the potential damages associated with alleged variable annuity sales practice violations. In addition, assisted counsel during this investigation by reviewing the damage calculations provided by the state and providing clarification regarding the calculation methodology.
On behalf of the regulatory division of an international broker/dealer analyzed over 300 multicurrency accounts with the ultimate goal of tracing the flow of assets to establish relationships in a potential money laundering scheme. Utilized many proprietary programs and created custom program solutions (including relationship mapping) that highlighted those transactions connecting accounts/individuals. This resulted in the client having to close many accounts and pursue additional legal action.
Retained by a Fortune 500 company to perform statistical analysis to support cash reserve estimates and project completion likelihood in relation to a major construction project in Las Vegas.
Retained by a local bank company to perform a risk assessment of their lending process, including a statistically valid examination of their likely loan losses, and the overall quality and characteristics of their existing loan portfolio. Prepared and submitted an advisory report.
Retained by state government to analyze the revenue implications of adopting various hotel and tourism tax policies. Involved detailed forensic analysis of previous revenue generated under various tax initiatives. Created and ran numerous simulations of proposed tax system using SAS, in order to prepare an authoritative report recommending a single course of action.
Performed risk assessment on a number of proprietary strategy funds acquired by a particular financial institution prior to their being available for the institution’s general FA team to put clients in. This was done to determine whether the Funds’ performance appeared inconsistent with its stated investment strategy or other benchmarks such that there was a basis for further scrutiny. The assessment analyzed strategy-adjusted returns across a number of dimensions to assess on an ex-ante basis if there was a heightened risk of fraud/NAV manipulation, based on aberrant performance indicators. Dimensions included: 1. A discontinuity in the distribution of returns, 2. Unconditional serial correlation in returns, 3. Conditional serial correlation in returns, 4. The pattern of return and volatility, 5. Data quality, 6. Frequency of positive returns v. frequency of negative returns, 7. Kurtosis and skewness, and 8. Measures of low correlation between fund returns and the returns of similar assets.
Created a mock MIDAS (Market Information Data Analytics System) for a major financial institution in order to prepare that institution for possible findings if they were targeted for review by the SEC. Mean frequency analysis was applied to every order within the selected traders’ books against the NBBO. The curve formed by the shape of deviations from the mean over time was used to examine a number of potential Rule 10b-5 violations, depending on the shape of the deviation space. These could include market timing, spoofing, inter-positioning, trading ahead, and insider trading.
Bates Group, Managing Director, White Collar, Regulatory and Internal Investigations, 2019 - present
Linfield College, Adjunct Professor – Finance
Willamette University Atkinson Graduate School of Management, Adjunct Professor – Finance
Bates Group, Director, Institutional and Complex Litigation, 2016 - 2019
Bates Group, Head of Research, 2013 – 2016; Senior Manager Capital Markets, 2011 - 2013
LECG, Consultant, 2008 - 2011
LECG, Senior Associate, 2006 - 2008
Willamette University Endowment, Consultant, 2004 - present
Oregon Department of Revenue, Audit, 2004 - 2006
Merrill Lynch, Research Analyst, 2005
Willamette University, MBA Finance, 2006
American University, BA Mathematical Logic, 2003
Chartered Financial Analyst, 2012
Certified Fraud Examiner, 2008
Association of Certified Fraud Examiners
CFA Society of Portland
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Bates Group is with you every step of the way. Contact us today for more information on how our End-to-End Solutions can help your firm.