Plaintiffs sued defendants related to investments in mutual funds. Plaintiffs have hired a Finance Expert Witness to provide testimony. Defendants have filed a motion to exclude this expert from testifying. The court denied the motion.
Facts: This case (Obeslo et al v. Great-West Capital Management, LLC – United States District Court – District of Colorado – April 17th, 2019) involves investments in mutual funds. The plaintiffs filed suit against the defendants alleging that they violated § 36(b) of the Investment Company Act of 1940 (the “ICA”), by charging excessive fees and therefore violated the ICA’s fiduciary duty with respect to the receipt of compensation for services. The plaintiffs have hired Dr. Brian Henderson (Finance Expert Witness) to provide testimony. The defendants have filed a motion to exclude this expert from testifying.
Discussion: The plaintiffs have retained Dr. Henderson a rebuttal witness to Dr. Hubbard. The defendants argue that Dr. Henderson’s opinions should be excluded because he is not sufficiently qualified to offer an expert opinion in this case. Specifically, the defendants state that Dr. Henderson does not have experience analyzing peer group methodologies; has not done academic research with regard to mutual funds in particular; and did not review data related to mutual fund peer group construction prior to reaching his opinion.
The court opines that Dr. Henderson has substantial training and experience in the field of finance and investment, holding multiple degrees in Finance and Quantitative Finance. In addition, he has had professional experience working for investment management firms. Currently, he is employed as a professor of finance at the George Washington University School of Business in Washington, DC. The court thus opines that he has the requisite training, education, and experience to offer an opinion in this case. The court also states that any weaknesses in Dr. Henderson’s testimony go to the weight of his testimony, not its admissibility.
Regarding reliability and relevance, Dr. Henderson, after reproducing Dr. Hubbard’s methodology, analyzed the results and determined that Dr. Hubbard had included funds that are not economically similar to the funds at issue. The court opines that Dr. Henderson’s methodology is valid as he recreates and evaluates another expert’s opinion based on an informed assessment of the strength’s and weaknesses of the other expert’s approach. Also, Dr. Henderson’s analysis can be properly applied to the facts at issue. Last, the court opines that Dr. Henderson’s opinion is relevant.
Conclusion: The motion to exclude the expert witness report of Dr. Brian Henderson is denied.