United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
Jeffrey T. Gilbert United States Magistrate Judge
the Court are Plaintiff's Motion to Exclude Proposed
Testimony by Anthony Garvy (“SEC's Motion”)
[ECF No. 847] and Defendants' and Relief Defendants'
Motion in Limine to Bar the Testimony of Mari Reidy
and Peter Hickey and the Admission of Their Respective
Reports (“Defendants' Motion”) [ECF No. 852].
For the reasons stated below, the SEC's Motion [ECF No.
847] is granted in part and denied in part, and
Defendants' Motion [ECF No. 852] is granted in part and
denied in part.
Securities and Exchange Commission (the “SEC”)
sued three defendants and five relief defendants. In a
nine-count complaint, the SEC alleged that the defendants-The
Nutmeg Group, LLC (“Nutmeg”); Randall Goulding
(“Randall”); and David Goulding
(“David”)-violated the Investment Advisers Act of
1940 (the “Advisers Act”), 15 U.S.C. § 80a-
1 et seq., and the rules promulgated thereunder.
Amended Complaint, [ECF No. 314]. The SEC also asserted an
equitable claim for unjust enrichment against the relief
defendants-David Goulding, Inc.; David Samuel, LLC; Financial
Alchemy, LLC; Philly Financial, LLC; and Eric Irrgang.
Id. Throughout this Memorandum Opinion and Order,
the Court will refer collectively to the defendants and the
relief defendants as the “Defendants.”
of the claims in this case where resolved in the Court's
ruling on the parties' cross-motions for summary
judgment. SEC v. Nutmeg Grp., LLC, 162 F.Supp.3d 754
(N.D. Ill. 2016), reconsideration denied, 2016 WL
3023291 (N.D. Ill. May 24, 2016). Specifically, the Court
granted summary judgment in favor of the SEC on all of the
alleged primary violations except for the portions of Count I
that alleged misvaluation and misappropriation, on which the
SEC did not seek summary judgment. Id. at 761-62,
777-78, 780, 782. But the Court also denied summary judgment
to any party on all of the aiding and abetting counts.
Id. at 784. No party sought summary judgment on
Count IX, which is the only count against the relief
defendants. Id. at 761-62.
parties are now preparing to try the remaining claims in this
case. Toward that end, both parties have filed
Daubert motions asking the Court to limit expert
testimony that can be admitted during trial. The SEC has
moved to exclude the testimony of Defendants' expert
Anthony Garvy. SEC's Motion, [ECF No. 847]. Defendants
have returned the favor by moving to exclude two of the
SEC's witnesses, Mari Reidy and Peter Hickey.
Defendants' Motion, [ECF No. 852].
Rule of Evidence 702 and Daubert v. Merrell Dow
Pharmaceuticals, 509 U.S. 579 (1993) govern the
admissibility of expert testimony. Hall v. Flannery,
840 F.3d 922, 926 (7th Cir. 2016). Expert testimony is
admissible only “if the testimony is relevant to a fact
in issue, is based on sufficient facts or data, and is the
product of reliable scientific or other expert methods that
are properly applied.” Stuhlmacher v. Home Depot
U.S.A., Inc., 774 F.3d 405, 409 (7th Cir. 2014). It is
the role of the district court to serve as “the
gatekeeper of expert testimony” by admitting only
testimony that is reliable and relevant. Id. The
court will admit expert testimony only where the expert
“(i) is qualified to offer opinion testimony under Rule
702, (ii) has employed a reliable methodology, (iii) proposes
to offer opinions that follow rationally from the application
of his knowledge, skill, experience, training, or education,
and (iv) presents testimony on a matter that is relevant to
the case at hand, and thus helpful to the trier of
fact.” Mintel Int'l Grp., Ltd. v.
Neergheen, 636 F.Supp.2d 677, 684-85 (N.D. Ill. 2009)
(internal quotation marks omitted). The proponent of expert
testimony bears the burden of proving the testimony is
admissible. Fail-Safe, L.L.C. v. A.O. Smith Corp.,
744 F.Supp.2d 870, 887 (E.D. Wis. 2010).
expert may be qualified “by knowledge, skill,
experience, training or education.” Fed.R.Evid. 702. An
expert need not have any “particular credentials”
to be qualified. Tuf Racing Prod., Inc. v. Am. Suzuki
Motor Corp., 223 F.3d 585, 591 (7th Cir. 2000). The
court must consider “‘a proposed expert's
full range of practical experience as well as academic or
technical training when determining whether that expert is
qualified to render an opinion in a given area.'”
Trustees of Chicago Painters & Decorators Pension,
Health & Welfare, & Deferred Sav. Plan Trust Funds v.
Royal Int'l Drywall & Decorating, Inc., 493 F.3d
782, 788 (7th Cir. 2007) (quoting Smith v. Ford Motor
Co., 215 F.3d 713, 718 (7th Cir. 2000)). When assessing
whether an expert is qualified, the court is “not
concerned with [her] general qualifications.”
Hall, 840 F.3d at 926. Instead, the court examines
whether the expert has the necessary qualifications to
support “‘each of the conclusions [she]
draws.'” Id. (quoting Gayton v.
McCoy, 593 F.3d 610, 617 (7th Cir. 2010)). In other
words, the expert must be “qualified to offer opinions
in the specific area of his or her proposed testimony.”
Bone Care Int'l LLC v. Pentech Pharm., Inc.,
2010 WL 3928598, at *1 (N.D. Ill. Oct. 1, 2010).
reliable, an expert's testimony must be “based on
sufficient facts or data” and be “the product of
reliable principles and methods” that the expert has
“reliably applied . . . to the facts of the
case.” Fed.R.Evid. 702(b), (c). Put more succinctly,
the expert's testimony must demonstrate “‘the
same level of intellectual rigor that characterizes the
practice of an expert in the relevant field.'”
Lapsley v. Xtek, Inc., 689 F.3d 802, 805 (7th Cir.
2012) (quoting Kumho Tire Co. v. Carmichael, 526
U.S. 137, 153 (1999)). This standard is not satisfied when an
expert “simply assert[s] a ‘bottom
line'” or bases her opinion on “subjective
belief or speculation.” Metavante Corp. v. Emigrant
Sav. Bank, 619 F.3d 748, 761 (7th Cir. 2010). The court
has broad latitude when deciding whether an expert's
testimony is reliable. Higgins v. Koch Dev. Corp.,
794 F.3d 697, 704 (7th Cir. 2015).
relevant, an expert's testimony must “assist the
jury in determining any fact at issue in the case.”
Stuhlmacher, 774 F.3d at 409. Expert testimony must
be “pertinent to an issue in the case.”
Id. at 410. If “the jury is able to evaluate
the same evidence and is capable of drawing its own
conclusions, ” then the expert's testimony is not
helpful. Sanders v. City of Chicago Heights, 2016 WL
4398011, at *4 (N.D. Ill. Aug. 18, 2016). The relevance
standard for expert testimony is a liberal one. Hale v.
State Farm Mut. Auto. Ins. Co., 2016 WL 6947065, at *2
(S.D. Ill. June 2, 2016).
court's application of these admissibility standards for
expert testimony “is not intended to supplant the
adversarial process.” Ortiz v. City of
Chicago, 656 F.3d 523, 536 (7th Cir. 2011). Even
“shaky” testimony may satisfy Rule 702 and
Daubert. Bielskis v. Louisville Ladder,
Inc., 663 F.3d 887, 894 (7th Cir. 2011). It remains for
the jury to determine the accuracy of admissible expert
evidence that has been “tested” through
“‘vigorous cross-examination, presentation of
contrary evidence, and careful instruction on the burden of
proof.'” Lapsley, 689 F.3d at 805 (quoting
Daubert, 509 U.S. at 596).
Court will discuss the SEC's Daubert motion
first and then turn to Defendants' motion.
The SEC's Daubert Motion
has moved to exclude the testimony of Anthony Garvy. The SEC
argues Garvy is unqualified, and that his opinions are
unreliable and irrelevant. The Court will address each of these
arguments in turn after providing some background
prepared an expert report in this case, which the Court will
refer to as “Garvy's Report.” Garvy's
Report, [ECF No. 849-1]. Various opinions are scattered
throughout the report, but they largely can be sorted into
three categories. First, Garvy opines as to the fair value of
the Mercury Fund on December 31, 2008. Most of the report is
devoted to calculating this number, which Garvy determines is
$7, 051, 642. Id. at 13. Second, Garvy opines on the
adequacy of how Nutmeg calculated the value of the Mercury
Fund. He concludes Nutmeg engaged in “unacceptable
discounting, ” and thus ended up with a value that was
too low. Id. at 15. But Garvy also says Nutmeg's
valuation was “in good-faith” and
“reasonably objective and approximate to the Fair
Value of the assets.” Id. 13, 15. Third,
Garvy opines on the adequacy of Crowe Horwath's
calculations of the value of the Mercury Fund. He asserts Crowe
Horwath “aggressively discounted” assets
“with no understandable basis per their limited
discussion of their discounting of these fair value
assets” and improperly determined the value of certain
securities by extrapolating from the value of others.
Id. at 13 n.7, 18-19. Garvy further claims Crowe
Horwath did not comply with the Appraisal Foundation's
Uniform Standards of Professional Appraisal Practice, the
American Institute of Certified Public Accountants'
Statement of Standards of Valuation Services, or the Fair
Value Standards. Id. at 16-17. Garvy even contends
one of Crowe Horwath's reports does not conform with the
Federal Rules of Civil Procedure. Id. at 16.
Although this is not a complete summary of every opinion
contained in Garvy's report, it is sufficient for
contends Garvy is not qualified to render an opinion in this
case because he does not have experience calculating the fair
value of securities, particularly the type of illiquid or
restricted microcap securities that the Mercury Fund held.
Plaintiff's Reply in Support of the Motion to Exclude
Proposed Testimony by Anthony Garvy (“SEC's
Reply”), [ECF No. 866], at 2; see also
SEC's Motion, [ECF No. 847], at 3. But the SEC also
argues Garvy's opinion in this case is unreliable because
he did not use the same methodology he used in a previous
“similar” engagement. SEC's Motion, [ECF No.
847], at 8, 13; SEC's Reply, [ECF No. 866], at 1, 4. So,
the SEC's premise is that Garvy's previous engagement
is similar enough to this one that he should have used the
same methodology in both engagements. It is odd, then, for
the SEC to argue at the same time that Garvy has no
experience conducting the type of valuation required in this
case. Regardless, courts impose no requirement that an expert
be a specialist in a given field. See In re Fluidmaster,
Inc., Water Connector Components Prod. Liab. Litig.,
2017 WL 1196990, at *5 (N.D. Ill. Mar. 31, 2017) (explaining
that courts normally do not require an expert to be a
specialist and that an expert's lack of specialization
typically goes to weight, not admissibility); Taylor v.
Union Pac. R. Co., 2010 WL 3724287, at *2 (S.D. Ill.
Sept. 16, 2010) (“However, an expert need not have
credentials narrowly tailored to the subject matter of a case
in order to pass muster under Rule 702, so long as the expert
is testifying to matters within the area of his or her
the Court is not convinced Garvy actually lacks the
knowledge, experience, training, or education required to
satisfy Rule 702. See Smith, 215 F.3d at 718
(“[A] court should consider a proposed expert's
full range of practical experience as well as academic or
technical training when determining whether that expert is
qualified to render an opinion in a given area.”).
Garvy received a Master of Business Administration from
Northwestern University's Kellogg School of Management
and completed some graduate level course work at the
University of Chicago's Booth Graduate School of
Business. Garvy's Report, [ECF No. 849-1], at 26. Garvy
also has various accreditations, including Certified Public
Accountant, Certified Valuation Analyst, and Accredited in
Business Valuation. Id. at 26. Garvy was a Managing
Partner for valuation and litigation support services at
Chadwick & Garvy LLC until he became President of
Corporate Valuation Services Inc., which is the position he
currently holds. Id. at 23. Garvy says that, through
his work, he “has appraised billions of dollars of
equity interests” and that he has appraised assets
using fair value standards. Id. This includes a fair
market valuation of a hedge fund that owned public
securities. Deposition of Anthony Garvy (“Garvy's
Dep.”), [ECF No. 849-2], at 20-22. Therefore, the Court
rejects the SEC's challenge to Garvy's qualifications
to value the Mercury Fund.
does raise one meritorious objection to Garvy's
qualifications. The SEC notes Garvy opined in his report
about whether reports prepared by Crowe Horwath comply with
the Federal Rules of Civil Procedure. SEC's Motion, [ECF
No. 847], at 6 n.5; see also Garvy's Report,
[ECF No. 849-1], at 17. Garvy does not appear to be qualified
to render such an opinion and Defendants have not explained
why he is qualified to do so. Therefore, Garvy cannot testify
about that opinion.
takes somewhat of a scattershot approach to challenging
Garvy's opinions as unreliable. Apparently attempting to
inflict death by a thousand cuts, the SEC identifies many
potential weak spots in Garvy's opinions. While this
method of attack may be sufficient to kill off some experts,
the Court finds that most of the SEC's arguments leave
only scratches on Garvy for the purpose of its
Daubert motion, not mortal wounds, and are the stuff
of cross-examination rather than disqualification. They do
not render Garvy's testimony entirely
first advances several reasons why Garvy's opinions are
“untrustworthy” and argues he took shortcuts in
preparing his report. The Court notes, as an initial matter,
that “untrustworthiness” is not a recognized
basis for excluding an expert's opinion. The question of
an expert's credibility is left to the jury.
Smith, 215 F.3d at 719. The SEC never ties many of
the supposed “untrustworthy” aspects of
Garvy's report to a recognized legal principle that
renders expert testimony inadmissible. As noted above, most
of what the SEC has to say about Garvy is more appropriately
addressed to the jury.
contends Garvy spent so little time preparing his report that
he could not have developed a reliable opinion. SEC's
Motion, [ECF No. 847], at 3-4; SEC's Reply, [ECF No.
866], at 2. According to the SEC, Garvy spent only 26.5 hours
working on his report. The SEC seems to have calculated this
number by dividing the amount Garvy charged for his services
($10, 000) by his hourly rate ($375.00). At his deposition,
Garvy testified that he did not recall how many hours he
spent working on the report. Garvy's Dep., [ECF No.
849-2], at 44. But Garvy also testified that, by the time he
sent Randall a $6, 000 bill in June, 2011, he had stopped
billing by the hour. Id. at 45. That means the
SEC's method of calculation is not necessarily reflective
of the amount of time Garvy actually worked on his report.
More fundamentally, the SEC has not shown that a competent
report could not be prepared in 26.5 hours. Although the SEC
can cross-examination Garvy about the amount of time he
devoted to developing his opinions, his testimony should not
be barred solely because of the number of hours he spent
preparing his report. See Traharne v. Wayne Scott Fetzer
Co., 156 F.Supp.2d 717, 724 (N.D. Ill. 2001)
(“Defendant's main objections to [the expert's]
testimony center around the short amount of time he spent
studying the facts and documents in the case and the fact
that he never personally examined the sump pump at issue.
Although these are valid objections this Court believes that
they are better explored on cross-examination.”).
the SEC contends Garvy's opinion is not trustworthy
because he allowed Randall to file his report with exhibits
that were not a part of the report. SEC's Motion, [ECF
No. 847], at 2, 6; SEC's Reply, [ECF No. 866], at 5.
Garvy's report has only one exhibit, which is just one
page. See [ECF No. 297], at 23. The report includes
a Table of Exhibits that lists only that one exhibit.
Id. at 3. Randall filed the report, including its
one exhibit, as ECF No. 297. He filed hundreds of pages of
additional documents as ECF Nos. 297-1 through 297-9 and ECF
Nos. 298 through 305. It is uncertain whether Garvy reviewed
these additional documents when preparing his report.
See Garvy's Dep., [ECF No. 849-2], at 219-21.
The record also does not clearly reflect what Garvy knew
about what Randall did, when he knew it, and what control, if
any, Garvy had over Randall's decision. At his
deposition, Garvy testified only that he “must have
said that is fine” when Randall said he would file
the report “with some of the debentures and
documents.” Id. at 221, 232.
Court does not believe that Randall's conduct justifies
excluding Garvy's testimony. It should go without saying
that the filing of the additional exhibits in no way bears on
the actual soundness of the opinions in Garvy's report.
Further, there is no indication that Randall's filings
prejudiced the SEC or misled the Court. The version of the
report filed by Randall specified that there was only one
exhibit to the report and was docketed as a separate filing
with attachments. To the extent the SEC thought this was
improper, it easily could have moved to strike the filing and
asked the Court to require Randall to file the report without
the additional exhibits. The SEC did not do so. The SEC has
not cited any case law barring an expert's report under
similar circumstances or explained why such a severe result
is justified in this case.
the SEC claims Garvy took a shortcut by pulling the
“National Economic Outlook” section of his report
for this case from a report that he prepared for another
engagement. SEC's Motion, [ECF No. 847], at 2, 6-7;
SEC's Reply, [ECF No. 866], at 5. The SEC concedes
copying from a prior report is not prohibited. SEC's
Motion, [ECF No. 847], at 7. The SEC says, though, that
lifting the section undermines the reliability of Garvy's
report. That may be so but, again, that is more of an issue
for cross-examination than for wholesale disqualification.
addition, the record does not clearly support the SEC's
theory that Garvy copied-and-pasted text from one report into
another. Garvy did not deny that portions of the two reports
could be similar. See Garvy's Dep., [ECF No.
849-2], at 96-97. But he said he “didn't rely
anything on” or “derive anything” from the
previous report. Id. at 91-92, 95. Garvy claimed he
maintained an “[a]bsolute Chinese wall” between
his previous engagement and his work for this case.
Id. at 98. Garvy explained that he generally
included an economic outlook section in his appraisal reports
and that those sections tended to follow a “fairly
similar” template with similar boilerplate language or
data. Id. at 95, 97. He also noted that, in the case
of the two reports at issue, he “probably was using the
same service” to get the information in the outlooks.
Id. at 96- 97. Again, this may be fodder for
cross-examination but not flat disqualification The Court is
not making a factual finding as to what actually happened
because doing so is unnecessary to resolve the SEC's
identifies two specific problems supposedly resulting from
the inclusion of the “lifted” National Economic
Outlook section. The first is that Garvy's opinion is
untrustworthy because he could not explain why it was
relevant. At his deposition, the SEC questioned Garvy about
why he included this section in his report. The SEC
specifically focused on agriculture and housing. Garvy
explained that neither of those are directly related to the
value of the assets held by the Mercury Fund. Id. at
116-17. But he also noted how “agriculture drives
commodity prices and it also drives inflation” and
housing is a factor “in the overall macro sense that
could drive the market.” Id.
also contends Garvy's opinion is untrustworthy because
the National Economic Outlook section includes a statement
contradicted by Defendants. The SEC focuses on Garvy's
statement that “the downward volatility” in the
national economy would be “magnified in the [Mercury]
Fund's assets which comprise mostly of (sic) lower
capitalized equities.” Garvy's Report, [ECF No.
849], at 10. The SEC contends that, to the contrary, Randall
and David revalued the Mercury Fund in early 2009, leading to
an increase in the Fund's value. What the SEC decided not
to mention, however, is that the memorandum describing the
revaluation, which the SEC cites in its briefs, shows that
the revaluation occurred because Defendants supposedly
discovered “two small errors” made in their
initial valuation. [ECF No. 849-8], at 1. One error
purportedly involved the incorrect entering of the terms of a
note and the other was the overlooking of one certificate.
Id. at 5-6. In other words, the revaluation may have
no bearing on Garvy's statement regarding downward
as noted above, the SEC argues Garvy's opinion must be
untrustworthy because he used a different approach in this
case than in a previous engagement. SEC's Motion, [ECF
No. 847], at 2, 8, 13; SEC's Reply, [ECF No. 866], at 1,
4. According to the SEC, in another case, Garvy used a fair
market value approach instead of a fair value approach. The
SEC says Garvy did not explain at his deposition why he used
different approaches in these two engagements. It is
undisputed, however, that the previous engagement did not
involve the Advisers Act, which imposes specific requirements
with respect to valuation. Moreover, the SEC itself
identifies, tellingly, the proper vehicle for addressing this
issue: cross-examination. See SEC's Reply, [ECF
No. 866], at 4 (“If Garvy testifies at trial, he will
be required to explain why, in a previous valuation
engagement, he disregarded the standard he now claims apply .
. . .”). A conflict between an expert's prior work
and his work in a specific case is “prime territory for
‘vigorous cross-examination.'” Ernst v.
City of Chicago, 39 F.Supp.3d 1005, 1011 (N.D. Ill.
2014) (quoting Daubert, 509 U.S. 596).
SEC's next set of arguments all drive towards the notion
that Garvy blindly followed Defendants' lead without
checking whether information they gave him was accurate. The
SEC's first complaint in this area is that Garvy did not
independently verify the Mercury Fund's holdings.
SEC's Motion, [ECF No. 847], at 2, 5, 13-14; SEC's
Reply, [ECF No. 866], at 1, 5. But “[a]nalyzing data
assembled by others is neither illicit nor unusual, even if
the data were prepared for litigation by an interested
party.” Southwire Co. v. J.P. Morgan Chase &
Co., 528 F.Supp.2d 908, 934 (W.D. Wis. 2007); see
also Fluidmaster, 2017 WL 1196990, at *20 (rejecting a
challenge to an expert's testimony based on his reliance
on information provided by a party); City of Gary v.
Shafer, 2009 WL 1605136, at *6 (N.D. Ind. June 2, 2009).
Defendants, as the people and entities responsible for
running the Mercury Fund, were well-suited to know of its
holdings. Importantly, the SEC has not asserted or argued
(much less shown) that, as of the valuation date, the Mercury
Fund did not actually own any of the assets that Garvy
included in his report. Instead, the SEC merely notes the
Mercury Fund was not a party to certain agreements that
predate the December 31, 2008 date valuation
date. With no indication that Garvy lacked
sufficient facts or data with respect to the Mercury
Fund's holdings, “[f]actual inaccuracies are to be
explored through cross-examination and go toward the weight
and credibility of the evidence not admissibility.”
Traharne v. Wayne Scott Fetzer Co., 156 F.Supp.2d
717, 723 (N.D. Ill. 2001); see also Sys. Dev.
Integration, LLC v. Computer Scis. Corp., 886 F.Supp.2d
873, 882 (N.D. Ill. 2012) (“The Court must be mindful,
however, not to usurp the jury's role of determining the
‘soundness of the factual underpinnings of the
expert's analysis and the correctness of the expert's
conclusions based on that analysis.'”) (quoting
Bielskis, 663 F.3d at 896); Traharne v. Wayne
Scott Fetzer Co., 156 F.Supp.2d 717, 724 (N.D. Ill.
2001) (“Also, ‘shaky' expert testimony and
testimony with a weak factual basis is better revealed
through cross-examination and it is not an abuse of
discretion to admit such testimony.”).
also asserts Garvy relied on unreliable price information
supplied by Defendants. SEC's Motion, [ECF No. 847], at
2, 4-5, 12-13; SEC's Reply, [ECF No. 866], at 1, 4. As
pointed out above, even if Garvy accepted such information
from Defendants, this alone would not necessarily justify the
exclusion of his opinion. The SEC contends the price
information from Defendants that Garvy supposedly relied upon
was inaccurate with respect to one security. The SEC notes
Garvy listed in his report the price of USA Technologies,
Inc. (“USAT”) as $2.16, but E*Trade reported a
closing price of $2.11 on December 31, 2008. [ECF No.
849-13]. What the SEC does not say, however, is that the
pricing information provided by Aegis Capital
(“Aegis”) reported $2.16 as the price of USAT on
December 31, 2008. [ECF No. 849-7], at 4. The SEC has not
argued the data provided by Aegis is unreliable. That means
the SEC has not shown conclusively that Garvy used inaccurate
pricing information to value the Mercury Fund's holdings
in USAT. Again, while this may be fodder for
cross-examination, it does not justify disqualification.
also says Garvy's pricing information was internally
inconsistent. The SEC notes Garvy used a price of $0.16 for
one security in Andover Medical, Inc. (“ADOV”)
and $0.35 for another security in that same company.
Garvy's Report, [ECF No. 849-1], at 27. Defendants say in
response that the two securities are different, the former is
a debenture and the latter is a warrant. Id. As
such, Defendants say, Garvy used the market price for the
debenture and the warrant exercise price for the warrant. The
SEC does not respond in its reply brief to this explanation.
The other supposed inconsistency identified by the SEC has to
do with securities in Long E, Inc. (“LOGE”).
Again, though, Garvy used different prices for two different
types of securities in LOGE, a debenture and a warrant.
Defendants offer the same explanation and the SEC again does
not respond. Therefore, the Court is not convinced Garvy
relied on inconsistent pricing data. Once again, fertile
areas for cross-examination do not disqualify Garvy at the
SEC's last argument related to prices is that Garvy lied
about the source of the data he relied upon by claiming he
got it from Aegis. Garvy said during his deposition that he
received some pricing information from Defendants but that he
got most of it from Aegis. Garvy's Dep., [ECF No. 849-2],
at 59-61. The SEC seizes on the fact that Garvy signed his
report on May 26, 2011, but did not receive one specific
email that contained pricing information from an employee at
Aegis until the next day. Garvy's Report, [ECF No.
849-1], at 21; [ECF No. 849-7]. At his deposition, Garvy
testified that he usually does not do work on a report after
signing and dating it. Garvy's Dep., [ECF No. 849-2], at
65-67. He said he was not sure if the May 27, 2011 email
contained all of the pricing information that he received
from Aegis. Id. at 145. But, he said that, if it
did, then he would have incorporated the information into his
spreadsheet after he received the email. Id. Garvy
testified that he told Defendants he needed a third party,
such as Aegis, to provide confirmation of the pricing data
contained in Defendants' memorandum. Id. at
289-91. In other words, it is possible that Defendants
provided Garvy with pricing information that he used while
preparing his report and that he confirmed the prices with
the Aegis information that he received on May 27. So, while
this may be ripe area for cross-examination, the Court does
not find that it shows Garvy relied on pricing data that is
so unreliable as to justify excluding his
opinion. See Manpower, Inc. v. Ins. Co. of
Pennsylvania, 732 F.3d 796, 809 (7th Cir. 2013)
(“Assuming a rational connection between the data and
the opinion-as there was here-an expert's reliance on
faulty information is a matter to be explored on
cross-examination; it does not go to admissibility.”).
next argues that Garvy's methodology was fundamentally
flawed because he did not incorporate certain liabilities in
his fair value calculation. SEC's Motion, [ECF No. 847],
at 7-8; SEC's Reply, [ECF No. 866], at 1. The SEC
identifies as the supposedly ignored liabilities “money
owed to certain Mercury Fund investors, administrative fees,
and early disbursements.” SEC's Motion, [ECF No.
847], at 7. In support of this argument, the SEC cites
Garvy's deposition testimony and a memorandum prepared by
Defendants. Both Garvy's testimony and the memorandum
indicate that the $266, 168.23 due to Mercury Fund investors
was owed by Nutmeg, not the Mercury Fund. Garvy's Dep.,
[ECF No. 849-2], at 292-95; [ECF No. 849-8], at 7-8. In other
words, that amount was not a liability of the Mercury Fund.
Moreover, the record does not clearly show that the amount
was still due as of December 31, 2008. The memorandum says
only that the entry reflecting payment of that amount
“was placed on the books in January 2009” without
stating whether the payment was made in that month or prior
to it. [ECF No. 849-8], at 8. At his deposition, Garvy seemed
to indicate that he thought the payment occurred before the
date of his valuation, although his ...