Case Studies

Market Manipulation Investigations

  • A plaintiffs’ law firm filed a purported class action against IGI’s client, a computer component maker whose share price had dropped. Working closely with outside counsel, IGI developed information demonstrating that the lead plaintiff, a hedge fund, had massively shorted the defendant company – information improperly withheld from the court in the motion to be designated lead plaintiff. In fact, the lead plaintiff had purchased the defendant company’s shares only to cover its short sales. IGI also detailed information showing that the hedge fund had spearheaded a lengthy campaign to drive down the defendant company’s share price. In one instance, hedge fund employees assumed false names and impersonated bona fide buy-side securities analysts on the company’s quarterly earnings conference call, to air false and misleading accusations. IGI also discovered that the hedge fund had coordinated these efforts with lead counsel in the lawsuit. Indeed, the complaint was drafted even before the defendant’s share price dropped. Revelation of these facts led the presiding judge to strip the hedge fund of its lead plaintiff status and to express “serious concerns” about lead counsel’s role.