03 Oct 2022 Cases

Compass Lexecon Client Tower Research Capital LLC Defeats Class Certification in Alleged Manipulation Case

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Plaintiffs sued on behalf of themselves and a putative class of investors who bought or sold futures contracts based on the Korean KOSPI 200 stock index during overnight trading in 2012. The class that Plaintiffs sought to represent consisted of investors who traded with Defendant Tower Research Capital LLC (“Tower”) during periods in which Tower allegedly manipulated the overnight market for KOSPI 200 futures. On September 27, 2022, United States District Judge Kimba M. Wood issued an opinion and order finding that Plaintiffs had failed to establish that common issues of law or fact predominated over individualized questions and denying Plaintiffs’ class certification motion.

Judge Wood’s ruling favorably cited the Expert Report of Compass Lexecon Senior Consultant, Professor Hendrik Bessembinder, which demonstrated that Plaintiffs’ expert did not describe any empirical method that could be used to distinguish between artificial and non-artificial prices and did not describe any empirical method that could be used to assess whether market participants were “lured” to participate by Tower’s actions. Professor Bessembinder’s report also explained that the determination of damages, if any, to potential class members would be a complex and highly individualized exercise. Plaintiffs subsequently elected not to appeal the Court’s class certification ruling and the parties filed a joint stipulation dismissing the case with prejudice.

Professor Bessembinder was supported by a Compass Lexecon team that included David Ross, Neal Lenhoff, and Elizabeth Wall. Compass Lexecon was retained by Noah Levine, Matt Beville, and Albinas Prizgintas at Wilmer Cutler Pickering Hale and Dorr LLP, who represented Tower.

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