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