Case
Florida State Board of Administration v. Alliance Capital Management
In a landmark trial victory, a Florida jury found investment firm Alliance Capital Management not liable for the losses incurred by the Florida Retirement System pension fund as a result of Alliance Capital's investments in Enron stock. During 2000 and 2001, Alliance Capital invested a portion of the Florida pension fund's money in Enron stock. The fund lost more than $280 million when Enron collapsed. The Florida State Board of Administration (FSBA) sued Alliance for allegedly failing to sufficiently research Enron and for not following an agreed-upon investment strategy. The FSBA was seeking more than $1 billion in damages. Analysis Group was retained by defense counsel for Alliance. During a two-year period, Analysis Group Managing Principal Mark Egland led a case team that supported six external experts – Patricia Chadwick, Ronald Gilson, R. Glenn Hubbard, Michael Koehn, John Lacey, and Laura Starks – who provided consulting and testimony in the areas of portfolio management, accounting, corporate compliance control, corporate governance, and damages. After evaluating expert testimony from the plaintiffs and the defense, the jury found Alliance Capital not liable on all counts. The jury also ruled that Alliance was entitled to recover advisory fees from the FSBA.
Analysis Group team members included Managing Principals Marc Van Audenrode and Lee Heavner, Principal Jimmy Royer, and Vice President Mike Nguyen.
"This verdict is extremely important to the investment industry. Investors hire portfolio managers to make decisions that involve risk. Had the plaintiff prevailed in this case, investment firms might have had to reconsider actively managing portfolios for their clients."
– Mark Egland, Managing Principal
Associated People
Jimmy Royer
PrincipalDr. Royer applies a broad range of quantitative tools to address client needs in data science, statistics, HEOR, finance, intellectual property, competition policy, and antitrust cases in the United States, Canada, and the EU. His recent work includes predicting the potential future onset of rare or undiagnosed conditions with machine learning models; predicting whether patents would be considered essential to technological standards if challenged in courts; valuing patents in the communications industry; evaluating damages related to product defects; analyzing investment guidelines in securities lending suits; addressing allegations of monopolization in major antitrust cases involving high tech firms; and supporting many academic experts on mutual fund market timing and excess fee cases. In addition, Dr. Royer has conducted extensive academic research and coauthored books and papers on topics such as using new AI advances in HEOR; predicting treatment resistance in tuberculosis, using machine learning algorithms in propensity score models; measuring the impact of ESO backdating on shareholders’ wealth; analyzing mutual fund pricing; analyzing antitrust limit pricing; valuing private investments for hospitals in Canada; determining the impact of hypertension therapies on mortality; and comparing unemployment compensation in different countries.
Marc Van Audenrode
Managing Principal*Dr. Van Audenrode is an expert in data analysis and econometrics, labor economics, antitrust and competition policy, and public economics. He has consulted to clients - including law firms and government agencies - in Canada, the US, and Europe. Dr. Van Audenrode’s work includes developing a methodology to value desktop software; he also developed expertise valuing goods as varied as restaurant franchises, executive stock options, or smartphone features. His recent work in public economics includes evaluating the economic rent from hydroelectricity to the Canadian economy and the value of logging rights on the ancestral territory of a Canadian First Nation. In the area of labor economics, his work has included filing an expert report assessing fair compensation for Quebec provincial judges and Quebec prosecutors and advising Quebec’s commission on pay equity. Dr. Van Audenrode has filed expert reports in courts in the US, Canada, Belgium, Germany, France, and the Netherlands, and has testified in Canada and the US. He recently filed a report with the Amsterdam Court of Appeal in support of the settlement reached between Ageas and claimant organizations in the Fortis case, the largest settlement ever reached through the Dutch Collective Settlement Act (WCAM). Dr. Van Audenrode’s scientific research and articles have been published in numerous peer-reviewed academic journals and trade journals. He is a coauthor of the book The Mutual Fund Industry: Competition and Investor Welfare, and is a frequent presenter at industry and academic conferences.
*Marc Van Audenrode srl