In Re Imperial Credit Industries, Inc. Securities Litigation

The Situation

Imperial Credit Industries, Inc. ("ICII") was sued on behalf of investors in a shareholder class action. The principal allegation was that ICII's stock price was inflated due to undisclosed losses at a subprime lender in which ICII had an ownership stake of over 40%.

NERA's Role

NERA was retained to respond to the report of Plaintiffs' expert in this matter. NERA's expert, Dr. David Tabak, noted in his report that Plaintiffs' expert's analysis did not contain an event study to properly measure the effect of any alleged fraud on the stock price. NERA argued that plaintiffs had therefore significantly overestimated the damages that would be due to plaintiffs if liability were found.

The Result

Plaintiffs' expert's testimony was struck on Daubert grounds when the judge found that his analysis "is deficient for failure to provide an 'event study' or similar analysis." In part because plaintiffs were had no evidence of loss causation or of damages once the analysis of their expert was struck, Defendants' motion for summary judgment was granted.

Read the judge's decision here.