The opinion
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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IN RE FOREIGN EXCHANGE BENCHMARK : 13 Civ. 7789 (LGS)
RATES ANTITRUST LITIGATION. :
: OPINION
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LORNA G. SCHOFIELD, District Judge:
WHEREAS, on August 26, 2022, Defendants moved to exclude at trial certain proposed
testimony of Plaintiffs’ experts Dr. Hal J. Singer and Mr. Eric Robin. On September 30, 2022,
the Court issued a short order (Dkt. No. 1944), resolving Defendants’ motion and stating that the
reasoning for those decisions would be forthcoming in a separate opinion. The reasons for the
Order at Dkt. No. 1944 are below. All references to Rules are to the Federal Rules of Evidence.
Dr. Singer’s Testimony About the Number or Frequency of Chats
Defendants’ application to preclude Dr. Singer from presenting “factual narrative” about
the chats that he examined was granted in part and denied in part. Dr. Singer was permitted to
testify about how many and what kind of chats were collected and why. Explaining the
collection methodology required Dr. Singer to explain, from the perspective of an antitrust
economist, what kinds of information exchange are inconsistent with competition and likely to
result in wider spreads, and why the searches used to collect these chats were appropriate. In
presenting that testimony, he was permitted to include some illustrative discussion of specific
chats. Dr. Singer was precluded, however, from going beyond the testimony required to explain
the basis for those opinions. For example, Dr. Singer was precluded from interpreting chats or
opining on whether specific chats involve the sharing of price information among competitors,
and from reading excessive numbers of chats into the record.
Defendants’ application to preclude Dr. Singer from describing the alleged conspirators’
spread chats as “routine” was denied. Defendants’ argument is well taken that “routine” is not a
technical term, and jurors need no economic expertise to determine whether a given number of
chats over a given time period is “routine.” But it would have been odd and counterproductive to
preclude Dr. Singer from using layman’s terms to characterize the number and frequency of
chats or from using certain words in doing so.
Dr. Singer and Mr. Robin’s Testimony About Guilty Pleas and Settlements
Plaintiffs’ experts were precluded from offering opinions about the likely significance of
guilty pleas and regulatory settlements. Defendants’ motions in limine to preclude evidence of
regulatory settlements were for the most part granted because the fact of settlement is
inadmissible to prove liability under Rule 408.1 (Dkt. 1880, 1st, 5th and 7th MILs.) Economic
expert testimony that seeks to explain why someone might rationally make the decision to settle
therefore is irrelevant under Rule 402. Guilty plea evidence was permitted at trial because the
probative value of those pleas outweighed the risk of prejudice as explained in the Order denying
Defendants’ motion in limine. (Dkt. 1880, 3rd and 4th MILs.) However, expert testimony on the
likely reasons for those pleas would have been only minimally helpful to the jury while
amplifying any prejudicial effect, and thus was excluded under Rules 702 and 403.
Class counsel credibly argued that Dr. Singer’s review of regulatory settlements and
guilty pleas was relevant as a basis for his economic analysis to show that spreads were widened
during the period in which the conduct covered by those settlement and pleas occurred. That
testimony was nevertheless excluded under Rules 403 and 702. It would have been a “backdoor”
1 Credit Suisse’s motion in limine was denied as to one regulatory settlement, which contained
factual admissions of one of Credit Suisse’s alleged co-conspirators, but Plaintiffs did not offer
that evidence at trial, so the permissibility of expert testimony about that evidence is moot.
way of introducing prejudicial and inadmissible evidence of settlements, and in his September
14, 2022, declaration in opposition to Defendants’ motion, Dr. Singer conceded “that regulatory
settlements and guilty pleas are not necessary to assess the economic effects of an alleged
conspiracy.” Even if Dr. Singer’s testimony had been restricted to the admissible evidence of
guilty pleas and criminal convictions, his opinion that such criminal consequences are consistent
with the existence of a conspiracy would not have helped the jurors understand any concept
beyond their common understanding.
For the same reason, Mr. Robin was precluded from testifying about guilty pleas and
regulatory settlements because the opinion proffered -- that these regulatory outcomes would
have been unlikely had the activity in the chatrooms been proper -- is not based on any special
expertise of Mr. Robin’s and creates a high risk of prejudice by encouraging the substitution of
the regulators’ conclusions for the jury’s own.
As Defendants argue only in a footnote that Mr. Robin is not qualified to opine on the
concept of “market color,” they forfeit that argument. See Fin. Guaranty Ins. Co. v. Putnam
Advisory Co., LLC, No. 12 Civ. 7372, 2020 WL 264146, at *2 (S.D.N.Y. Jan. 17, 2020). In any
event, the argument is unpersuasive on the merits. Putting aside the term “market color,”
Defendants do not dispute that Mr. Robin is qualified as an expert to opine on the FX industry,
FX trading practices and whether certain practices were routine or problematic. In light of his
extensive experience, the fact that Mr. Robin has worked at only three of the sixteen alleged co-
conspirator banks and has not worked in a compliance department is immaterial, and he is
qualified to opine whether a trading practice was generally accepted or not. To the extent
Defendants sought to preclude other unidentified “factual narrative” Mr. Robin might offer, that
request was denied.
Dr. Singer’s Regression Analysis
Defendants’ application to preclude several of Dr. Singer’s conclusions about the alleged
narrowing of spreads was granted in relevant part. While regression analysis is in general a
reliable methodology to estimate the relationship between certain variables, Defendants
persuasively argued that the Conduct coefficient produced by Dr. Singer’s regression analysis
actually measures variation in spreads only between the last six months of 2013 on the one hand
and the first six months of 2014 on the other. Neither Plaintiffs nor Dr. Singer in his declaration
rebut the assertions of Defendants and their experts that a regression in which the “Conduct”
variable is turned “on” only for that twelve-month period produces precisely the the same
coefficient of 0.0000408 that Dr. Singer claims describes the difference between the entire
conspiracy period and the post-conspiracy period. Nor does Dr. Singer dispute that his use of
year-fixed effects variables in combination with the Conduct variable results in perfect
collinearity for each year except the twelve-month period discussed above. Dr. Singer therefore
was precluded under Rule 702 from opining that the current Conduct coefficient produced by his
regression analysis measures the average difference in spreads between the entire conspiracy
period and the post-conspiracy period he analyzed.
Defendants’ other challenges to Dr. Singer’s opinions were overruled, but the challenged
testimony was not offered at trial. In particular, the Court permitted, but Plaintiffs did not offer,
Dr. Singer’s opinion that spreads were wider in the last six months that the alleged conspiracy
existed and the first six months after it allegedly ended; Dr. Singer’s opinions derived from his
“cointegration regression” analysis of the correlation between interbank and customer spreads;
and Dr. Singer’s opinion that the incidence of chats in which spreads were shared coincided and
correlated with wider spreads. Defendants’ challenges to that testimony therefore are moot.
Dr. Singer and Mr. Robin’s Testimony About “Transmission Theories”
Defendants’ application to preclude Plaintiffs’ experts testimony about so-called
“Transmission Theories” was denied. The parties use the term “Transmission Theories” to
describe theorized mechanisms that “would allow a supposed agreement in one chat about one
spread to affect other spreads.” Defendants identified three such theories: “vertical and
horizontal correlations,” “adverse selection” and “feedback loops.” As neither of the latter two
theories was addressed in expert testimony at trial, the admissibility of such testimony is moot.
Expert testimony is admissible on the third theory, which addresses purported correlations
between spreads. Contrary to Defendants’ arguments, expert opinions about correlations
between spreads are directly relevant to whether Plaintiffs proved the existence of a broad,
global conspiracy to widen spreads. Accordingly, Defendants’ relevance challenge to Dr. Singer
and Mr. Robin’s testimony on this topic was rejected.
Dr. Singer and Mr. Robin’s Testimony About Spread Durability or Stability
Defendants’ challenge to expert testimony about the purported durability or stability of
spreads was denied. Defendants argued that Mr. Robin’s opening merits report contains only a
brief discussion of spread stability with a single citation of dubious value. Mr. Robin’s reply
report, however, contains a detailed discussion of the issue supported both by Mr. Robin’s
experience working for market-making banks and numerous citations to record evidence and
scholarship. Mr. Robin based his opinion in significant part on spread matrices; he cited
numerous sources explaining the role of spread matrices; and he explained the relationship
between those matrices and the EBS data used by Dr. Melvin. Plaintiffs’ claim that Mr. Robin’s
and, by extension, Dr. Singer’s opinions about spread stability are not based on sufficient facts
and data is unpersuasive.
VI. Conclusion
For the foregoing reasons, Plaintiffs’ motion was granted in part and denied in part with
respect to both Dr. Singer and Mr. Robin’s testimony.
Dated: October 20, 2022
New York, New York
LorXa G. Scio
UNITED STATES DISTRICT JUDGE