Our analysis products have been tested and accepted in virtually all litigation and arbitration forums setting the standard for account analyses and reporting of account performance.
At Bates, it all begins with analyzing the account. Using Bates Group’s proprietary software, our skilled professionals prepare high-quality data analytics reports, hypotheticals and what-if scenarios to support or rebut allegations before, during, and after hearings and while settling or mediating matters.
Clients will receive professionally completed ready-to-use schedules detailing account performance that have been thoroughly checked for accuracy. Quality work product has been a hallmark of Bates for over three decades, and we pride ourselves on the consistency with which we have been able to produce and deliver damage reports and supplemental schedules.
Bates Group’s Standard Analysis -- “The Bates Report”
With over 30 years of innovation, Bates has developed a core set of schedules that we have found to be most useful in analyzing case specific issues from a high level data perspective. These schedules provide insight into the performance of investment accounts over time, providing detail on individual securities, profits and losses per trade, turnover ratios, holding periods, and a wide range of related account activity, including deposits and withdrawals. Our Standard Analysis can be used to highlight changes in asset allocations and the performance of specific trading strategies over time. Using Bates Standard Analysis as a baseline, our consultants will work with you to develop supplemental schedules that will help you address specific issues to strengthen your case and get results.
Our Standard Analysis has been designed to offer maximum flexibility to our clients in generating additional schedules that speak to the specific issues at hand in a given case. Two of our supplemental schedules that are most regularly requested speak to damages, or the mitigation of damages, as it relates to account performance. They are hypothetical analysis and standstill analysis. Both answer relatively straight forward questions, but with a degree of mathematical precision that allows all parties involved to use concrete numbers when talking about damage related issues of the case.
Our hypothetical analysis matches the cash inflows and outflows that occurred in the accounts with an investment in 'something else' in order to come up with comparable performance data over the same time period. Allegations will often center around the idea that the client 'should have been invested in something else'. The 'something else' can be anything from a specific bundle of securities, to broad indices, to mutual funds, and our hypothetical analysis allows us to say in real terms (using the clients actual behavior) what their investment performance would have been and compare that to the actual account performance. Hypothetical analyses can also be used to pinpoint specific points in time where an account may have deviated from its prior performance, which can be helpful in mitigating damages down to only a certain period, with the client agreeing that prior performance was acceptable to them.
Our Standstill Analysis is another frequently requested supplemental schedule that provides insight into how a group of securities would have performed had the securities remained in an investor’s account and not been sold or transferred away. Often times allegations center on the poor performance of securities that were transferred away from an account, and knowing their current value is invaluable to determining the extent of damages assessed. Conversely, clients will allege that they were advised to sell a security which has since outperformed the market. Bates can help you analyze the impact of this decision, for a single security or across groups of securities, at multiple points in time. A Standstill Analysis will help you determine the precise effects upon the ultimate performance of an account based upon an investor’s decisions to follow or ignore his or her investment advisor’s recommendations related to selling or holding securities.
Specialized Supplemental Reports
There are many other offerings in our supplemental reports category, including margin analysis, A vs B mutual fund share comparisons, risk analyses (using standard deviation, Beta, or other measures), trading activity charts, and client communication flow charts. With over 30 years of industry experience, we've created reports that can help analyze most situations, and we are confident in our ability to create new ones as demanded by a particular case or new issue.
Derivatives and Complex Trading
These cases often begin with simply trying to piece together what happened within the account. Knowing how different types of derivatives behave, and being able to identify a strategy when it is in place, is crucial to these matters. Our team includes professionals who have practical knowledge of all types of derivative products and trading strategies, and includes individuals who have previously held regulatory roles governing these types of accounts.
The simplest of these derivative strategies involves writing naked puts, in which the seller of the put option does not have an existing position in the underlying entity. As a result of general declines in equity markets beginning in 2008, these previously successful strategies suddenly turned into large losses. Often, the positions were rolled forward into more contracts at higher prices, delaying the occurrence of losses within the account.
Bates conducted statistical analysis to determine the likelihood that the underlying asset would experience declines of the magnitude seen during that time period, and then combined these probabilities with the characteristics of the put option (time to expiration, moneyness at issuance, premium received) to determine a probability weighted expected profit from each trade. Our understanding of the intent behind different strategies enables us to produce innovative analyses which capture an ‘a priori’ view of each investment. When a major Wall Street firm was left with massive exposure as a result of naked put writing in one set of accounts, Bates was able to analyze the account records and locate additional assets to meet the liabilities generated by the put writing.