Case study: Questioning a questionable plaintiff
Experience/Deceptive Cover Uncovered

Deceptive Cover Uncovered

On behalf of a public company that was the target of class-action lawsuits after a sudden drop in share price, Nardello & Co. was retained to investigate the plaintiffs and their competency. Plaintiffs claimed the client had made false statements regarding the financial health of the company and that plaintiffs relied upon these false statements to their detriment.

The lead plaintiff was a municipal pension fund whose chairman opposed settlement of the matter. Contrary to the chairman’s claims that he was an unsophisticated investor, Nardello & Co.’s investigation determined he had held himself out as an expert in the pension fund investment world and had spoken regularly at conferences as an authority on pension fund management. Moreover, the chairman’s expenses for attending these conferences, which had been held at exotic locales, had apparently been paid by various investment fund managers.

In addition, Nardello obtained and reviewed audits of the municipal pension fund that identified long-standing, unresolved bookkeeping irregularities, ranging from failure to reconcile bank statements to making multi-million- dollar transfers in contravention of regular procedures. The audits were critical of the pension fund’s increased use of “alternative investments,” such as those in hedge funds and private equity funds. These alternative investment positions were reportedly four or five times larger than those held by similar pension funds. The client used our findings to support a favorable settlement.

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