NERA Economist Plays Key Role in Successful Outcome for Defendants in Subprime Securities Case

17 October 2008

17 October/New York -- NERA Economic Consulting, a leading global provider of economic advice and analysis in business, legal, and regulatory matters, announced today the essential role NERA President Dr. Andrew Carron played in the Second Circuit appellate decision in Teamsters Local 445 Freight Div. Pension Fund v. Bombardier Inc. et al.

In a decision announced 14 October 2008, the US Court of Appeals for the Second Circuit cited at length Dr. Carron's original testimony for the defense in affirming the denial of class certification in Bombardier.

The case focused on a putative class action arising from the sale of debt securities (Certificates) backed by mobile home loans and leases. Teamsters filed suit against Bombardier, alleging misrepresentations about the integrity of the collateral behind the Certificates.

For the trial court, Dr. Carron provided analysis and expert testimony critiquing Teamsters' assertion that the Certificates operated in an efficient market. Dr. Carron also challenged an event study prepared by plaintiffs' expert, which purportedly demonstrated that, according to Cammer factors, the Certificates traded in an efficient market.

In August 2006, Judge Shira Scheindlin of the US District Court for the Southern District of New York denied the motion for class certification, concluding that plaintiffs had failed to demonstrate market efficiency. In a decision that frequently cited the NERA affidavit, Judge Scheindlin agreed with Dr. Carron that the plaintiffs' expert used faulty math and relied upon "circular reasoning" to justify the prices used in the plaintiffs' event study.

Following an appeal, on 14 October 2008, the Second Circuit upheld the district court's ruling, citing the plaintiffs' failure to prove market efficiency sufficient to support application of the fraud-on-the-market presumption of reliance. The Court agreed with the initial ruling that Dr. Carron was more persuasive than the plaintiffs' expert on several factors relating to the determination of market efficiency.

Due to the involvement of securities backed by subprime mortgages, the Bombardier ruling could potentially have important implications for future subprime litigation.

About NERA

NERA Economic Consulting ( is a global firm of experts dedicated to applying economic, finance, and quantitative principles to complex business and legal challenges. For more than six decades, we have been creating strategies, studies, reports, expert testimony, and policy recommendations for government authorities and the world’s leading law firms and corporations. We bring academic rigor, objectivity, and real-world industry experience to issues arising from competition, regulation, public policy, strategy, finance, and litigation.

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