Counsel for Ernst & Young retained Cornerstone Research in a case arising from losses incurred by hedge fund investors.
Counsel for Ernst & Young retained Cornerstone Research in a case arising from losses incurred by hedge fund investors. The plaintiffs claimed that the hedge fund’s annual financial statements, audited by Ernst & Young, failed to disclose the general partner’s withdrawal of its incentive compensation fee. The plaintiffs further alleged that had they been aware of such information, they would have withdrawn their assets from the fund in time to avoid losses incurred by the fund the following year.
The court granted the defendants’ motion for summary judgment on all counts.
Cornerstone Research supported Professor René Stulz of The Ohio State University, who served as a testifying expert in the case. He found that the alleged omission was not material to the plaintiffs. Through an analysis of the fund’s financial statements and the timing of plaintiffs’ receipt of them, Professor Stulz showed that the plaintiffs suffered no damages. After expert discovery was completed, the court granted the defendants’ motion for summary judgment on all counts.