Reverse Convertibles At A Glance

Capabilities and Services

A reverse convertible note is a structured product typically issued by a financial institution such as a bank. Evaluating the benefits and risks of such a note is more complex than doing so for a plain-vanilla bond or even a convertible bond. A reverse convertible typically pays an interest rate that is higher than conventional debt of the same issuer, maturity, and seniority. In exchange, the purchaser of the note accepts the risk that the full principal value will not be repaid at maturity.

NERA assists clients in disputes relating to a wide range of structured products including reverse convertible notes. NERA's securities experts have been involved in numerous disputes where we have analyzed issues related to suitability, risk, and valuation of such products. Our experts have extensive experience valuing and analyzing complex structured products and other derivatives. Our relevant expertise includes:

Broker-Customer Disputes

Evaluating suitability and risk of specific investments
Assessing portfolio performance
Examining portfolio-level risk characteristics
Evaluating liability
Evaluating opposing expert reports and analyses
Analyzing and calculating damages (if any)

Valuation and Risk Management

Valuing structured products including various reverse
convertible products
Analysis of hedging strategies for the sale and purchase
of reverse convertible notes
Analysis of trading data to examine liquidity and
efficiency of trading in secondary markets