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Commercial

Are Investors Confusing Correlation with Risk?

It’s largely agreed that uncorrelated investments are in demand. Given the ongoing impact of COVID, as well as pending inflation, it makes sense to seek out uncorrelated assets. But SYZ Capital co-founder and managing partner Marc Syz, says that some investors may be confusing correlation with risk. International Adviser explains that uncorrelated assets are not impacted by instability in the markets, and are not exposed to macroeconomic volatility. But that does not make them low-risk. In fact, holding too much of the same type of uncorrelated asset can increase risk. As always, it’s safest to maintain a diverse portfolio with an array of traditional investments, as well as uncorrelated assets. Syz recommends three uncorrelated assets worth looking at. They are royalties, life settlements, and litigation finance. Litigation funding is a strong uncorrelated asset for several reasons. Investors can gain exposure to an array of legal case types, jurisdictions, and participants in the cases. Single cases and class actions are the most popular case types, though portfolio funding is increasingly common. Legal funding also increases access to justice when claimants cannot otherwise afford to take their case to court. This makes it a highly ethical investment with a potential for high returns. However, the risks are still very real.
Case Developments Commercial

Chinese Banks Found Not Liable in Nike Counterfeiting Cast

Six banks based in China have avoided liability in their role in the Nike Counterfeit case. The banks were cited for failing to freeze the assets of several hundred counterfeiters of Nike goods. Together, the banks faced sanctions of up to $150 million. Reuters reports that the entity that bought the rights to the default award from Nike, Next Investments LLC, did not abide by the asset freeze mandated by the courts. This went on for more than five years. Representatives of Quinn Emanuel Urquhart & Sullivan represented all but one of the banks, and are reportedly happy with the decision. In 2015, Nike (and their Converse Inc arm) won the default judgement against hundreds of companies and individuals for counterfeiting products. At the time, Judge Shira Scheindlin issued a restraining order freezing the assets of the defendants, and anyone acting in concert with them. Four years later, Next Investments filed to hold the banks in contempt and requested compensatory damages. The motion was rejected based on the separate entity rule. On appeal, Next Investments argued that the separate entity rule was not enacted to provide cover for illegal activity. Judges determined that ultimately, Next Investments did not establish that the Chinese banks were required to enforce the asset freeze.
Consumer Regulatory Issues

New York Post Maligns “Evil” Legal Funding Industry

The Southern District in New York has unsealed indictments against several doctors and attorneys accused of engaging in fraudulent conduct. The defendants have been charged with mail and wire fraud in connection with a plot to gain fraudulent insurance reimbursements. The New York Post has laid the blame for this squarely at the feet of third-party litigation funding. Claims of blackmail, preying on vulnerable claimants, and nuisance claims are ongoing, but lack basis in verifiable fact. Increasingly, funders are experiencing increased regulation both in the US and also globally. It would behoove the ILFA and other professional funding groups to more assertively combat misinformation about the industry.
Announcements Commercial Deals

Investor Group Led By Litigation Funder Drumcliffe Acquires Additional Equity Stake in Odyssey Marine Exploration, Inc. (NASDAQ:OMEX)

An investor group led by asset recovery funder Drumcliffe LLC has purchased 1,138,245 shares in Odyssey Marine Exploration, Inc. (NASDAQ:OMEX) (“Odyssey”), from Epsilon Acquisitions LLC in a private transaction exempt from the registration requirements of the Securities Act of 1933, as amended. The purchase price was not disclosed. Odyssey will not receive any proceeds from this transaction. Odyssey is a deep-ocean exploration company that discovers, validates and develops high value seafloor resources in an environmentally responsible manner. Odyssey has a diversified mineral portfolio that includes projects controlled by it and other projects in which it is a minority owner and service provider. Odyssey is currently pursuing a nearly $3 billion NAFTA arbitration claim against the Republic of Mexico. The claim relates to Mexico’s denial of an off-shore dredging license previously granted to an Odyssey subsidiary for one of the largest untapped phosphate deposits in the world. Drumcliffe has been providing financing to Odyssey to support its arbitration efforts since 2019. “In our view, Odyssey’s recently published Reply to Mexico’s Counter-Memorial in the NAFTA arbitration only reinforces the merits of Odyssey’s claim and the restitution they deserve,” said James C. Little, Drumcliffe’s CEO. Several long-term Odyssey investors and investment funds, including major Odyssey investor FourWorld Capital Management, and Greywolf Capital Management LP are also part of the investor group. About Drumcliffe LLC Drumcliffe LLC is the world’s leading provider of asset recovery finance to the victims of global fraud, corruption, and abuse of power. Additional details can be found at www.drumcliffepartners.com. Forward Looking Information This Press Release may include "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. Certain factors that could cause outcomes to differ materially from those in the forward-looking statements are set forth in "Risk Factors" in Part I, Item 1A of Odyssey’s Annual Report on Form 10-K for the year ended December 31, 2020, and Odyssey’s other filings with the Securities and Exchange Commission. The possible outcomes of the matter described herein will depend upon unpredictable future events, many of which are beyond Odyssey's or Drumcliffe’s control and, accordingly, no assurance can be given that any desirable outcome will occur.
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People Moves

Who’s Who Legal’s Thought Leaders in Third-Party Funding

Who’s Who Legal recently assembled a list of movers and shakers in the third-party legal finance industry. They represent a global community of stakeholders advancing the acceptance and adaptability of the industry. Who's Who Legal's highlighted professionals include Julia Gewolb, Director of Underwriting at Validity Finance. Gewolb relies on her extensive legal experience to create an environment where clients can expect a speedy answer on funding compatibility. She emphasizes that legal funding isn’t just for those who struggle financially—it’s also a valued tool for companies looking to mitigate risk.  Co-founder of Profile Investments, Iain McKenny, enjoyed a lengthy career in international disputes before launching PI. He explains that many potential clients are unaware of the differences between legal funding and bank loans—to their detriment. McKenny seeks to educate the public on the benefits of the practice and to increase access to justice.  Alain Grec is also a co-founder of Profile Investments. He emphasizes the flexibility of portfolio funding as a means of money management. Grec is deeply involved in the growth and expansion of PI, as well as the debate between those who support external regulation and those who feel self-regulation is sufficient. Investment Manager and head of the Houston office for Validity Finance, Laina Hammond, is seeing increased demand for funding in oil and gas cases—largely arising from turbulence in the industry. She emphasizes building goodwill by establishing trust. The team at Validity is made up of experienced trial lawyers who put client needs first. Drumcliffe, a fund facilitating recovery of assets for victims of international corruption or fraud, is led by James Little. Little enjoys being a go-to source for fighting fraud. He is impressed by how well the legal industry has adapted to the challenges of COVID, and claims that this allowed Drumcliffe's funds to flourish despite tragedy.  David Kerstein is the Chief Risk Officer of Validity. In fewer than three years, Kerstein helped grow the company from a startup funder with few employees to having $100 million in committed capital, and over $400 million in raised capital. He welcomes the trend of funding being used by companies as a means of mitigating risks, in addition to more traditional funding applications. Validity Finance CEO and Founder, Ralph Sutton, is considered a pioneer in the funding industry. Sutton has lectured on civil justice at Stanford and Harvard Law, among others. He believes that the funding industry is not in need of increased regulation—and that regulation will hinder access to justice, rather than increase it. Ben Moss is a new addition to the team at Orchard Global Asset Management. His background in law and finance have combined to make him a valued asset to Orchard. He points out that the legal and financial merits of a case are equally important factors when determining which cases should receive funding.  In the UK, thought leaders represent the biggest names in litigation funding, including Burford Capital, Litigation Capital Management, Augusta Ventures, Omni Bridgeway, and Harbour. While in France, Profile Investment and Vannin Capital are the sole firms represented.  Globally, Omni Bridgeway has the strongest presence on this list. Burford Capital, Therium, Vannin Capital, and LCM also featured prominently. Unsurprisingly, Australian representation on this list of thought leaders focuses on Omni Bridgeway, Vannin Capital, LCM, and Therium.
Announcements People Moves

Lauren J.Harrison Joins Law Finance Group as Vice President/Investment Counselor

Law Finance Group, a leading commercial litigation finance company, today announced that Lauren J. Harrison has joined the firm as Vice President/Investment Counselor, based in Houston, Texas. Ms. Harrison will work with Law Finance Group’s underwriting and business development teams, where she will focus on evaluating the merits of proposed investments while also identifying and managing growth opportunities in the civil litigation space. “Lauren’s deep expertise in antitrust, intellectual property, and commercial litigation, in addition to her long-standing relationships across the AmLaw 200, will be tremendous assets as we continue to grow our business,” said Kevin McCaffrey, Law Finance Group’s CEO. “We are thrilled to welcome Lauren to our team as we add scale to our platform to take further advantage of the exciting opportunities in the litigation finance markets.” Ms.Harrison joins Law Finance Group after practicing for more than 30 years as a civil litigator for leading law firms int he Houston area. Most recently, she was a Partner in the Litigation Practice Group of Jones Walker LLP, where she represented clients active in the areas of alternative energy development, traditional oil exploration and production, energy infrastructure, chemical and mechanical engineering, software development, entertainment, media distribution, and manufacturing. Earlier in her career, Ms. Harrison worked as a Partner in the litigation departments of Conner & Winters and Vinson & Elkins LLP, and before practicing, served as a judicial clerk to the Honorable Thomas S. Zilly in the U.S. District Court for the Western District of Washington and the late Honorable Eugene A. Wright in the U.S. Court of Appeals for the Ninth Circuit. She received her J.D.fromCornell UniversityLawSchool, where she graduated magna cum laude and was elected into the Order of the Coif, and earned her B.A. degree from Dartmouth College, where she graduated magna cum laude as a member of Phi Beta Kappa. AboutLaw FinanceGroup Founded in 1994, Law Finance Group is a leading litigation funding firm focused on investing in high-value civil litigation opportunities.LawFinance Group partners with law firms and their clients to mitigate risk, improve cashflows, and leverage existing assets in the face of litigation risk. The firm has offices in Mill Valley, New York, and Austin. For more information, visit www.lawfinance.com.
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Announcements Fundraising

$wLITI lists on Changelly PRO, on the heels of HitBTC and Bitcoin.com listings

Liti Capital’s wLITI token, a wrapped version of the Swiss company’s LITI equity token, lists on Changelly PRO, $wLITI pairs with BTC and USDT are now available for trading. This comes less than a week after listing on Bitcoin.com Exchange and less than two weeks on HitBTC. The Changelly PRO team has expressed their warm welcome to the litigation financing token. “We are happy to welcome $wLITI to our big family of carefully curated cryptocurrencies and hope that our users will gain maximum benefits from this collaboration. We are proud to partner with a company that provides financial resources, strategic solutions and renowned connections to the best law firms worldwide to help plaintiffs obtain court awards for damages or losses they have suffered,” says a Changelly PRO spokesperson. Liti Capital, a Swiss-based blockchain private equity fund specializing in raising capital for legal cases, is making waves in traditional investing by bringing litigation financing to the masses, an investment practice traditionally monopolized by hedge fund heavyweights and elite investors. Litigation financing is the practice of bringing in investors to cover the cost of a lawsuit or arbitration in exchange for a portion of the profit. Litigation financing specialists, such as Liti Capital, purchase litigation assets for cases they deem to have a high chance of winning. “We appreciate the amazing support that established exchanges such as Changelly PRO have shown for our $wLITI token. With high profile projects in the blockchain and decentralized finance spaces finally attracting mainstream interest, we are excited to explore the possibilities for $wLITI as a wrapped version of an equity token that offers regular people the chance to invest in an asset class that previously wasn’t available to them,” says Liti Capital CEO Jonas Rey. $wLITI: an ERC-20 Wrapped Version of Equity Token $LITI wLITI is an ERC-20 wrapped version of the LITI equity token. Launched on June 29, 2021, the wLITI token is suitable for trading on centralized exchanges (CEXes) like Changelly PRO, and also on DEXes, whereas the LITI token is only available through liticapital.com after meeting KYC requirements. Liti Capital uses the blockchain to manage its share registry. Development of its own blockchain-based case management tools is on its roadmap. wLITI can be exchanged for LITI at a token buyer’s request via Liti Capital’s app or website, which converts LITI to wLITI at a 1:5000 ratio and vice versa. The tokens will always maintain this ratio. The buyer is then able to trade their wLITI freely. Liti Capital does not directly sell wLITI. LITI is a true digital share of Liti Capital that has voting rights, pays dividends and is protected under Swiss law. LITI is purposely not designed to be on exchanges at this time. Both tokens represent Liti Capital, whose mantra is “Private Equity for All.” Liti Capital works exclusively in a single form of private equity – Litigation Finance, also called third party funding. This asset class has remained almost entirely exclusive to hedge funds and venture capitalists since its inception several decades ago. Litigation Finance is the practice of financing all or part of a legal case on behalf of a plaintiff for an agreed upon percentage of the court award. Once Liti Capital purchases a portion of ownership of a case, it provides capital that can be used in many ways: legal fees, case management and strategy, expert witnesses, intelligence work and whatever else is needed to give the plaintiff the best chance of winning the case and collecting the award. The portion owned by Liti Capital becomes a “litigation asset” that backs the LITI token. On 19 August 2021, Liti Capital announced that it was funding a claim against Binance, which would enable affected individuals to pursue compensation in relation to the exchange failing on 19 May 2021. This failure resulted in the trading accounts (including Futures, Margin, and Leveraged Token products) of at least 700 and potentially thousands of individuals being effectively untradeable for hours, causing traders to suffer losses that could exceed one hundred million dollars. Listing Details
Trading Opening:Aug. 30, 2021 3 PM UTC
Trading Pairs:wLITI/BTC
wLITI/USDT
About Liti Capital Switzerland-based Liti Capital is a Swiss limited liability company specializing in litigation finance and fintech. Liti Capital buys litigation assets to fund lawsuits and provides a complete strategic solution along with connections to top law firms to help clients win their cases. Tokenized shares of the company lower the barrier of entry for retail investors and give token holders a vote in the company’s decision-making process. Dividends are distributed to LITI token holders upon the success of the plaintiff. Jonas Rey, co-founder of Liti Capital, also heads Athena Intelligence, one of the most successful intelligence agencies in Switzerland. His two co-founders, Andy Christen and Jaime Delgado, bring operational, innovation and technical skills to round out the leadership team. Liti Capital recently onboarded seasoned industry leader David Kay as chief information officer and executive chairman. Boasting more than a decade of experience as funding partner and portfolio manager of a billion-dollar private equity fund in the litigation financing space, Kay successfully enforced what was at the time the largest international arbitration award in history, bringing in over $1 billion in cash and securities. For project information, please read the Whitepaper. For token distribution, please read Tokenomics. Liti Capital Official Channels Liti Capital Website: https://liticapital.com Liti Capital Telegram: https://t.me/Liti_Capital_Official Liti Capital Telegram Announcements: https://t.me/Liti_Capital_Official_ANN Liti Capital LinkedIn: https://www.linkedin.com/company/liti-capital Liti Capital Twitter: https://twitter.com/liticapital Liti Capital Medium: https://medium.com/@liticapital Liti Capital Reddit: https://www.reddit.com/r/liticapital About Changelly Changelly provides an ecosystem of products and services that enables customers to have a one-stop-shop experience when engaging with crypto. Operating since 2015, Changelly acts as an intermediary between crypto exchanges and users, offering access to 200+ cryptocurrencies that can be effortlessly swapped within 10 minutes on desktop and on the go via the Changelly mobile app. In 2020, Changelly branched out to accommodate the needs of traders. Changelly PRO has been built as a platform focused on the customer’s needs, effectively enabling retail buying and selling of digital tokens and coins. Piggy-backing on the great support system found within Changelly, Changelly PRO will provide the community with high limits, effective pricing, fast execution and 24/7 live support. Learn more about Changelly: Changelly Website: changelly.com Changelly PRO website: pro.changelly.com Twitter: twitter.com/Changelly_team
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Deals

Halifax AU & NZ Litigation Funding Scheme

Per Australian law, Omni Bridgeway has registered with ASIC as a litigation funding scheme. This statement has been distributed to all applicable parties with an interest in the appeals in Halifax Investment Services Pty Ltd v Loo, and Halifax New Zealand limited v Loo, for Category 1 Investors. Omni Bridgeway details that Category 1 Investors include investors in Halifax Investment Services or Halifax New Zealand Limited (both in liquidation). These investors have an entitlement to a share of funds recovered—a sum that is likely to be higher after investments are realized. Mr. Choo Boon Loo, who brought the appeals, represents Category 1 investors. He asserts that the judges erred when determining the administrations’ dates in terms of the valuation of entitlements. Further, Loo asserts that the primary judges should have calculated the entitlements as closely as possible to the date of distribution—and after extant investments had been realized by the liquidators. Category 1 investors who wish to join the scheme can do so at no upfront or out-of-pocket costs. Omni Bridgeway is funding the appeals. Under the terms of the Funder Distribution Order, Omni Bridgeway would receive a share of the Increased Liquidation Distribution Amount if the appeals are successful. Investors will likely benefit from the appeals regardless of whether or not they apply to become members of the scheme. Those who do apply to join will be kept informed about new developments in the process. A Product Disclosure Statement is expected within a week, which will explain investor rights and entitlements in greater detail. Omni Bridgeway suggests that this statement should be considered carefully, perhaps with a professional adviser, to determine whether or not inclusion in the scheme is a good idea. Registering interest in the case does not imply an offer to participate in the scheme, nor does it constitute a funding agreement.
Case Developments

Washington DC Court Asked to Enforce $325MM Judgement Against Argentina

Last week, Titan Consortium filed a lengthy petition against Argentina’s government while seeking to enforce an earlier award from 2008. This continues a long dispute regarding the re-nationalization of two Argentinian airlines. CH-Aviation explains that three subsidiaries of Grupo Marsans were shareholders who made agreements to sell their shares to the Argentine government. However, the shares were instead seized without notice in 2009. Shareholders were given a single peso as “symbolic compensation.”   Collectively, the shareholders believed they were owed about $1.5 billion for both airlines. In 2017, ICSID awarded the companies $320 million in compensation, plus costs, fees, and post-award interest. The government’s actions were ruled to be arbitrary, and lacking in transparency. Titan Consortium purchased the rights to the lawsuit from funders Burford Capital for $94 million after Argentina tried to have the compensation order annulled over a funding agreement.