Expert Analysis of Complex Securities and Strategies in Financial Market Disputes
Complex securities and sophisticated trading strategies are poorly understood outside professional trading desks. When financial disputes arise, Navesink International provides the analytical clarity courts and arbitration panels require.
Navesink International provides expert witness services focused on analysing complex securities strategies, including derivatives, structured products, and multi-instrument portfolios. Our work translates technical structures into clear, defensible analysis for litigation and arbitration.
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Recipient of Best Financial Markets Expert Witness Specialists (USA) award
Senior practitioner–led analysis (no junior consultant layering)
Work product built to withstand deposition and cross-examination
ABOUT NAVESINK INTERNATIONAL
About the Firm
Navesink International is the premier expert witness firm for financial markets. We help the most prominent law firms win complex cases by providing expert witnesses with the highest quality and the strongest technical knowledge.
Our experts are all industry veterans who can cover the most complex topics and cases in the securities industry. All our experts are selected based on peer recommendations and vetted before representing Navesink International.
We take pride in representing the highest quality expert witnesses with the strongest technical knowledge, and we do not employ consultants or junior expert witnesses.
OUR SERVICES
Service Scope: Analysis of Complex Securities and Strategies
Complex securities and strategies span a wide range of instruments and approaches, from structured products and volatility-linked securities to sophisticated trading strategies with embedded optionality and non-standard risk. Disputes arise when these instruments or strategies behave in ways that were not expected, not understood, mismanaged, or not properly disclosed.
Our work focuses on analysing how a security was structured or a strategy was designed, how it was intended to perform or be used, and how it actually behaved under real market conditions.
This includes:
- analysing the structure and risk profile of individual instruments
- evaluating the interaction between securities and the strategies built around them
- reviewing valuation methods, modelling assumptions, risks, and pricing inputs
- assessing execution decisions, hedging behaviour, and timing
We determine whether outcomes were driven by market forces, instrument design, or the decisions of the parties involved. Our analysis supports expert reports, depositions, and testimony in litigation and arbitration matters.
OUR EXPERTISE
Questions Examined in Our Expert Analysis
When complex securities or strategies become the subject of a dispute, the core questions often include:
What was the structure and what assumptions supported it
Understand the design of the security or strategy, including instrument selection, allocation logic, and the assumptions that shaped expected performance.
What risks were embedded in the instruments and the overall structure
Identify exposures such as leverage, correlation, optionality, and liquidity that influenced the risk profile, whether at the instrument level or across the strategy as a whole.
Did the security or strategy perform in line with how it was represented
Compare actual performance against stated objectives and representations under the prevailing market conditions.
Were the risks and potential outcomes properly disclosed and understood
Assess whether disclosures accurately reflected the risks involved and whether those risks were reasonably understood by the relevant parties.
What alternative structures or decisions could have reduced the loss
Evaluate feasible alternative approaches to determine how different design or execution choices may have mitigated losses.
Were the losses attributable to market conditions or to decisions made
Distinguish between losses that reflect normal market risk and those that resulted from identifiable decisions in the design, execution, or management of the security or strategy.
OUR PROCESS
Our Analytical Approach To
01. Reconstruct the design and execution of the security or strategy
We analyze how the instrument was structured or the strategy was built, including instrument selection, allocation decisions, and execution timing.
02. Map structural and embedded risks
We identify the key exposures within the security or strategy, including leverage, correlation, optionality, and liquidity constraints, whether these sit at the instrument level or across the portfolio as a whole.
03. Analyse performance drivers and deviations
We examine what drove actual outcomes and where performance diverged from what the design or representations would have suggested.
04. Model alternative outcomes where relevant
We construct feasible alternatives to assess how different structures, instrument choices, or execution decisions would have changed results.
05. Prepare litigation-ready findings
We deliver clear, well-supported analysis suitable for expert reports, depositions, and testimony in litigation and arbitration matters.
CASE STUDIES
Representative Matters
Warrant and Convertible Bond Valuation
Facts:
A biotechnology company issued bonds convertible into its stocks and warrants on its stock. A dispute later arose between the company and its broker-dealer / lead investor regarding the economic value of the warrants embedded in the financing structure and the benefits received through the convertible transaction.
Instruments & Strategy:
Convertible bonds, equity warrants, equity, derivative valuation and structured equity financing.
Core Questions:
- Historical review: Reviewed all conversions to assess the quantities and defining features of warrant tranches received by investors. Reviewed how the company’s corporate actions (listings, splits) impacted all instruments.
- Product review: Analyzed the multiple interdependent and atypical clauses in the issuance documents, assessing their risks/benefits for both parties.
- Valuation: Chose the valuation model for the warrants and demonstrated its appropriateness. Extracted and justified historical and implicit volatilities. Valued the different warrant tranches at each critical date in the commercial relationship. Estimated the impacts of the more complex clauses.
- Valuation: Reverse-engineered the bond to calculate its yields at the onset of the transaction, at the critical junctures, as well as its realized yield.
- Damage assessment: Estimated the economic benefits received by the investors.
Our work:
The biotech company retained two different Navesink International experts due to the technicity of both the bonds and the warrants. The two experts synchronized their work, the warrant report becoming the basis for the convertible bond report. A rebuttal analysis of the broker-dealer/investor’s report was provided. Navesink experts amended their reports to take advantage of new information then provided.
Outcome:
- Navesink’s analysis demonstrated that the bond yields were usury – at least 267.09% at inception and still 141.20% realized (despite mismanagement). This provided a strong legal argument to our client’s attorney.
- Under NY law, usury loans must be cancelled and all payments returned. The damages were significant.
- The parties immediately settled after the depositions.
- The opposite expert, whose report was of much lower quality, was fired from his (well-known) legal consulting firm.
Testimonial:
“Slugging away on our motion for summary judgment, which is due today, and saved the best for last: plugging in your numbers. It’s really refreshing to go back through your work and find how clear and comprehensive it is. Thank you both!!!”SVXY options and margin liquidation
Facts:
A retail trader was liquidated due to option losses realized in the last two hours of Volmaggedon day.Instruments & Strategy:
SVXY (short-volatility ETP), equity options on those VIX reverse ETFs.
Core Questions:
Loss causation, product complexity and foreseeability, suitability, supervision and margin methodology, and allocation of responsibility.
Our work:
We performed a document and quantitative review focused on:
- Loss Causation: Reconstructed how short put selling on a short-volatility ETP amplified losses during a volatility jump.
- Product analysis: Explained the mechanics of VIX futures, ETP rebalancing, and why options on a short-volatility ETP can compound tail exposure. The strategy was ‘exotic’ , highly volatile and highly risky.
- Foreseeability: Used professional-grade fat-tailed statistical analysis to show that large volatility shocks are not rare, and should be considered in professional risk management.
- Disclosures: Reviewed the ETP’s offering documents and risk disclosures plainly stating the potential for rapid and substantial losses.
- Suitability: Assessed whether the client’s sophistication matched the strategy, and contrasted it with the broker-dealer’s technical knowledge and supervisory obligations.
- Supervision and margin: Evaluated platform risk models and margin calculations, including whether methodology understated tail risk and whether additional margin or trading restrictions were warranted.
Outcome:
Provided a detailed report and exhibits supporting a defense narrative that the lack of supervisory and deficient margin practices materially contributed to the loss and to the inappropriateness of the broker’s claimed damages.
Related articles:
- Don’t touch the VIX explains the non-normality of the VIX, and the mechanics of leveraged ETPs. (White paper)
- Options on leveraged VIX ETFs – Legal Issues explain the high exoticity and toxicity of those ETPs, as well as the margin requirements for volatile customer portfolios. (White paper)
WHY CHOOSE US
Why Choose Navesink International?
Senior practitioner-led analysis
Every case is handled by experienced senior professionals, not delegated to junior staff.
Deep technical expertise
Deep experience across derivatives, structured products, volatility, valuation, margin, and assignment mechanics.
Litigation-ready work product
Work product designed to hold up under cross-examination with clear, defensible methodologies.
Attorney-focused collaboration
Attorney-focused communication and collaboration throughout the engagement.
Complex Securities Strategy Analysis for Litigation Matters
We provide clear, market-based analysis to help law firms evaluate complex securities and strategies and develop defensible expert opinions.