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Former Chairman of SEC struck as expert witness in securities fraud case

Who would have thought that a former head of the SEC would for any reason be struck as an expert witness in a securities fraud case? Yet, that's what happened in In re Fannie Mae Securities Litigation, No. 04-1639 (DDC March 8, 2011). Former SEC Chairman Harvey Pitt had been retained as an expert by the lead plaintiff, and was deposed for a day. However, he refused to continue his deposition after he learned that former SEC Chief Accountant Donald Nicolaisen had been deposed in the action, because he had not had an opportunity to review Nicolaisen's testimony.

In their motion the defendants argued that the discovery schedule for expert witnesses had been negotiated with great effort, and that allowing Plaintiffs' to unilaterally delay Mr. Pitt's deposition and then potentially have him change or add to his opinions would upset the schedule, and would waste the time the defense experts had already expended to rebut those opinions.

Judge Leon had harsh words for lead plaintiff's counsel for failing to provide Mr. Pitt with that transcript, stating "Of course, the repeated failure of Lead Plaintiffs' counsel to provide Mr. Pitt with Nicolaisen's deposition transcript, both prior to the submission of his expert report, and prior to his deposition, is inexplicable and inexcusable!"

The Court pointed out the Lead Plaintiffs' counsel had initiated the litigation which had required the deposition of Mr. Nicolaisen in the first place. The Court struck Mr. Pitt as an expert witness, finding that the prejudice to the defendant could not be overcome by simply allowing the deposition to continued one week later.

Hat tip to the Blog of the Legal Times for first covering this.