Stout conducted a financial and statistical analysis of customer account records for a financial services company specializing in self-directed individual retirement accounts. The company was sued in a class action matter related to the disclosure and charging of fees on customers’ uninvested cash in their custodial accounts.

The plaintiffs alleged that the company inappropriately collected fees for sub-accounting services and failed to disclose these fees in their custodial account agreement(s). The lawsuit focused on self-directed retirement customers who had uninvested cash balances over an eight-year period. The plaintiffs’ damages claim was for refunds for the aforementioned sub-accounting fees.

Our Role: The defendants engaged us to analyze customer account records and omnibus depository account records. We also served as a rebuttal expert critiquing the analytical and statistical methodologies utilized by the opposing expert in attempting to calculate class member damages, and identifying computational flaws to refute the opposing expert’s calculation of individual class member damages.

Outcome: The court denied the motion for class certification, emphasizing the inability of the plaintiffs’ expert to develop a reliable model and method to calculate damages. Additionally, the court ruled that the plaintiffs could not satisfy the Rule 23 requirements for predominance or superiority, particularly because of the variety of variables unique to each customer and the inherent difficulty in tracing damages to any specific customer.

Our analysis emphasized the necessity of reliable financial models to extrapolate findings to the broader class of affected customers.