Wall Street fights back against expert witness in lawsuits

Tue Feb 14, 2012 8:19am EST
 
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By Suzanne Barlyn

(Reuters) - For years, Craig McCann played a prominent role as a top expert witness, his testimony helping to win millions of dollars for investors who sued financial companies.

As those victories piled up, brokerages went to war on his credentials, and more recently, his credibility. The effort provides a window into how critical expert witnesses have been to investor cases, and how intent brokerage firms are on weakening their influence.

"Most of these securities firms don't like Craig because his testimony hurts them," said a securities arbitration lawyer who spoke on the condition of anonymity. "They don't want someone who can lift the tent to show people what's underneath it. He's Public Enemy No. One," the person said.

McCann, a former U.S. Securities and Exchange Commission economist, is accustomed to financial companies challenging his qualifications during arbitration cases. But their efforts have become unrelenting since last October, with a number of brokerages trying to prevent him from testifying at all.

The shift to all-out war against McCann came after a federal judge issued a controversial ruling that McCann gave fraudulent testimony in a case against brokerage Morgan Keegan & Co Inc. The fact that McCann disclosed the discrepancy ahead of time and that the new testimony would have done nothing to change the outcome of the case has not stopped lawyers from using the ruling to attack McCann's integrity.

LEADING WITNESS

Lawyers for investors often hire McCann, an economist with a doctorate from the University of California at Los Angeles, to testify as an expert witness about the value and risks of certain securities. McCann has testified against Wall Street about everything from the risks of equity indexed annuities to valuations of complex securities.

Securities industry lawyers have been particularly stymied by McCann, whose deep knowledge of the valuation and risks of securities has often been insurmountable.   Continued...