Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

Business Crimes BulletinFeaturesKickerLJN NewslettersNewsSections

Expert Testimony on Industry Practice

By Jodi Misher Peikin and Rachel Agress

Late last year, the U.S. Court of Appeals for the Second Circuit, in United States v. Litvak, held that expert testimony regarding how a “specialized securities market” operated ' in this case, the Residential Mortgage-Backed Securities (RMBS) market ' was relevant and potentially “highly” probative of the question of whether the defendant's misstatements to investors were material. United States v. Litvak, 808 F.3d 160, 179, 182-84 (2d Cir. Dec. 8, 2015). Because juries are tasked with determining materiality ' i.e., whether there is “a substantial likelihood that a reasonable investor would find the ' misrepresentation important in making an investment decision” ( United States v. Vilar, 729 F.3d 62, 89 (2d Cir. 2013), cert. denied, ”' U.S. ””, 134 S.Ct. 2684, 189 L.Ed.2d 230 (2014)), the notion that experts can opine on overarching industry practice that is not case-specific, including that RMBS investment managers typically do not rely on representations (or misrepresentations) by broker-dealers, appears surprising.

In fact, however, a long line of Second Circuit cases dating back over 20 years have held that expert testimony of the type proffered in Litvak, relating to “ordinary practices in [an] industry,” can be probative of materiality where it “enable[s] the jury to evaluate a defendant's conduct against the standards of accepted practice,” so long as the testimony does not encompass an ultimate legal conclusion. United States v. Bilzerian, 926 F.2d 1285, 1295 (2d Cir. 1991); see also Marx & Co. v. Diners ' Club Inc., 550 F.2d 505, 509 (2d Cir. 1977), cert. denied, 434 U.S. 861, 98 S.Ct. 188, 54 L.Ed.2d 134 (1977) (finding that “[t]estimony concerning the ordinary practices of those engaged in securities business is admissible under the same theory as testimony concerning the ordinary practices of physicians or concerning other trade customs: to enable the jury to evaluate the conduct of the parties against the standards of ordinary practice in the industry.”).

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Bankruptcy Sales: Finding a Diamond In the Rough Image

There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.

Judge Rules Shaquille O'Neal Will Face Securities Lawsuit for Promotion, Sale of NFTs Image

A federal district court in Miami, FL, has ruled that former National Basketball Association star Shaquille O'Neal will have to face a lawsuit over his promotion of unregistered securities in the form of cryptocurrency tokens and that he was a "seller" of these unregistered securities.

Blockchain Domains: New Developments for Brand Owners Image

Blockchain domain names offer decentralized alternatives to traditional DNS-based domain names, promising enhanced security, privacy and censorship resistance. However, these benefits come with significant challenges, particularly for brand owners seeking to protect their trademarks in these new digital spaces.

Coverage Issues Stemming from Dry Cleaner Contamination Suits Image

In recent years, there has been a growing number of dry cleaners claiming to be "organic," "green," or "eco-friendly." While that may be true with respect to some, many dry cleaners continue to use a cleaning method involving the use of a solvent called perchloroethylene, commonly known as perc. And, there seems to be an increasing number of lawsuits stemming from environmental problems associated with historic dry cleaning operations utilizing this chemical.

Why So Many Great Lawyers Stink at Business Development and What Law Firms Are Doing About It Image

Why is it that those who are best skilled at advocating for others are ill-equipped at advocating for their own skills and what to do about it?