U.S. v. Martoma

10 Citing cases

  1. Sec. & Exch. Comm'n v. Goldstone

    No. CIV 12-0257 JB/LFG (D.N.M. May. 10, 2016)   Cited 6 times
    Noting that event studies are "essentially ... mandatory" in the Third Circuit

    That the Tenth Circuit does not require event studies to show materiality, however, does not mean that the parties have no right to present them. In United States v. Martoma, 993 F. Supp. 2d 452 (S.D.N.Y. 2014)(Gardephe, J.), the United States moved to exclude portions of a defense witness' testimony in an insider trading case. See 993 F. Supp. 2d at 454.

  2. Sec. & Exch. Comm'n v. Aly

    16 Civ. 3853 (PGG) (S.D.N.Y. Mar. 27, 2018)   Cited 2 times
    Holding scienter established based on, inter alia, "the benefits [the defendant] received from the scheme," and the "temporal proximity between [the defendant's] filing of the Schedule 13D and [his] sale of his call options" (alteration omitted)

    "Event studies are used to determine whether 'the price changes at issue in [a] case were [related or] unrelated to the representations in dispute' by eliminating other factors, such as 'the effects on stock price of market and industry information.'" United States v. Martoma, 993 F. Supp. 2d 452, 458 (S.D.N.Y. 2014) (alteration in original) (quoting In re N. Telecom Ltd. Sec. Litig., 116 F. Supp. 2d 446, 460 (S.D.N.Y. 2000)). Because the efficient market theory counsels that "'information important to reasonable investors . . . is immediately incorporated into the stock price[,]'" Martoma, 993 F. Supp. 2d at 457, an "event window . . . need not be exceedingly long"; rather the goal is "to select a window long enough so that the period includes the entirety of the market's reaction to the information released." Hatfield, 2014 WL 7271616, at *12.

  3. Avomeen Holdings, LLC v. Thanedar

    Case No. 17-cv-13703 (E.D. Mich. Aug. 1, 2019)   Cited 1 times

    Within the context of securities litigation, "[c]ourts routinely allow expert testimony regarding whether undisclosed information, or information that was later disclosed, was material." S.E.C. v. ITT Educ. Servs., 311 F. Supp. 3d 977, 995 (S.D. Ind. 2018) (citing S.E.C. v. Ferrone, 163 F. Supp. 3d 549, 565 (N.D. Ill. 2016); United States v. Martoma, 993 F. Supp. 2d 452, 457 (S.D.N.Y. 2014)). In ITT Educational Services, the Southern District of Indiana explained the difference between an impermissible legal conclusion and a permissible factual finding:

  4. U.S. Sec. & Exch. Comm'n v. ITT Educ. Servs., Inc.

    311 F. Supp. 3d 977 (S.D. Ind. 2018)   Cited 9 times
    Excluding expert testimony on a standard defined by law, in contrast to situations where "the standard a jury must apply is not defined by the law, but rather by a custom, practice, or even difficult-to-understand technology''

    Courts routinely allow expert testimony regarding whether undisclosed information, or information that was later disclosed, was material. See, e.g. , Securities and Exchange Commission v. Ferrone , 163 F.Supp.3d 549, 565 (N.D. Ill. 2016) (SEC could present expert testimony regarding materiality of allegedly false and misleading statements because "[t]he jury...cannot determine whether the statements were false and misleading unless it knows the actual facts [surrounding the statements and]... the total mix of information related to those topics"); U.S. v. Martoma , 993 F.Supp.2d 452, 457 (S.D. N.Y. 2014) ("Expert testimony concerning materiality is often introduced in cases involving allegations that a company misrepresented or wrongfully withheld information from investors"). To the extent that Defendants object to the use of the word "material" as a legal term of art, the Court notes that the SEC has stated that it "would not object to Dr. Thakor using a word other than ‘material’ to describe his opinions."

  5. Ong v. Chipotle Mexican Grill, Inc.

    294 F. Supp. 3d 199 (S.D.N.Y. 2018)   Cited 42 times   2 Legal Analyses
    Finding no duty to disclose when the challenged "misstatement . . . is far too attenuated from the alleged omission"

    To be sure, a reasonable Chipotle shareholder in early 2016—having suffered losses as a result of the outbreaks and having learned the intricacies of investigating such an outbreak—might now consider the issue material, but the Court cannot find, exante , that Chipotle’s ability to nose to the source of a contaminated piece of produce would weigh significantly on an investor’s mind. See Panther Partners, Inc. v. Ikanos Commc'ns, Inc. , 538 F.Supp.2d 662, 668 (S.D.N.Y. 2008) ("[I]n assessing whether a misrepresentation or omission was material, courts may not employ 20/20 hindsight[.]" (quoting In re Unicapital Corp. Sec. Litig. , 149 F.Supp.2d 1353, 1363 (S.D. Fla. 2001) ), aff'd , 347 Fed.Appx. 617 (2d Cir. 2009) (summary order); accord United States v. Martoma , 993 F.Supp.2d 452, 457 (S.D.N.Y. 2014) ; Sedighim v. Donaldson, Lufkin & Jenrette, Inc. , 167 F.Supp.2d 639, 650 (S.D.N.Y. 2001). And the immateriality of such ability on Chipotle’s part is only underscored by the Company’s prior disclosure that having multiple produce suppliers "may make it more difficult to keep quality consistent, and present additional risk of food-borne illnesses given the greater number of suppliers involved ... and the difficulty of imposing our quality assurance programs on all such suppliers."

  6. In re Barclays Bank PLC Sec. Litig.

    09 Civ. 1989 (PAC) (S.D.N.Y. Sep. 13, 2017)   Cited 17 times

    This process allows an expert to "determine whether the price changes at issue in a case were related or unrelated to the representations in dispute by eliminating other factors, such as the effects on stock price of market and industry market information." United States v. Martoma, 993 F. Supp. 2d 452, 458 (S.D.N.Y. 2014) (quotations, citation, and alterations omitted), aff'd, 2017 WL 3611518 (2d Cir. Aug. 23, 2017). "[N]umerous courts have held that an event study is a reliable method for determining market efficiency and the market's responsiveness to certain events or information."

  7. Veleron Holding v. Stanley

    117 F. Supp. 3d 404 (S.D.N.Y. 2015)   Cited 28 times   1 Legal Analyses
    Finding that the court "must look past the labels that [the parties] placed on their relationship, and instead plumb the real character of the services [provided] ... because, ‘[u]ltimately, the dispositive issue of fiduciary-like duty or no such duty is determined not by the nomenclature "finder" or "broker" or even "agent," but instead by the services agreed to under the contract between the parties.’ " (quoting Ne. Gen. Corp. v. Wellington Adver., Inc. , 82 N.Y.2d 158, 163, 604 N.Y.S.2d 1, 624 N.E.2d 129 (1993) )

    “Event studies are used to determine whether ‘the price changes at issue in [a] case were [related or] unrelated to the representations in dispute’ by eliminating other factors, such as ‘the effects on stock price of market and industry information.’ ” United States v. Martoma, 993 F.Supp.2d 452, 457–58 (S.D.N.Y.2014) (quoting In re N. Telecom Ltd. Sec. Litig., 116 F.Supp.2d 446, 460 (S.D.N.Y.2000)). “In other words, event studies seek to ‘disentangle[ ] ... the stock price movement (if any) attributable to the release of new, allegation-related information from the movement attributable to the release of other, non-allegation-related news.’ ”

  8. In re Citigroup Erisa Litig.

    104 F. Supp. 3d 599 (S.D.N.Y. 2015)   Cited 27 times   3 Legal Analyses
    Dismissing as implausible a claim that ESOP fiduciaries imprudently continued to permit investment in an excessively risky company because the market had already incorporated risk into share price

    This allegation highlights the immateriality of any purported nonpublic information that the defendants could have disclosed. See U.S. v. Martoma, 993 F.Supp.2d 452, 457 (S.D.N.Y.2014) (“[I]f a company's disclosure of information has no effect on stock prices, it follows that the information disclosed ... was immaterial.” (internal quotation marks and citation omitted)).

  9. United States v. Hatfield

    06-CR-0550 (JS)(AKT) (E.D.N.Y. Dec. 18, 2014)   Cited 3 times

    An event study is a statistical analysis that performs this task. U.S. v. Martoma, 993 F. Supp. 2d 452, 458 (S.D.N.Y. 2014) ("In other words, event studies seek to 'disentangle[ ] . . . the stock price movement (if any) attributable to the release of new, allegation-related information from the movement attributable to the release of other, non-allegation-related news." (alterations and ellipsis in original) (quoting In re Xerox Corp. Sec. Litig., 99-CV-2374, 2009 WL 8556135, at *4 (D. Conn. Apr. 22, 2009)).

  10. People ex rel. James v. Exxon Mobil Corp.

    65 Misc. 3d 1233 (N.Y. Sup. Ct. 2019)   Cited 4 times   5 Legal Analyses

    Event studies are a well-recognized manner of establishing the materiality of an alleged misstatement. SeeUnited States v. Martoma , 993 F. Supp. 2d 452, 457 (S.D.NY 2014).