Exhibit 17: Deposition of Dr. Adam Werner (Dkt. 568-17, S.D. Fla.)
Summary
Exhibit 17 (Document 568-17) in Case 1:21-md-02989-CMA, entered on the FLSD docket June 8, 2023, is a 114-page transcript of the deposition of Dr. Adam Werner taken April 24, 2014 at 10:09 a.m. at the offices of Vinson & Elkins in New York, New York, in the Hi-Crush Partners securities litigation, No. 12-cv-08557 (CM), in the United States District Court for the Southern District of New York, filed there as Document 97-1 on 06/17/14. Mark A. Strauss appears for Plaintiffs and Steven R. Paradise and Elizabeth C. Brandon of Vinson & Elkins LLP for Defendants, with Wendy D. Boskind, Registered Professional Reporter and Notary Public, reporting. Werner, with a business address in Berkeley, California, is examined by Mr. Paradise, and the transcript ends with a word index.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
- Date
- 2023-06-08
Cite this document
“Exhibit 17: Deposition of Dr. Adam Werner (Dkt. 568-17).”
Original at archive.org, dated 2023-06-08. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2023-06-08-covid-era-misc-473eec74-1/
, SHA-256 473eec74ad4df7ea9d97425839e6957c474a4032fecec14e6fb0de4f088ddfcb.Full text
Case 1:21-md-02989-CMA Document 568-17 Entered on FLSD Docket 06/08/2023 Page 1 of
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Exhibit 17
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1
2 UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
3 No. 12-cv-08557 (CM)
4 x
5 IN RE: HI-CRUSH PARTNERS L. P.
6 SECURITIES LITIGATION
7 x
8
9
10 April 24, 2014
11 10:09 a.m.
12
13
14 Deposition of DR. ADAM WERNER,
15 held at the offices of Vinson & Elkins,
16 666 Fifth Avenue, New York, New York,
17 pursuant to Notice and Agreement, before
18 Wendy D. Boskind, a Registered
19 Professional Reporter and Notary Public
20 of the State of New York.
Fj
21
22
23
EXHIBIT
24
33
25
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2 APPEARANCES: 2 DR. ADAM WERNER,
3 3 business address at 2550 Ninth
4 K[RBY McINERNEY LLP 4 Street, Suite 210 A, Berkeley,
5 Attorneys for Plaintiffs 5 California 94710, having been first
6 825 Third Avenue 6 duly sworn by anotary public of the
7 New York, New York 10022 7 State of New York, (Wendy D. Boskind,
8 BY: MARK A. STRAUSS, ESQ. 8 RPR), was examined and testified as
9 (212) 371-6600 9 follows:
10 mstrauss@kmllp.com 10
11 11 EXAMINATION
12 12 BY MR. PARADISE:
13 VINSON & ELKINS LLP 13 Q. Good morning, Dr. Werner.
14 Attorneys for Defendants 14 A. Good morning.
15 666 Fifth Avenue 15 Q. We just introduced ourselves,
16 26th Floor 16 but I'll do it on the record. Fm Steven
17 New York, New York 10103-0040 17 Paradise, along with my colleague,
18 BY: STEVEN R. PARADISE, ESQ. 18 Elizabeth Brandon, we represent the
19 -and- 19 Defendants in this securities litigation
20 ELIZABETH C. BRANDON, ESQ. 20 lawsuit.
21 (212) 237-0016 21 It appears that you've
22 (214) 220-7929 22 testified by deposition previously; am I
23 sparadise@velaw.com 23 right?
24 ebrandon@velaw.com 24 A. That is correct.
25 25 Q. Iwon't spend alot of time
Page 3 Page 5
I 1 Dr. Adam Werner
2 APPEARANCES: (Cont'd) 2 going over any ground rules, just a
3 3 couple.
4 ALSO PRESENT: 4 A. Okay.
5 MICHAEL A. KEABLE, 5 Q. One, Itend to sometimes
6 Executive Vice President 6 speak quickly. So if 1speak too
7 Compass Lexecon 7 quickly, or you don't understand anything
8 332 South Michigan Avenue 8 Isay, or you don't understand my
9 Chicago, Illinois 60604 9 question, please let me know and I'll do
10 (312)322-0200 10 my best to rephrase it so that you
11 mkeablecompasslexecon.com 11 understand it.
12 12 A. Okay.
13 13 Q. Second one is, you have to
14 14 answer questions with yes, no, or, beyond
15 15 that, you can't just nod your head.
16 16 A. (Nodding.)
17 17 Q. The court reporter can't take
18 18 down nods of the head.
19 19 A. Right.
20 20 Q. Please try to remember that.
21 21 Third one is please try to
22 22 wait until Ifinish my questions and -
23 23 before you answer. Iwill try to wait to
24 24 ask another question before you finish
25 25 your answer. If Idon't do that, and I
2 (Pages 2 5) -
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Dr. Adam Werner 1 Dr. Adam Werner
2 accidentally cut you off please let me 2 previously owned, called Berkeley
3 know. Iwant to get acomplete answer 3 Economic Consulting?
4 from you and not cut you off. 4 A. Uh that's accurate.
--
5 A. Okay. 5 Q. Is there some reason why
6 Q. Last is, if you need abreak, 6 you're hesitating?
7 just let me know. The only thing Iask 7 A. Again, Iwasnt paid any
8 is that, if there's aquestion pending, 8 money--
9 you complete your answer to the question 9 Q. Okay.
10 before we take abreak. 10 A. --in the acquisition. I
11 A. Sure. 11 just was subsumed by them.
12 Q. Thank you. 12 Q. Why did withdrawn.
--
13 MR. PARADISE: Let's mark, as 13 What were the circumstances
14 Exhibit 1, acopy of your 14 behind Gnarus acquiring Berkeley?
15 declaration. 15 A. Ijustwanted to go with a
16 (Whereupon Deposition Exhibit 16 larger finn (gesturing)
-- --and --you
17 1, Declaration of Dr. Adam Werner 17 know.
18 April 15, 2014, was marked for iS Q. How large --I'm sorry.
19 identification, as of this date.) 19 A. They take care of things like
20 Q. The court reporter has handed 20 accounting and bookkeeping.
2] you what's been marked as Exhibit 1. I 21 Idon't have to do that
22 ask you to please take alook at Exhibit 22 anymore.
23 1and, when you're ready, to identify it 23 Q. And, when you were with
24 for the record, if you can. 24 Berkeley, were you the sole owuer of
25 A. (Pause.) 25 Berkeley?
Page 7 Page 9
1 Dr. Adam Werner 1 Dr. Adam Werner
2 Yeah, Ibelieve it's the 2 A. Yes.
3 report 1submitted in this case. 3 Q. How many employees did
4 Q. Iwant to start by just going 4 Berkeley have?
5 through --briefly going through your 5 A. Define "employees"?
6 employment history and background, which 6 Q. Well, how many people worked
7 Ibelieve is set forth in your Curriculum 7 for Berkeley?
8 Vitae, Exhibit 1. 8 A. Worked in some capacity?
9 So if you can turn to -- 9 Q. Yes.
10 unfortunately, we don't have exhibit tabs 10 A. Between four and five.
ii in there, but can you find Exhibit 1? 11 Q. And how many people work at
12 A. Yeah. 12 Gnarus?
13 Q. Okay. Am Iright that Gnarus 13 A. Ithink probably 40, 45?
14 Advisors is your current is where you
- 14 Q. Other than reporting to an
15 are currently employed? 15 employer with adifferent or, a
--
16 A. Ibelieve that's correct. 16 company with adifferent name, have your
17 Q. I'm sorry, you say you 17 responsibilities changed at all from
18 "believe that's"
-- 18 Berkeley to what you're doing now, at
19 A. Well, Imean, I'm not a-- I 19 Gnarus?
20 don't get aW-2, so.... 20 MR. STRAUSS: Objection.
21 Q. You're working in some 21 Go ahead.
22 capacity for Gnarus Advisors. 22 A. Idon't believe so.
23 A. Correct. 23 Q. Going back to your time
24 Q. Am Ialso correct that Gnarus 24 before Berkeley well, first, when did
--
25 Advisors acquired your -- afirm that you 25 you form Berkeley?
3(Pages 6 9)
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Dr. Adam Werner Dr. Adam Werner
2 A. You know, Idon't know the 2 Q. Whendidyou -- andl
3 exact year Berkeley Economics was formed. 3 understand your memory on dates, it
4 It was formed by two other gentlemen who 4 sounds like, is not terrific, so
5 subsequently went to the Brattle Group, 5 approximations are fine, but
6 soltook over the firm. 6 approximately when did you leave
7 Q. So when did you join 7 Cornerstone?
8 Berkeley? 8 A. Ibelieve 2000.
9 A. My memory's not that good -- 9 Q. And did you then join NERA,
10 bold on--I want to say 2008. 10 at that time?
11 Q. There's alist on page 4of 11 A. That is correct.
12 your CV that's next to the heading: 12 Q. Did you have adifferent --
13 Previous employment. 13 withdrawn.
14 Do you see that? 14 Were your responsibilities,
15 A. Right. 15 at NERA, different than what your
16 Q. Is that are those listed
--
16 responsibilities had been at Cornerstone?
17 chronologically in reverse order from the 17 A. ldon't believe so.
18 dates that you worked with these various 18 1did some additional work in
19 companies? 19 intellectual property, which Ididn't do
20 A. That is correct. 20 at Cornerstone, Iwas strictly in the
2] Q. Okay. So let's start with 21 finance practice at Cornerstone.
22 the beginning. After you left the 22 Q. Why did you leave
23 Kellogg Graduate School of Management, 23 Cornerstone?
24 you joined Cornerstone Research; is that 24 A. Money.
25 correct? 25 Q. So you had abetter financial
Page 11 Page 13
I Dr. Adam Werner 1 Dr. Adam Werner
2 A. That is correct. 2 deal at NERA than you had gotten at
3 Q. In what capacity did you join 3 Cornerstone?
4 Cornerstone? 4 A. Yeah.
5 A. Idon't remember my title, it 5 1had actually originally
6 was probably associate. 6 gone to Cornerstone, and taken less
7 Q. What were your job functions 7 money, and NERA kept offering me more
8 at that time? S money. So, eventually, Itook them up on
9 A. Prepare expert reports I -- 9 their offer.
10 mean, basically litigation consulting 10 Q. How long did you remain at
11 stuff. 11 NERA?
12 Basically, Idid mostly 12 A. Ibelieve three years.
13 securities work, and there were abunch 13 Q. So that brings us to 2007,
14 of Windstar cases, which are these 14 or--
15 lawsuits against the federal government 15 A. 2003?
16 by savings and loans or were I
-- -- 16 Q. Oh, wait, I'm sorry, I'm
17 think, actually, they're still going on, 17 sorry.
18 so Iworked on those, as well. 18 You left Cornerstone in 2000
19 Q. Were you is it fair to
--
19 and joined NERA, okay.
20 describe your role at Cornerstone as more 20 How long did you work for
21 of asupport role, as opposed to the 21 NERA?
22 person who's actually providing the 22 A. Ibelieve Isaid three years.
23 testimony? 23 Q. So okay, sorry, getting
-
24 A. Idon't believe lever 24 lost here on chronologic got it. So
--
25 testified at Cornerstone. 25 you left NERA in 2003 to join CRA
4 (Pages 10- 13)
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1 Dr. Adam Werner I Dr. Adam Werner
2 International? 2 International?
3 A. No. 3 A. Between four and five years.
4 Q. What did you do -- 4 Q. So that brings us to around
5 A.I-- 5 2008, 2009; correct?
6 Q. I'm sorry, go ahead. 6 A. Correct.
7 A. Itook ayear off to bartend 7 Q. Okay. And what did you do
8 and sell wine. 8 then.
9 Q. And then you joined CRA? 9 A. So, when Iwas at CRA, they
10 A. That is correct. 10 moved me down to Los Angeles, because
11 Q. Why did you leave NERA to 11 that's where their finance practice was
12 bartend and sell wine? 12 based out of, and on the West Coast. I
13 Although, Ithink Ican 13 then moved back to the Bay area.
14 imagine the answer to that. 14 So that'
swhen Iwent to
15 A. IsNERAon -- isNERA 15 LitiNomics. And that was agroup of
16 supporting you in this case? 16 former CRA people who had started another
17 Q. No. 17 firm.
18 A. Idid not like people at 18 Q. So the reason was the --
19 NERA. 19 reason why you decided to leave CRA is
20 Q. Fair enough. 20 because you wanted to return to the Bay
21 Were you asked to leave NERA? 21 area?
22 A. No. 22 A. Correct.
23 Q. Were you working at NERA and 23 Q. How long did you work with
24 at Cornerstone on the West Coast? 24 LitiNomics?
25 A. Yes. 25 A. Ibelieve about ayear.
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1 Dr. Adam Werner 1 Dr. Adam Werner
2 Q. So, in the Sari Francisco 2 Q. Did you want to change that?
3 area? 3 A. No.
4 A. Right. 4 Iwas going to say that I
5 Actually, Idid some work for 5 wa.su't an employee of LitiNomics.
6 NERA in New York, as well, Imaybe spent 6 Q. You were working as a --
7 six months here. 7 A. Asa--
8 Q. So you took ayear off to 8 Q. --1099?
9 bartend and to sell wine, and then you 9 A. Exactly.
10 decided to go back into the business of 10 Q. As aconsultant?
11 economics consulting, and you joined CRA 11 Why did you stop working as a
12 International in Iguess my
-- -- 12 consultant for LitiNomics, after about a
13 hopefully, my math's better now is -- 13 year?
14 that around 2005? 14 A. Travel.
15 A. 2004. 15 Q. Well, can you --
16 Q. Okay, so Iguess my math's 16 A. They were--
17 not better yet. 17 Q. elaborate?
--
18 And what were your job 18 A. They were located in Menlo
19 responsibilities, at CRA International? 19 Park or, actually, it was Mountaiu
--
20 A. Same as my job 20 View. And, so, the commute was an hour
21 responsibilities at NERA and 21 each way every day, so....
22 Cornerstone prepare expert reports,
-- 22 Q. It wasn't working out for
23 support other experts, testify things
-- 23 you?
24 of that nature. 24 A. Ididn't enjoy it.
25 Q. How long did you work for CRA 25 Q. Okay.
5(Pages 14 - 17)
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Dr. Adam Werner 1 Dr. Adam Werner
2 A. Driving, two hours aday. 2 Q. And how about today, how
3 Q. So, after you left 3 about since you've joined Gnarus, have
4 LitiNomics, you joined Berkeley Economic 4 you continued to rep-- to work on behalf
5 Consulting, you had mentioned earlier 5 of both plaintiffs and defendants in
6 that, at the time, it had been started by 6 securities litigation matters?
7 two other gentlemen? 7 A. I'm not sure I've done any
8 A. Correct. 8 defendant work at Gnarus.
9 Q. So you went there as a-- 9 Q. Is there any reason for that?
10 what type of capacity did you go there? 10 1mean on your side of the
11 A. Same, 1099. 11 equation --
12 Q. So this is I'm being awful
--
12A. No.
13 today with my years, but this is around 13 Q. -- orisitthatthisis
14 2009,2010? 14 where the work has been coming from, the
15 A. Correct. 15 plaintiffs' side?
16 Q. When you when Berkeley was
--
16 A. That is correct.
17 subsumed by Gnarus, did the other 17 Q. Soit'suotthatyouhavean
18 employees of Berkeley go along with you, 18 aversion to representing defendants.
19 to join Gnarus? 19 A. No, not at all.
20 A. Define "employees". 20 In fact, you're welcome to
21 Q. Well, the other people that 21 hire me on your cases.
22 worked with you at Berkeley. 22 Q. I'll keep that in mind, thank
23 A. Ibelieve that is correct. 23 you.
24 Q. So Berkeley ceases to exist 24 Turning back, for amoment,
25 today? 25 to Exhibit Ito your Exhibit Ito
--
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1 Dr. Adam Werner I Dr. Adam Werner
2 A. Ibelieve that is correct. 2 Exhibit 1, your declaration. You have an
3 Q. Okay. And you left each of 3 extensive list of the matters that you've
4 these positions that we've been 4 been retained in, beginning on page 1,
S discussing of your own volition; is that 5 continuing through Iguess page 6 --
6 correct? 6 approximately, page 6.
7 A. That is correct. 7 Have your-- has your
8 Q. Okay. I'm going to ask you a 8 testimony, or any declaration that you've
9 general question, if it's too general let 9 submitted in any of these cases, ever
10 me know and I'll be more specific, but 10 been excluded by acourt?
11 during the time you worked at these other 11 A. No.
12 firms, before you -- sorry before you
--
12 Q. You list on page 1, under the
13 joined Berkeley, were you working 13 heading: Expert reports and testimony, a
14 primarily on behalf of plaintiffs, 14 series of cases, and on page 3you have a
15 primarily on behalf of defendants, or 15 heading called: Experience.
16 both? 16 Can you explain the
17 MR. STRAUSS: Objection. 17 difference between the matters that are
18 Go ahead. 18 listed under: Expert reports and
19 A. Of both. 19 testimony and the matters that are listed
20 Q. Did that continue to be the 20 under: Experience?
21 case when you joined Berkeley, that you 21 A. Well, Imean, the things that
22 worked for both plaintiffs and defendants 22 I've done expert testimony and reports
23 in securities litigation matters? 23 in, and Ithink that's self-explanatory.
24 A. In securities litigation 24 And, in the other cases, I
25 matters, Ibelieve that's correct. 25 didn't submit reports on my behalf.
6(Pages 18 -21)
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Dr. Adam Werner I Dr. Adam Werner
2 Q. These are cases where you 2 A. Imean, I'd be speculating.
3 either supported someone, another expert 3 Q. You can speculate.
4 who was submitting areport or testimony, 4 Imean, Iunderstand you're
5 or you never were asked to submit a S estimating, and I'm not you know, I'm
--
6 report or testimony; is that fair to say? 6 not holding you to an exact number.
7 A. Ithink that's correct. 7 A. Okay.
8 Q. Is there any additional -- 8 Q. Ijust want to get asense.
9 are there any additional matters on which 9 A. Okay, Iwould guess 50/50.
10 you've been engaged as an expert that are 10 Q. And I'm not sure if Iasked
11 not listed in your CV, that you can think 11 you before, but did you work for both
12 of as you sit here today? 12 plaintiffs and defendants at Berkeley?
13 A. I'm sure there are but, as I 13 A. Ibelieve that is correct.
14 sit here today, Ican't think of any. 14 But, again, you're specifying
15 Q. Today, you know, this time, 15 in securities litigation?
16 where you're working at Gnarus, 16 Q. Iam, thank you.
17 approximately how much of your work is 17 A. Ibelieve that is correct.
18 involved in the securities litigation 18 Q. What opinion were you asked
19 matters? 19 to provide in this case, this litigation,
20 A. Define "securities litigation 20 Hi-Crush litigation?
21 matters"? 21 A. Ithink, if you turn tomy
22 Q. Any lawsuits that are -- 22 report (pause)
-- Idon't know if
--
23 arise under the federal securities laws. 23 that's paragraph 2: My opinions address
24 A. Probably, 90 percent. 24 the following matter: whether the market
25 Q. And Iknow you testified 25 for Hi-Crush's common units was efficient
Page 23 Page 25
1 Dr. Adam Werner 1 Dr. Adam Werner
2 earlier that, at Gnarus, you have been 2 during the class period.
3 working, to the best of your knowledge, 3 MR PARADISE: And, just for
4 you said, exclusively for plaintiffs. 4 the record, the witness is
5 Before joining Gnarus -- 5 referring to Iguess paragraph 2of
6 A.I-- 6 Exhibit 1, his declaration.
7 Q. insecurities
-- 7 Q. It says "opinions", plural.
S litigation in securities litigation
-- 8 Is that atypo? Because that appears to
9 matters, Ithought that's what you 9 me to be just one subject matter of your
10 testified to. 10 opinion.
11 A. Ibelieve in securities 11 A. (Pause.)
12 litigation matters, that is correct. 12 Ibelieve that is correct.
13 Q. Right. And, just for the - - 13 Q. Have you been were you--
14 make it simpler, when I'm asking you 14 asked to provide any other opinion that
15 these questions, when Idon't specify, 15 you were not able to provide?
16 I'm asking for your work in securities 16 A. No.
17 litigation matters. 17 Q. And is it fair to say that
15 A. Okay. 18 this Exhibit 1, your declaration,
19 Q. Prior to joining Gnarus, can 19 contains your opinion and the support for
20 you give me an estimation as to the 20 your opinion?
21 percentage of work you had done for 21 A. Ibelieve that is correct.
22 plaintiffs, as opposed to defendants? 22 Q. So, as you just answered, the
23 Just-- 23 opinion you've been asked to express in
24 A. In my entire history? 24 this case is whether the market for
25 Q. Yes. 25 Hi-Crush's common units were efficient --
7 (Pages 22 - 25)
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I Dr. Adam Werner 1 Dr. Adam Werner
2 or, was efficient, during the class 2 A. The Armtec case. (Pause.)
3 period; is that that's correct?
-- 3 1believe that's it.
4 A. Ibelieve that is correct. 4 Q. Was is it fair to say that
--
5 Q. Have you previously been 5 each of those cases, and Icount seven, 1
6 retained to testify on the issue of 6 think you've mentioned, was it your
7 whether or not the market for apublicly- 7 opinion in each of those cases that the
8 traded security was efficient? 8 market was efficient?
9 A. Yes. 9 A. Ibelieve that is correct.
10 Q. Can we just take aquick look 10 Q. And was your opinion rejected
11 at Exhibit Iand, just, if you could 11 in any of those cases?
12 identify, for the record, which of these 12 In other words, did the court
13 cases involved that you know, that
--
13 or the finder of fact disagree with your
14 opinion, and it could have been more than 14 opinion.
15 just that opinion, but at least the 15 A. Ibelieve in the China
16 opinion as to whether or not the market 16 Agritech case.
17 was efficient for the subject security. 17 Q. Was your work, or your
18 MR. STRAUSS: You mean 18 opinion, criticized by the court in any
19 Exhibit ito Exhibit 1? 19 of those cases?
20 MR. PARADISE: Exactly. 20 MR. STRAUSS: Objection.
21 A. Okay. 21 A. Define "criticize".
22 MR. STRAUSS: ljust want to 22 Q. Did the court take issue with
23 be clear. 23 your methodology, your conclusion, or any
24 MR. PARADISE: No. Thank 24 other aspect of your opinion?
25 you. 25 MR. STRAUSS: Objection.
Page 27 Page 29
I Dr. Adam Werner 1 Dr. Adam Werner
2 A. Okay. (Pause.) 2 Go ahead.
3 The Ebix case; Eric Poole and 3 A. Idon't know how to answer
4 William Ithody versus Alange Energy Corp.; 4 that question.
5 the Orient Paper case; the China Expert 5 Q. Why not?
6 case; the China Agritech case --
6 A. It's too broad.
7 Q. I'm sorry, could you just 7 Q. What's too broad about it?
8 hold on one second? Oh, I'm sorry. 8 A. Imean, you're asking me for
9 Orient Paper, you said, China 9 an opinion about acourt. Idon't
10 Expert-- 10 know Ican't interpret what the court
--
11 MR. PARADISE: Do you want to 11 has said.
12 see acopy of this, so you can see 12 Q. You didn't read the if --
13 the names? 13 there was adecision issued well,
--
14 THE COURT REPORTER: I'll 14 let's do it that way. Did the court in
15 have the exhibit, I'll work with 15 any of those cases issue adecision which
16 that. Thank you so much. 16 criticized or took issue with your
17 Q. Sony. So China Agritech. 17 opinion?
18 A. The National Australia Bank 18 MR. STRAUSS: Objection.
19 case,Idon'tknowifl -- Ididnot 19 Q. That youre aware of.
20 submit areport in that matter or, no,
--
20 A. Idon't believe so.
211 did Idon't recall.
--
21 Q. Do you know why -- why the --
22 Q. I'm sorry, where is the 22 was it the court that rejected the market
23 National Australia Bank case? 23 efficiency opinion in China Agritech or
24 A. Pathway Investments. 24 was itajury?
25 Q. Oh, okay. 25 MR. STRAUSS: Objection.
8(Pages 26 -29)
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1 Dr. Adam Werner I Dr. Adam Werner
2 A. Ibelieve it was the court. 2 expressing uncertainty.
3 Q. Do you know what the basis of 3 A. Well, to the extent that you
4 the court's decision was? 4 measure inflation using event study
5 A. Ibelieve the court was 5 methodology, Iam aware of what the
6 confused over the fact that two expert 6 inflation might be in the alleged stock
7 reports were submitted on market 7 as aresult of the alleged bad act by
8 efficiency, and we looked at different 8 your client.
9 events and, for whatever reason, they 9 Q. Okay, but that's aslightly
10 couldn't reconcile that you can look at 10 different question than what I'm asking,
11 different events and -- to determine 1.1 so let me try it again.
12 market efficiency. 12 I'm asking whether or not
13 Q. Was the second expert report 13 you've been asked by Plaintiffs' counsel
1.4 offered on behalf of the defendants? 14 in this case to do any work to form an
15 A. No. 15 opinion as to what the alleged inflation
16 Q. Are there two plaintiffs'
--
16 per share of Hi-Crush was during the
17 expert reports were offered. 17 class period.
18 A. Correct. 18 THE WITNESS: I'm sorry,
19 Q. Did the so, other than
--
19 could you read back the question?
20 looking at different events, did the 20 (The record was read.)
21 other expert in that case apply a --
21 A. Idon't believe so.
22 apply the same methodology that you had 22 Q. In the past, when you've been
23 applied to evaluate whether or not the 23 asked and have rendered an opinion as to
24 market was efficient? 24 inflation per share, have you done that
25 A. Ibelieve that is correct. 25 both on behalf of plaintiffs and
Page 31 Page 33
1 Dr. Adam Werner 1 Dr. Adam Werner
2 Q. You've also as Iread your
--
2 defendants?
3 CV, it appears that you've also been 3 MR. STRAUSS: Objection. You
4 retained in the past to estimate the 4 mean in other cases?
5 alleged inflation per share in certain 5 MR. PARADISE: Yes, Isaid
6 securities litigation matters; is that 6 "in the past".
7 correct? 7 MR. STRAUSS: Fine.
8 A. Ibelieve that is correct. 8 A. Define "render an opinion"?
9 Q. Just for the sake of 9 Q. Submit either adeclaration
10 completeness, you have not been asked to 10 or testify.
11 render that opinion in this case; right? 11 A. Urn -- as Isit here, Idon't
12 MR STRAUSS: Objection. 12 recall.
13 THE WITNESS: Could you read 13 Q. Let's take alook at your CV,
14 back the question, please. 14 which is Exhibit 1to Exhibit 1.
15 (The record was read.) 15 Starting with-- I'm just
16 MR. PARADISE: And Ithink 16 going to ask you, in the Hecla Mining,
17 there was asecond question. 17 the Hecla Mining Securities Litigation
18 (A portion of the record was 18 matter, where you issued adeclaration on
19 read.) 19 investor losses, did that involve
20 A. Idon't recall. 20 rendering an opinion as to inflation per
21 Q. Earlier, Ihad asked you 21 share of the subject security?
22 whether you had been asked to render any 22 A. Idon't believe so.
23 opinions beyond that which you express in 23 Q. Okay. Were you which side --
24 paragraph 2, and you said you don't 24 did you represent in I'm sorry
-- --
25 believe you have, but now you're 25 which side did you appear as an expert
9 (Pages 30 -33)
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Dr. Adam Werner Dr. Adam Werner
2 for in the Hecla Mining case? 2 Q. Correct.
3 A. Plaintiff. 3 A. Idon't believe so.
4 Q. The next one that appears t0 4 Q. Okay.
5 involve some testimony as to damages is 5 THE WITNESS: But could you
6 the Shenk case? 6 read back the question, please?
7 Looks like this was a 7 Make sure I've answered it
8 derivative action? S correctly.
9 A. Okay. 9 (The record was read.)
10 Q. Do you see that? 10 A. Idon't believe so.
11 Was there any work in that 11 Q. In those cases where you did
12 case where you were required to express 12 render an opinion as to the alleged
13 an opinion as to alleged inflation per 13 inflation per share, how did you go about
14 share? 14 coming up with the number, you know, the
15 A. Idon't believe so. 15 alleged inflation.
16 Q. Did you also represent the 16 MR. STRAUSS: Objection to
7 Plaintiff in that case? 17 form.
18 A. Idid. 18 A. Idid an event study.
19 Q. I'mjust going to ask the 19 Q. Anything beyond doing an
20 same question, just go down the list for 20 event study?
21 asecond. 21 A. Idon't know how to answer
22 A. Okay. 22 that question.
23 Q. How about the BP case? 23 Q. Okay. Well, let's take it --
24 A. Idon't recall. 24 let's break that down alittle bit.
25 Q. The Tripath Technology case? 25 So you do an event study, and
Page 35 Page 37
Dr. Adam Werner I Dr. Adam Werner
2 A. That on share inflation,
--
2 then how do you apply the results of an
3 no. 3 event study to determine what the alleged
4 Q. How about Ainslie and Muriel 4 inflation per share is?
5 Marentette versus CV Technologies? S A. Well, Iusually measure the
6 A. Ibelieve so. 6 abnormal return around the alleged I --
7 Q. And who did you represent -
7 don't know, Idon't know what you want to
8 I'm sorry. 8 call it the alleged date, for want of
--
9 On whose side did you appear 9 abetter term.
10 as an expert in that case? 10 Q. The date of disclosure?
11 A. The Plaintiffs. 11 A. The date of disclosure, there
12 Q. Let me see ifl can cut 12 we go, and use that as ameasure of
13 through this, because you said you 13 inflation.
14 weren't sure if you testified on behalf 14 Q. And then what do you let --
15 of defendants as to inflation per share, 15 me help you out.
16 so Itake it you looked at this list, are 16 Do you take that alleged
17 any of the cases on this list ones in 17 inflation and back it take it back to
--
18 which you appeared on behalf of 18 the date of the alleged fraud?
19 defendants in the situation where you 19 A. What do you mean by "take
20 were asked where you rendered an
--
20 back"?
21 opinion as to inflation per share? 21 Q. Well, how do you well, let --
22 A. "This list" being --
22 me ask adifferent question, actually.
23 Q. The list- 23 What do you -- so you
24 A. the list that's defined
--
24 determine the alleged inflation as of the
25 under: Expert reports and testimony? 25 date of the what's called the
--
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2 "corrective disclosure"; is that fair to 2 was and you can refer to your
--
3 say? 3 declaration, if you would like, but, if
4 A. Okay, 4 you remember, is that the information
5 Q. And then, what do you do with 5 that was revealed iu apress release that
6 that inflation? Do you apply it to the 6 was issued on November 13th, 2012?
7 shares that were acquired at the 7 A. Ibelieve that is correct.
8 beginning of the class period to the 8 Q. We'll take alook at that
9 shares that were acquired throughout the 9 press release alittle bit later, and
10 class period? 10 I'll ask some more questions about it,
11 How do you come up witha 11 but Fm going to move on, for the time
12 damages number? 12 being.
13 A. Are you talking about acase 13 Coming back to your answer to
14 with one disclosure? 14 my question before, about how you go
15 Q. We'll start with that. 15 about applying the inflation to determine
16 A. Yeah, I'd estimate the number 16 the amount of damages, you said that you
17 of damage shares and apply that inflation 17 have to look at the number of damage
18 to the to the damage shares.
-- 18 shares?
19 Q. Andwhat — doyoudo 19 A. You have to estimate the
20 something differently when there's more 20 number of damage shares.
21 than one disclosure? 21 Q. How do you go about doing
22 A. Not necessarily, but then you 22 that?
23 have you know, you have different
-- 23 A. Using atrading model.
24 types of people who are damaged. 24 Q. Is that atrading model that
25 You'll have so, if you
-- 25 you construct?
Page 39 Page 41
1 Dr. Adam Werner Dr. Adam Werner
2 have multiple disclosures, you'll have 2 A. I"construct" meaning?
3 what we call in-and-out damages as well 3 Q. You put the model together or
4 as buy-and-hold damages. 4 is there amodel that's used in the
5 Q. How many-- do you have an 5 industry.
6 opinion as to how many corrective 6 A. Idon't know how to answer
7 disclosures there were in the Hi-Crush 7 that question.
8 case, this case? 8 Q. Well, what trading model do
9 A. Idonot. 9 you use to estimate the number of damage
10 Q. Have you not looked at that? JO shares?
11 Is that -- 11 A. A trading model --
12 A. What do you mean, "not looked 12 (gesturing).
13 at" it? 13 Q. Any?
14 Q. In other words, have you not 14 So where do you find this
15 looked at what disclosures were involved 15 trading model?
16 and not rendered or, not come to an
-- 16 A. It's the same trading model I
17 opinion as to how many were corrective 17 used at Cornerstone, NERA, and even my
18 disclosures, or is there some other 18 past employers.
19 reason why you don't have an opinion? 19 Imean, Idon't Idon't
--
20 A. Imean, Idon't believe I 20 know how to answer this question.
21 have formed an opinion on that, but I 21 It's the trading it's
--
22 believe there according to the filings
-- 22 the trading the standard trading model
--
23 in this case, there appears to be one 23 in the industry.
24 corrective disclosure at issue. 24 Q. That's what rin asking, okay,
25 Q. Is that the information that 25 it's --
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2 A. But there are different 2 A. But Imay have left something
3 inputs that people put into those models. 3 out.
4 Q. Okay, no, Iunderstand that, 4 Q. Has your in those cases in
--
5 that's what Iwas getting at. 5 which you have done this type of work,
6 It's amodel that is used in 6 prepared this type of model, and then
7 the industry, you decide what inputs go 7 expressed an opinion, has your opinion
8 into the model to come up with your 8 been rejected by any courts?
9 estimate. 9 A. No.
10 A. Ibelieve that is correct. 10 Q. As you sit here today, do you
11 Q. If you are asked to render an 11 have any intention of developing and
12 opinion in this case as to the alleged 12 expressing any opinions beyond those that
13 damages that were suffered as aresult of 13 are contained in your declaration in --
14 the alleged omission in this case, wonid 14 your declaration, which is Exhibit 1?
15 you apply that same model that you've 15 MR. STRAUSS: Objection.
16 used in other cases? 16 A. As Isit here today, Imean,
17 MR. STRAUSS: Objection. 17 Idon't know what the future holds --
18 Go ahead. 18 Q. Okay.
19 A. Again, when you say "same 19 A. so
-- (gesturing)
-- it's --
20 model", how do yon define the "same 20 possible Iwill express different
21 model"? 21 opinions in the future.
22 Q. Well, Iguess the model will 22 Q. But you haven't been well, --
23 change depending on the inpnts. Is that 23 let me ask it this way. Have you been
24 your point? 24 asked or told that you will be asked to
25 A. Correct. 25 express additional or different
Page 43 Page 45
1 Dr. Adam Werner 1 Dr. Adam Werner
2 Q. So maybe we'll call it a 2 opinions --
3 "formula", and then you put inputs into a 3 MR. STRAUSS: Objection.
4 formula to come up with the model the --
4 Q. in the future, in this
--
5 answer? 5 case?
6 MR. STRAUSS: Objection. 6 A. Idon't-
7 A. 1believe that's afair 7 THE WITNESS: fm sorry, can
8 statement. 8 you re-read the question?
9 Q. Generally, when you've done 9 (The record was read.)
10 this type of work in the past, and I 10 MR. PARADISE: Than--there
11 understand you have not done it in this 11 was alittle bit more than that --
12 case, what inputs do you use to populate 12 than what's contained in--
13 your model? 13 (A portion of the record was
14 A. This is just for damage 14 read.)
15 shares my estimation of damage shares.
-- 15 MR. STRAUSS: Objection,
16 Q. Correct. 16 again.
17 A. Share volume, float, shares 17 THE WITNESS: Iapologize,
18 outstanding. 18 I'm going to have to could you
--
19 1believe those would be 19 re-read it, one more time.
20 the well, Imean, you'd also have to
--
20 (A portion of the record was
21 make different assumptions based on what 21 read.)
22 market the stock has traded in -- urn --
22 A. Idon't believe so.
23 Q. Anything else? 23 Q. Have you been engaged by
24 A. Ibelieve that's it. 24 Kirby McInerney in prior securities
25 Q. Okay. 25 litigation lawsuits?
12 (Pages 42 - 45)
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2 A. Yes. 2 MR. STRAUSS: Objection.
3 Q. How many? 3 You mean in any other cases.
4 A. Just one. 4 MR. PARADISE: Yes.
5 Q. Which case is that case
-- 5 A. Idon't believe so.
6 identified in your CV? 6 Just so we're clear, would
7 A. It is. 7 you --
8 Q. Which one is that? 8 Q. Yeah.
9 A. Under: Experience, 9 A. redefine
-- --
10 Securities and Finance, Citigroup 10 Q. Sure.
11 litigation. 11 A. who Plaintiffs are?
--
12 Q. And it says if I'm reading
-- 12 Q. It's Hite H-I-T-E, all
--
13 this correctly, it says: Testified as to 13 caps Hedge L.P., and HITE
-- all--
14 damages and inflation in asecurities 14 caps MLP L.P.
--
15 class action; is that right? 15 A. Yeah, Idon't believe so.
16 A. That is correct, but Iwas 16 Q. And for future reference,
17 not sworn in. 17 during the course of the deposition, if
18 Q. Can you explain? 18 it's okay with you and Mr. Strauss, I'm
19 A. Yeah. The the judge had
-- 19 going to refer to them as "Plaintiffs".
20 some questions about about settlements
-- 20 A. Okay.
21 and damage figures and, so, Iwas -- 21 Q. And for the Defendants,
22 while there was apublic hearing, Iwas 22 because there are numerous Defendants in
23 on it by phone, so the judge asked me 23 the case, I'm just going to refer to them
24 questions by phone, but Iwas never 24 collectively as "Defendants", unless
25 formally sworn in. 25 there is areason for me to be specific.
Page 47 Page 49
1 Dr. Adam Werner 1 Dr. Adam Werner
2 Q. Did that case is that case-- 2 Is that okay?
3 pending, currently pending? 3 A. That's fine.
4 A. Idont believe so. Idon't 4 MR. STRAUSS: And can Iask,
5 know. 5 if you're referring to the class,
6 MR. STRAUSS: The settlement 6 if you coulcljust say "the clasc".
7 is still -- 7 MR. PARADISE: Fair enough.
8 MR. PARADISE: I'll -- 8 THE WITNESS: Right.
9 MR. STRAUSS: in process.
-- 9 MR. STRAUSS: "The
10 MR. PARADISE: Fair, thank 10 Plaintiffs" means just for the
11 you. 11 Plaintiffs.
12 Q. But your and let me ask
- 12 MR. PARADISE: Fair enough.
13 you this way, is your work on that case 13 Q. So let's talk about the
14 concluded. 14 specifics of your engagement in this
15 A. Ibelieve that is correct. 15 case.
16 Q. Have you worked previously 16 When were you first contacted
17 with any of the lawyers from Kirby 17 by attorneys from Kirby McInerney to
18 McInerney who are working on this matter 18 potentially work as an expert in this
19 when they were if they were and when
- 19 case?
20 they were at any other law firms?
-- 20 A. Maybe two or three months
21 A. Idon't believe so. 21 ago.
22 Q. Have you ever been retained 22 Q. And what at that time,
--
23 to testify on behalf of the Plaintiffs-- 23 what did they ask you to do?
24 not the Plaintiffs' counsel, but the 24 A. Ibelieve they asked me to
25 Plaintiffs in this lawsuit? 25 render an opinion on market efficiency.
13 (Pages 46 - 49)
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2 Q. Was there any discussion, at 2 do?
3 that time, as to any other potential 3 A. Imean, Ilooked at read --
4 opinions you may be you might be asked
--
4 some newspaper reports, some articles,
5 to render? 5 read some academic articles, Igathered
6 MR. STRAUSS: Objection. 6 some data, or people gathered data at my
7 A. Not that Irecall. 7 behest, performed some analysis on that
8 MR. STRAUSS: All right if we 8 data, then put that analysis into this
9 take abreak? 9 (indicating) report.
10 MR. PARADISE: Sure. 10 Q. The people that gathered data
11 Off the record. 11 for you, are those people that were
12 (Recess taken: 10:55 a.m. -
12 also --I'm using the word "working for"
13 11:09a.m.) 13 but not in the W-2 sense.
14 MR. PARADISE: Are we back 14 A. Iunderstand.
15 on? 15 Q. But there's also people who
16 BY MR PARADISE: 16 came to work at Gnarus every day?
17 Q. Doyouhave -- doyouneedto 17 A. Everyday?
18 change any answers that you gave before 18 Q. That were consulting with
19 the break? 19 Onarus?
20 A. Idon't believe so. 20 I'm trying to ask it in away
21 Q. So, coming back to your work 21 to not make them W-2 employees.
22 on this engagement, you told me that you 22 A. Right.
23 were contacted about two or three months 23 Q. Idon't want to get them in
24 ago and asked to render an opinion as to 24 any trouble.
25 market efficiency. 25 A. Idon't believe they came to
Page Si Page 53
I Dr. Adam Werner Dr. Adam Werner
2 What did you do next, after 2 work every day, but yes.
3 that call? 3 Q. Did you also were you also
--
4 A. With regards to? 4 assisted in the gathering of data that
5 Q. To perform your work on this 5 you needed to do your work, were you
6 case. 6 assisted by Plaintiffs' counsel at all?
7 A. Ibelieve Iran aconflict 7 A. Idon't believe so.
8 check. Ihad our general counsel draft 8 Q. Who drafted your declaration?
9 an engagement letter, which 1believe was 9 A. Idid.
10 transmitted somehow, either 10 Q. Did anybody else participate
11 electronically or through the mail, 11 in drafting your declaration?
12 to Ibelieve Mr. Strauss. Then I
--
12 A. Define "participate"?
13 started doing research. 13 Q. Did anybody else put pen to
14 Q. Well, let's go to the 14 paper to write any of the words that are
15 research part. 15 contained in your declaration.
16 So what steps did you take to 16 A. Ibelieve counsel may have
17 be able to render the opinion that you 17 made some grammatical changes.
18 were asked to render? 118 Q. By "counsel", you're
19 A. Imean, that's an overly 19 referring to Kirby McInerney?
20 broad question. 20 A. Correct.
21 Can-you compartmentalize it 21 Q. But, as far as people at
22 somehow? 22 Gnarus, it was primarily or solely you?
23 Q. Well, you just said you did 23 A. Ibelieve that is correct --
24 some research, so we'll start with that. 24 oh, no. Someone may have drafted the
25 What type of research did you 25 section on the background.
14 (Pages 50 - 53)
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2 Q. Itake it you reviewed it and 2 if you're instructing him not to
3 edited it to your satisfaction? 3 answer, instruct him not to answer.
4 A. Correct. 4 Well, let's take it let's
--
5 Q. How many well, withdrawn.
-- S first find out whether or not there
6 Did you submit any drafts for 6 were -- Idon't even know if there
7 the declaration to Kirby McInerney before 7 were other drafts.
8 finalizing the declaration that has been 8 Q. So were there any other
9 marked as Exhibit 1? 9 drafts of your declaration prior to
10 A. Define "submitted"? 10 Exhibit 1, (indicating)?
11 Q. Send to them, transmit to 11 A. Define "drafts".
12 them, e-mail to them? 12 Q. A version of what is Exhibit
13 MR. STRAUSS: I'm going to 13 1that's different from Exhibit 1.
14 object to that. 14 MR. STRAUSS: Objection.
15 Imean, you're asking for 15 A. "Different" how?
16 communications between the expert 16 Q. Dr. Werner, you don't know
17 and counsel that aren't within 17 what "drafts" mean? Imean, are you for
18 the you know, within the scope
-- 18 real? You really don't know what a
19 of the rule about what you can ask 19 "draft" is?
20 about. 20 A "draft" is adocument that
21 If you want to ask him what 21 you put together as apiece of work, you
22 opinion he was asked to render, 22 submit it to somebody, and then someone
23 what facts or data he was provided, 23 says: Idon't like the way this reads,
24 that's all fair game but, you know, 24 or: Idon't like the way that reads, and
25 you're sort of intruding on other 25 you revise it and you have asecond
Page 55 Page 57
I Dr. Adam Werner 1 Dr. Adam Werner
2 types of communications, and I'm 2 draft, and then you go through the same
3 going to object to that, and ask 3 process again, and you have athird
4 him not to answer it. 4 draft
5 MR. PARADISE: Well, Idon't 5 I'm just asking, were there
6 agree with you. 6 numerous drafts of what ultimately became
7 Ithink that if the expert 7 Exhibit 1. That's all I'm asking.
8 prepared earlier drafts of his 8 it's really not adifficult
9 declaration and they were submitted 9 question.
10 to counsel and then they were 10 MR. STRAUSS: Can lhelp?
11 changed, I'm entitled to know that, 11 MR. PARADISE: Sure.
12 so I'm Dot asking him any 12 MR. STRAUSS: If someone
13 communications you've had, I'm 13 corrects acitation or inserts a
14 asking him did he submit other 14 page number or areference to a
15 drafts to Kirby McInerney. If we 15 paragraph of acomplaint, does that
16 get into communications, we'll slow 16 make it adifferent draft?
17 down alittle bit. 17 MR. PARADISE: Yes --
18 Na. STRAUSS: If you start 18 MR. STRAUSS: Let's say, are
19 asking about the contents of those 19 you talking about material changes,
20 or what counsel said about those, 20 materially-different drafts? Do
21 that's going to be that's off-
-- 21 you want to ask him if there was a
22 limits, and Ithink that's where 22 materially-different draft that was
23 you're going. 23 submitted?
24 MR. PARADISE: Oh, okay, we 24 MR. PARADISE: 1understand.
25 can agree to disagree on that, but 25 He--
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2 Q. You've already said that you 2 think $475 an hour for this engagement?
3 think that counsel may have corrected 3 A. Ibelieve that is correct.
4 some typos. 4 Q. Have you are you being
--
5 A. Ibelieve that is correct. 5 paid on an ongoing basis or is the
6 Q. Okay, SO I'm not concerned 6 payment deferred until the end of the
7 with typos. 7 matter?
8 I'm asking substantively 8 A. Ongoing.
9 different you know, asubstantively-
-
9 Q. How much have you been paid
10 different draft that had adifferent 10 to date, if you know, or how much has
11 opinion or didn't express something that 11 Gnarus been paid to date, if you know?
12 is now contained in this opinion, that's 12 A. Somewhere between twenty and
13 what I'm getting at. 13 thirty thousand dollars.
14 A. No. 14 Q. Again, Iknow this may be
15 Q. Okay. 15 difficult, but I'm asking you to
16 A. And that's why Ineeded to 16 estimate, how much time would you
17 clarif
y-- 17 estimate you put into drafting your
is Q. No, I-- 18 declaration, including the work you did
19 A. --"draft". 19 up until the time when you started
20 Q. --understand. Okay. 20 drafting it?
21 You don't mean you weren't
--
21 A. Did Ipersonally --
22 really asking me what "drafts" means, 22 Q. Yes.
23 you're really more asking me what am I 23 A. spend?
--
24 asking you about in terms of different 24 Maybe 40 hours? 50 hours?
25 drafts. 25 Q. Is that--
Page 59 Page 61
Dr. Adam Werner 1 Dr. Adam Werner
2 A. Right, if you're talking 2 A. I'm speculating, Ihonestly
3 about content or --
3 don't know.
4 Q. Understood. 4 Q. Iunderstand.
5 Have you had any discussions 5 Let me ask it this way. Is
6 with any representatives of Plaintiffs, 6 the amount of time that you put into this
7 and as we discussed earlier that means 7 project, or this engagement,
8 the two RITE entities, concerning your 8 substantively different than the amount
9 work on this matter? 9 of time you've put into other
10 A. Idon't believe so. 10 engagements, where you've been asked to
11 Q. You mentioned that your 11 render an opinion as to market
12 general counsel, or Gnaruss general 12 efficiency?
13 counsel, prepared an engagement letter 13 MR. STRAUSS: Objection.
14 that was submitted or transmitted to 14 A. Idon't know.
15 Kirby McInerney, and then Iassume it was 15 Q. Is any portion of your of --
16 ultimately signed; is that -
16 Gnarus's compensation for this matter
17 A. Ibelieve that is correct. 17 contingent on the outcome of the matter?
18 MR PARADISE: Idon't know 18 A. No.
19 if we have received acopy of that 19 MR PARADISE: Off the
20 but, if we haven't, Irequest that 20 record.
21 we be provided acopy of that 21 (Discussion- off the record.)
22 engagement letter. 22 Q. What Pm going to start
--
23 (REQUEST.) 23 broadly, and if you can't answer the
24 Q. But you mentioned in here 24 broad question I'll try to be more
25 that your rate your hourly rate is I
-
25 specific but, just to move it along, did
16 (Pages 58 -61)
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2 you do any research or slash due 2 mid-2012 time period, that was the
3 diligence on Hi-Crush to learn about its 3 question.
4 business in connection with the work that 4 MR. STRAUSS: Well,
5 you did to express an opinion in this 5 objection.
6 matter? 6 Q. And you asked me to define
7 A. Ibelieve so. 7 "trends".
8 Q. Can you generally describe 8 Na. STRAUSS: rin going to
9 for me what you did? 9 object because that's beyond the
10 A. Ireviewed press releases, 10 scope of the opinions that he was
11 news stories, financials, SEC documents. 11 asked to render, and that's the
12 Q. Did you review the 12 subject matter of this deposition.
13 prospectus, the final prospectus that was 13 But go ahead, and ask if you
14 issued, in connection with the initial 14 want.
15 public offering? 15 A. Imean, to the extent that l
16 A. Idon't recall. 16 knew what was going on with Hi-Crush, I
17 Q. Did you come to any 17 mean, Iunderstood what was going on with
18 understanding, in connection with that 18 their business, Idon't know if that
19 research, as to what the trends were in 19 would be industry trends or, really, that
20 Hi-Crush's business in the 2012 you -- 20 would be under your purview of "trend".
21 know, mid-2012 time-- 21 Q. You mentioned that yon read
22 MR. STRAUSS: Objection. 22 SEC filings, and Ithink that's also
23 Q. --period? 23 contained in your list of documents on
24 A. Define "trends". 24 which you relied, Exhibit 2.
25 Q. "Trends" meaning demand for 25 Can you be more specific, and
Page 63 Page 65
1 Dr. Adam Werner 1 Dr. Adam Werner
2 the product. 2 feel --Exhibit 2to Exhibit 1, on page
3 And you know what their 3 2, you just say: Hi-Crush financials,
4 product is, Iassume; correct? 4 but Idon't yon don't identify any
--
5 A. Ibelieve that is correct. 5 specific ones.
6 Q. Fracking sand -- 6 We talked about the
7 A. Correct 7 prospectus. Are there any others that
8 Q. --for proppants? Okay. 8 you can think of?
9 THE REPORTER: I'm sorry, 9 A. There are 10-K's, there are
10 what did you say? 10 8-K's.
111 MR. PARADISE: It's called 11 Q. And for what time period, if
12 fracking sand-- frac sand for 12 you remember?
13 proppants P-R-O-P-P-A-N-T-S.
- 13 A. So, Ibelieve it would be
14 MR. STRAUSS: Could you redo 14 2012, 2013.
15 the question, because that was an 15 Q. Can you be specific as to
16 exceedingly long question, 16 which press releases because, again, you
17 interrupted by anumber of things. 17 referred generally to "press releases",
18 MR. PARADISE: Yes. 18 on page 2of Exhibit 2of Exhibit 1.
19 MR. STRAUSS: Couldyonjust 19 A. Ibelieve any of them that
20 rephrase it? 20 are listed in my Appendix A.
21 MR. PARADISE: Yes. 21 Q. As you sit here today, are
22 Q. Did you well; the question
-- 22 you aware of who Hi-Crush considers to be
23 was about whether you did any research 23 its main competitors?
24 into trends in Hi-Crush's business in the 24 MR. STRAUSS: Objection.
25 mid-2012 you know, beginning in the
-- 25 A. Not that Irecall.
17 (Pages 62 - 65)
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2 Q. Did you have any 2 Q. In Exhibit 6, you have alist
3 communications with any of the market 3 of the market makers that covered
4 makers for Hi-Crush in connection with 4 Hi-Crush during the period from well,
--
5 the work that you did to express your 5 you have two separate periods --
6 opinion in this case? 6 A. Iwant to stop you, because I
7 A. "Market makers" defined as? 7 don't think you're using the terminology
8 Q. Entities that make markets 8 correctly.
9 for Hi-Crush. 9 Q. I'm sorry.
10 A. So not ina securities — 10 A. It's not "market makers".
11 like aNASDAQ market maker. 11 Q. You're right, rye made --
12 MR. STRAUSS: Are you talking 12 used the wrong term. "Analysts" let
--
13 about profit market makers? 13 me withdraw that question, start again.
14 MR. PARADISE: No, no, I'm 14 In Exhibit 6, you have alist
15 sorry. 15 of analysts who issued reports or
16 Q. I'm talking about a 16 otherwise followed Hi-Crush during two
17 designated market maker from the New York 17 different time periods. The first time
18 Stock Exchange or anybody else that 18 period Isee is August 15, 2012 to
19 trades in Hi-Crush's security, on a 19 September 18th.
20 market-making basis. 20 Do you see that?
23 A. Idon't believe so. 21 A. Correct.
22 Q. Did you review any analyst 22 Q. And theu the second is
23 reports issued for Hi-crush during the 23 September 19th through November 12th; is
24 2012, 2013 time period? 24 that correct?
25 A. Ibelieve so. 25 A. Ibelieve it's through
Page 67 Page 69
1 Dr. Adam Werner 1 Dr. Adam Werner
2 Q. As you sit here today, can 2 November 12th --
3 you tell us which analyst reports you 3 Q. Right.
4 reviewed? 4 A. --2013.
5 A. Iremember reading the Baird 5 Q. 2013, correct.
6 downgrade. Ibelieve that was on 6 How many analysts were
7 October either the 14th or the 15th.
-- 7 following Hi-Crush during the class
8 Q. November? 1think November. 8 period? And, by "the class period", I'm
9 A. November, yes, November 2012. 9 referring to the period from September
10 Ibelieve thars it. 10 19th, 2012 through November 12th, 2012.
11 1mean, Imay have read other 11 A. Ibelieve it was either seven
12 ones, Idon't recall as Isit here. That 12 or eight.
13 one sticks out in my mind. 13 Let me look at my report
14 Q. There are other Ithink--
14 here.
15 there are other analyst reports 15 Q. Sure. Just make sure you
16 referenced in Appendix A, so feel free to 16 understood me correctly.
17 look at that to see if it refreshes your 17 fm only asking now for the
18 memory. 18 class period, not this extended test
19 A. Well, Ithink --
19 period.
20 Q. That, you know, refreshes 20 A. Ah, well, okay.
21 your memory that you might have looked at 21 Going back to Exhibit 6 --
22 others. 22 Q. Ithink -- go ahead.
23 A. (Pause.) 23 A. Do you have apen?
24 As Isit here, Idon't 24 Q. Sure.
25 recall. 25 A. Iknow Ican't mark this.
18 (Pages 66 -69)
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2 Can Iborrow apad of paper, too? Thank 2 don't agree with my or you dispute my
3 you. (Writing.) 3 definition of "covering", so how do you
4 Okay. Going back to your 4 define "covering"?
5 question, define "covering". 5 How do you define an analyst
6 Q. Well, "covering" meaning 6 covering Hi-Crush?
7 issuing research reports on Hi-Crush. 7 A. Well, an analyst certainly
8 A. Do you have apen? 8 can be following the stock and not issue
9 (Discussion off the record.) 9 actual reports.
10 A. Can we go back to the 10 Q. Sohowmany — underyour
11 question? 11 definition, then, how many analysts do
12 THE WITNESS: Can you read 12 you believe were covering Hi-Crush during
13 the question? 13 the class period?
14 Q. I'll just say it again. 14 A. (Pause.)
15 You asked me how do Idefine 15 Eight.
16 "covering", and Isaid issuing -- 16 Q. Who are the other five,
17 analysts that were issuing research 17 besides the three we just identified?
18 reports. 18 A. (Pause.)
19 A. On Hi-Crush. 19 Barclays, UBS, Robert W.
20 Q. Correct. 20 Baird (pause)
-- Idon't know if EVA
--
21 A. (Pause.) 21 Dimensions was covering it during the
22 Define "the class period"? 22 class period William Blair & Company.
--
23 Q. It's November I'm sorry
-- -- 231 think that's it.
24 September 19th, 2012 through November 24 Q. That's-- Ithink that's
25 12th, 2012. 25 seven, if Icounted right Barclays,
--
Page 71 Page 73
1 Dr. Adam Werner 1 Dr. Adam Werner
2 And that's also in your 2 UBS, Robert Baird, William Blair, and the
3 report, so-- 3 three that we had previously discussed.
4 A. Ibelieve that is correct. 4 A. Well, Idid mention UBS.
5 Q. Well -- 5 Q. Okay, so those would be the
6 A. And lwanted to make sure 6 eight
7 that you weren't talking about the l4tk 7 And what's your basis for
8 Q. No, no, no. Look at -- if 8 concluding that those other even --
9 you look at Footnote 1, on page 1of yonr 9 though they were not issuing research
10 report, yon mention, that is the same 10 reports, that those other firms were
11 class period. 11 covering Hi-Crush during that time?
12 A. Right 12 MR. STRAUSS: Objection.
13 So Iwill dispute your 13 A. Idon't know whether they
14 definition of" analyst coverage". If 14 were or were not covering Hi-Crush during
15 you're asking me how many reports were 15 that time.
16 released by analysts during that time 16 I'm just saying it's possible
17 period, Ibelieve three. 17 that they covered those for Hi-Crush
18 Q. And the three that you're 18 during that time, as Idefine "coverage".
19 referring to are three reports that
--
19 Q. You are familiar with the
20 you're referring to are Raymond James, on 20 Cammer factors for measuring market
21 October 9, 20-12, RBC on October 16th, 21 efficiency; correct?
22 2012, and then Credit Suisse on October 22 A. Ibelieve lam.
23 171h,2012? 23 Q. What is the if you know,
--
24 A. Ibelieve that's correct. 24 what is the standard that's applied to
25 Q. Sowhatis — yousaidyou 25 determining whether or not an analyst is
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2 following or covering acompany under 2 "coverage"?
3 Cammer? 3 Q. Oh, no, Isaid three analysts
4 Is it that they're issuing 4 who are issuing reports.
5 reports or is it just that they're doing 5 A. Ah, okay. Idon't know, one
6 something else? 6 way or the other.
7 A. Idon't think Cammer defines 7 Q. No, my question is whether
8 that. 8 you've ever expressed an opinion that
9 Q. If they're not issuing 9 three is enough to satisfy the Cammer
10 reports, is there some other way that you 10 factor.
11 believe these analysts are communicating Ii A. Idon't recall.
12 infonnation that's being absorbed into 12 Q. Turning back, for amoment,
13 the market for the price of the stock? 13 to Exhibit 2, the list of the academic
14 A. Sure. They could be telling 14 articles and books that begins on page 1
15 their salespeople what their opinions are 15 and then continues over to page 2.
16 of the stock. They could be going on TV 16 Did you read each of the
17 shows. 17 items that are listed there in connection
18 There is awhole host of ways 18 with the work that you did on this
19 they could be communicating information. 19 matter?
20 Q. Let's assume, for the sake of 20 MR. STRAUSS: Objection.
21 this question, that my definition is 21 A. At some point.
22 correct, and it means that they're 22 Q. Did anyone at-- anyone other
23 actually issuing reports, and that there 23 than you, at Gnarus review and then
24 are only three during the class period. 24 prepare summaries of any of these
25 Are you aware of any federal court 25 materials for you?
Page 75 Page 77
1 Dr. Adam Werner Dr. Adam Werner
2 decisions that have held that three 2 MR. STRAUSS: Objection.
3 analysts covering astock is asufficient 3 A. The academic articles?
4 number to prove market efficiency under 4 Q. Correct.
5 the Cammer factors? 5 A. No.
6 MR. STRAUSS: Objection. 6 Q. And turning to Appendix A,
7 A. Idon't know, one way or the 7 for aminute, the there are you
-- --
8 other. 8 know, there are various reports, data,
9 Q. Why not? 9 articles, SEC filings, and press releases
10 MR. STRAUSS: Objection. 10 listed throughout Appendix A.
11 A. If you want to show me a 11 Did you read each of those
12 court opinion, I'm happy to look at it. 12 items in connection with the work that
13 Q. Oh, I'm sorry, you are just 13 you performed on this matter?
14 not aware of any reports; is that what 14 MR. STRAUSS: Objection.
15 you mean? 15 A. Each of those items
16 A. Yeah. 16 separately?
17 Q. Okay. Have you ever 17 Q. Yes.
18 expressed an opinion in acase, other 18 MR. STRAUSS: Can you repeat
19 than Hi-Crush, that three analysts 19 the question, please?
20 covering the security is enough to 20 (The record was read.)
21 demonstrate market efficiency for that 21 A. Each of the items? No --
22 Cammer factor? 22 well, again, define "item".
23 MR. STRAUSS: Objection. 23 Ionly ask because, you know,
24 A. As you I'm sorry
-- as you
-.
24 there are things about lawsuits being
25 define "coverage" or as Idefine 25 filed, Ididn't read the all the
--
20 (Pages 74 -77)
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2 lawsuits. You know, did Iread have I
--
2 analysts, and Iasked you Itold you
--
3 read this press release summary? Yeah. 3 my definition was issuing reports, you
4 So I'm not really understanding the 4 told me that you don't accept that
5 question. 5 definition.
6 Q. Is it fair to say that you 6 In your report, you're saying
7 read the items that you believe were 7 that Cammer says --followed areport, so
8 considered news for the company? 8 I'm trying to get an understanding as to
9 A. That Iconsidered news? 9 where you stand on all this, but now
10 Q. Yes, in connection with your 10 you've told me you don't think they have
11 event study. 11 to be reporting on it.
12 A. "News", as defined by? 12 MR. STRAUSS: Objection.
13 Q. Well, how do you define 13 You're asking him for alegal
14 "news"? 14 opinion, and that's not what he's
15 You talk about news in 15 here to testify about, and that's
16 connection with your declaration; don't 16 not what he testified about in his
17 you? 17 report, so-- but Iobject to your
18 A. Ido. 18 question.
19 Q. Right. 19 MR. PARADISE: Idon't agree
20 A. So one type of news is press 20 that I'm asking for alegal
21 releases. 21 opinion.
22 If Pm defining "news" as 22 He expressed the opinion that
23 that, did Ireview those? Yes. 23 the second factor of Cammer's been
24 Q. Take alook at page 12 of 24 satisfied here by what Ibelieve to
25 your declaration, for amoment, Exhibit 25 be three analysts issuing reports
Page 79 Page 81
1 Dr. Adam Werner 1 Dr. Adam Werner
2 1, paragraph 29. 2 during the relevant time period.
3 The first sentence of 3 Dr. Werner has told me now that he
4 paragraph 29 says, from your declaration: 4 doesn't agree with that definition.
5 The second factor under Cammer is that --
5 He thinks that other analysts
6 quote it would be persuasive if a
--
6 talking to their customers on the
7 significant number of securities analysts 7 phone, or their salespeople, can
8 followed and reported on acompany's 8 also be relevant, and I'm trying to
9 stock closed quotes.
--
9 understand how he can reconcile
10 Do you agree with that 10 that with Cammer, because C.arnmer
11 statement? 11 seems to say they have to also be
12 A. Do Iagree with that that's 12 reporting on it.
13 what Cammer says? Yes. 13 Q. So I'm trying to understand
14 Q. Well, do you also agree that 14 if there's some explanation you can give
15 that's what's persuasive? 15 me as to how you differentiate what
16 MR. STRAUSS: Objection. 16 you've come to the conclusion of and what
17 A. Persuasive to what? 17 Cammer says.
18 Q. Persuasive to determining 18 MR. STRAUSS: Right.
19 whether or not there's asufficient 19 A. Idon't--
20 number of analysts to satisfy the analyst 20 MR. STRAUSS: Objection,
21 coverage factor-of Cammer. 21 that's alegal argument, that's not
22 You told-me before it didn't 22 aquestion about his opinion or his
23 matter if they were issuing reports or 23 analysis.
24 not, they could still be relevant and, in 24 Go ahead.
25 your definition, you saw there were seven 25 A. Cammer doesn't define
21 (Pages 78-81)
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2 "reported" for us, so Idon't know what 2 MR. STRAUSS: And Idon't
3 Cammer means by "reported" --
3 know whether he's able to --
4 Q. Well, do you think --
4 whether he knows about that.
5 A. -- or "following". Go ahead.
6 Q. Again, if the number is 6 A. 1--
7 three, you know, assuming for the sake of 7 MR. STRAUSS: Do you want her
8 this question that the number is three, 8 to repeat the question? Hone in on
9 do you consider that asignificant 9 what it was you asked?
10 number --asufficiently-significant 10 MS. BRANDON: Ithink you
11 number of analysts to satisfy the second 11 want to go back to the question
12 Cammer factor? 12 where he reads from paragraph 30,
13 MR. STRAUSS: Objection. 13 and from there.
14 Once again, you're asking him for a 14 (A portion of the record was
15 legal opinion and not for his 15 read.)
16 expert opinion or what analysis he 16 A. Ibelieve it's paragraph 29.
17 conducted to get to his expert 17 MS, BRANDON: The last
18 opinion, it's beyond the scope of 18 question was started with paragraph
19 the deposition. 19 30 and then --
20 Go ahead. 20 Q. The last sentence of
21 A. Idefer to counsel on this 21 paragraph 30.
22 one. 22 A. Oh, theu Pin asking about the
23 Q. In what sense? 23 question before that.
24 A. In the sense that Ibelieve 24 THE WITNESS: Or, just read
25 you are asking me for alegal opinion. 25 the last question.
Page 83 Page 85
1 Dr. Adam Werner 1 Dr. Adam Werner
2 Q. Look at paragraph 30, the 2 (A portion of the read was
3 last sentence of paragraph 30: As a 3 read.)
4 result of my opinion that, while analysts 4 A. Ireally don't understand the
5 coverage implies there is interest in a 5 question.
6 company and securities, significant 6 Q. Well, you did need to hear
7 analyst coverage is not necessary to show 7 the prior question.
8 that asecurity is traded in an efficient 8 The prior question was asking
9 market. 9 about whether you needed --essentially,
10 Is that alegal opinion? 10 I'm going to summarize it --essentially,
11 A. Idon't believe so. 11 1was asking you about whether coverage
12 Q. So what makes that not a 12 was required to make an analyst relevant
13 legal opinion and the question I'm asking 13 for purposes of the Cammer factor; right?
14 you alegal opinion, besides that your -
14 Meaning that they were issuing reports.
15 besides that Mr. Strauss said it was. 15 That's how we got off Onto
16 THE WITNESS: Could you 16 this tangent in the first place, and you
17 re-read the question, please? 17 said you didn't think that was you --
18 MR, STRAUSS: Because this is 18 didn't agree with that definition. You
19 asking is about market
--
19 thought they don't necessarily have to be
20 efficiency, and he's testifying 20 issuing areport to be determined to be
21 about market efficiency. 21 covering it, the security.
22 The prior question was about 22 Did Iget that right?
23 whether something satisfies alegal 23 A. Ibelieve that is correct.
24 requirement. 24 Q. Okay. And then Iread to you
25 MX. PARADISE: (Indicating.) 25 paragraph 29, the first sentence, and you
22 (Pages 82 - 85)
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2 said, if Iunderstood you correctly, that 2 to define "sufficient".
3 you don't believe that Cammer defined 3 Q. Well, how many analysts is it
4 reported", so you're 1think what
-- 4 that you need to be covering astock, in
5 you're saying is you don't think it has 5 your opinion, to conclude from that that
6 to be actually awritten published report 6 there is market efficiency?
7 to be reported; is that right? 7 MR. STRAUSS: Objection.
8 A. Ibelieve that is correct. 8 A. It's possible Icould have no
9 Q. Okay. Igot it. Ithink we 9 analyst coverage and the stock would be
10 can move on, you know, we agree to 10 traded in an efficient market.
11 disagree, Iguess. 11 Q. Agreed, because you don't
12 But, my next question is, 12 need to satisfy all the Cammer factors.
13 let's assume that I'm right, and 13 That's why I'm asking to satisfy the
14 "reported" means issuing awritten 14 second Cammer factor, that was the whole
15 report. 15 thing I'm getting at, to satisfy that
16 A. Okay. 16 specific factor.
17 Q. And that there are three 17 A. If you want --
18 analysts doing so during the class 18 MR. STRAUSS: That's why your
19 period, which is what you testified to 19 question is alegal question and
20 earlier, meaning there were three 20 not an expert question.
21 analysts issuing reports about Hi-Crush. 21 MR. PARADISE: Idisagree.
22 A. Okay. 22 A. If you want to show me the
23 Q. Is that asufficient number 23 Cammer opinion, and show me where they
24 of analysts for purposes of establishing 24 talk about the number of analysts that
25 the second Cammer factor, in your 25 are sufficient, I'll be happy to discuss
Page 87 Page 89
1 Dr. Adam Werner 1 Dr. Adam Werner
2 opinion? 2 that with you, but Idon't believe Cammer
3 MR. STRAUSS: Objection. 3 states definitively that there have to be
4 Again, you're asking for alegal 4 acertain number of analysts, it just
5 opinion. S says sufficient.
6 If you're asking him whether 6 Again, you can define
7 it's sufficient to establish market 7 "sufficient" any way you want to.
8 efficiency from an economic point 8 Q. Okay. So, in your opinion,
9 of view, Ithink that would be a 9 "sufficient" can be three or fewer than
10 valid question, but you're asking 10 three, Ithink is what you are saying.
11 him for alegal opinion, and I 11 A. I'm saying it's possible for
12 think that's beyond the scope of a 12 astock to trade in an efficient market
13 proper question in the deposition. 13 and not have any analyst coverage or it
14 MR. PARADISE: Okay, Ithink 14 could have amillion analysts covering
15 Iunderstand your objection, I 15 it.
16 think I'm short-circuiting it a 16 Market efficiency, in and of
17 little bit. 17 itself, is not going to be established by
18 So let me, to satisfy you, 18 the number of analysts following astock.
19 I'll add to the question. 19 Q. Turning to your opinion that
20 Q. Is three asufficient number 20 you express at the end of paragraph 30,
21 to prove that the second Cammer factor 21 that Iread into the record earlier?
22 has been established and, therefore, 22 A. Mm-hmm okay.
--
23 there is market efficiency, 23 Q. I'm looking specifically at
24 MR. STRAUSS: Objection. 24 the second clause, which says:
25 A. So, first of all, Ineed you 25 Significant analyst coverage is not
23 (Pages 86 - 89)
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2 necessary to show that asecurity is 2 that question.
3 traded in asufficient market. You said that amarket can be
4 Is that aacceptable --is 4 efficient with zero analysts covering it
5 that apeer-reviewed accepted opinion, to 5 and it could also have Ican't
--
6 your knowledge? 6 remember the number you used, it was a
7 A. "Peer-reviewed"? 7 very large number, analysts covering it
8 Q. In other words, is there any 8 and it can be efficient, but if it can be
9 literature out there that shares that 9 efficient or, in your opinion, can be
10 opinion, that you're aware of. 10 proven to be efficient with zero analyst
11 A. As Isit here, Idon't know. 11 coverage, why did you bother even
12 Q. If lunderstood you 12 including this in your analysis, this
13 correctly, and we'll move off of this, I 13 Cammer factor two in your analysis?
14 apologize for belaboring it, you're 14 A. Because the court demands
15 saying is analyst coverage is or can
-- 15 that Ido it.
16 be irrelevant to determining market 16 Q. "The court" being Cammer, or
17 efficiency; right? 17 Judge McMahon in the Southern District of
18 A. Determining under what? 18 New York?
19 Q. Determining under the 19 A. Right.
20 analysis that you performed and type of 20 MR. STRAUSS: Objection.
21 analysis that you performed in this case. 21 A. Ibelieve Cammer.
22 THE WITNESS: I'm sorry, 22 Q. All right. What is your
23 could you read back the question? 23 definition of an "efficient market"?
24 (A portion of the read was 24 In other words, what does
25 read.) 25 that mean, when you say "a market is
Page 91 Page 93
Dr. Adam Werner 1 Dr. Adam Werner
2 MR STRAUSS: Objection. 2 efficient"?
3 A. Imean,look, this isa 3 A. Iassume that it's semi-
4 Cammer factor, Ihave to respond to that 4 strong form-efficient.
5 in this report. 5 Q. Can you explain what that
6 To me, like Isaid, you can 6 means, please?
7 have infinite analyst coverage or no 7 A. Turning to my report,
8 analyst coverage, the stock is still 8 paragraph 15, under the: Semi-strong
9 trading in an efficiency market. 9 form of efficiency: Prices reflect not
10 Going back to your question 10 just past prices but all other public
11 about peer-reviewed articles, Ican think 11 information, for example from the
12 of numerous event study articles that 12 internet or financial press.
13 don't mention anything about analyst --
13 Q. What does it mean to say that
14 or, market efficiency studies, that don't 14 "a market is not efficient", in your
15 mention anything about analyst coverage. 15 opinion, or your understanding?
16 Q. So you said you had to 16 A. Prices do not reflect past
17 analyze this because it's one of the 17 prices or public information.
18 Cammer factors, but if it can be 18 Q. You also used the term
19 efficient with zero market makers, why 19 throughout— and Ican give you some
20 was it necessary for you to -
20 examples, you have used the term, or some
21 MR. STRAUSS: Objection, you 21 derivation of the term, "irifortnationally
22 mean "analysts". 22 efficient"?
23 MR PARADISE: I'm sorry, 23 Do you remember using that
24 you're right. 24 term?
25 Q. Let's start over. Withdraw 25 A. Ibelieve so.
24 (Pages 90 - 93)
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1 Dr. Adam Werner I Dr. Adam Werner
2 Q. If you take alook at-- do 2 market for this stock is inefficient.
3 you want me to show you, just so we're on 3 Amazingly enough, the plaintiffs don't
4 the same page? 4 want me to submit areport in those
5 A. Sure. 5 instances.
6 Q. Take paragraph 4E, on page 6 Q. But do they pay you?
7 2. 7 A. They pay me.
8 These are informational 8 Q. Okay, fair enough.
9 efficiencies? 9 Do you remember what -- in
10 A. Okay. 10 those other cases to which you're
11 Q. And then there are other 11 referring, or these other instances to
12 places where you'll say something is 12 which you're referring, do you recall
13 informationally efficient, et cetera. 13 what led you to conclude that the market
14 Can you just explain what you 14 was inefficient?
15 mean by "inforinatioually efficient"? 15 A. The stock-- or, the stock or
16 A. It means that the information 16 bond price would not respond to
17 that is reflected in the stock price. 17 information, that Iwould expect it to
18 Q. Okay. So it's similar to the 18 respond to.
19 definition of what an "efficient market" 19 And, when Isay
20 is? 20 "information", Ishould qualify that by
21 A. Ibelieve that's correct. 21 saying "new information".
22 Q. Outside of work you've done 22 Q. And was that conclusion
23 in connection with either testifying or 23 reached after conducting if you
--
24 preparing areport as an expert, so, in 24 remember was that conclusion reached
--
25 other words, in your academic life, have 25 after conducting an event study?
Page 95 Page 97
I Dr. Adam Werner 1 Dr. Adam Werner
2 you ever studied or done research into 2 A. It could have been.
3 market efficiency? 3 Imean, Icould also eyeball
4 A. That's an overbroad overly
-- 4 it.
5 broad question. Ibelieve the answer is 5 Q. In your opinion, is it
6 yes. 6 possible for the market for asecurity
--
7 Q. Have you ever concluded that 7 to be efficient during one time period
8 amarket for aparticular security was 8 but inefficient during another time
9 not efficient? 9 period?
10 A. Yes. 10 MR. STRAUSS: Objection.
11 Q. Aud have you ever done that 11 A. Is it possible? Anything's
12 in any litigation, securities litigation? 12 possible.
13 A. Ibelieve so. 13 Q. Have you ever encountered
14 Q. Can you tell us which cases, 14 that situation, where you looked at
15 as you sit here? 15 trading over different time periods for
16 A. Not asl sit here. 16 the same security and determined that in
17 Imean, I'd have to when I
-- 17 one time period it wasn't sufficient and
18 was at Cornerstone and NERA and CRA, I 18 in another it was?
19 must have done, Idon't know, multiple 19 A. Not that Irecall.
20 cases in which the expert found that the 20 Q. We talked earlier about the
21 market for the stock was inefficient. 21 class period, and Ijust wanted to
22 I've certainly found been
-- 22 confirm that, to your knowledge, the
23 brought cases currently where I'm asked 23 class period still starts or begins in
24 to determine market efficiency, and I 24 this case on September 19th, 2012?
25 will say: Based on my determination, the 25 A. That's my understanding,
25 (Pages 94 - 97)
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2 based on the judge's opinion. 2 during apresentation at an industry
3 Q. What-- if you know, what 3 meeting, on September 25th, 2012,
4 happened on September 19th, 2012 to make 4 Hi-Crush continued to promote Baker
5 that the start date for the class period? 5 Hughes as an important long-term buyer of
6 Or what didn't happen, Ishould say. 6 its frac sand.
7 A. Well, other than the judge 7 Q. Okay, So coming back to my
8 determining that that was the start of 8 question.
9 the class period? 9 Then, what occurred or did
10 Q. She hasn't determined that 10 not occur on September 19 what
--
11 yet, it's --
11 occurred on September 19th, based on your
12 A. Well, then, I again, I'm
--
12 opinion, is that Hi-Crush received a
13 not alawyer, so that my reading of her 13 letter from Baker Hughes, notifying them
14 opinion was that she thought that the 14 that Baker Hughes was terminating the
15 class period started on-- 15 contract; is that correct?
16 Q. I'm going to-- 16 A. Idon't believe that's my
17 A. -- September 19th. 17 opinion.
18 Q. Let me try it this way. 18 Q. Isaid in your opinion, it's
19 Your not "your"
-- the
-- 19 expressed in this paragraph you just
20 Plaintiffs' counsel has alleged the class 20 read.
21 period that begins on September 19th. Is 21 MR. STRAUSS: Objection.
22 it fair to say that you've accepted that 22 Q. You just read me this
23 for purposes of your analysis and havent 23 paragraph.
24 done any independent determination as to 24 A. Correct.
25 when the class period should or should 25 Q. Okay, so that's what I'm
Page 99 Page 101
1 Dr. Adam Werner I Dr. Adam Werner
2 not start? 2 asking.
3 A. That is correct, but -- 3 Is that the event that
4 Q. I'm sorry, go ahead. 4 occurred on that date that makes that the
5 A. Well, Iwas just going back 5 start of the class period.
6to your question on September 19th. 6 A. Well, you're -
7 If you go to paragraph 11, 7 MR. STRAUSS: Idon't think
8 which is page 5of Exhibit 1to this 8 it's alleged.
9 deposition: Then, on September 19, 2012, 9 THE WITNESS: Right.
10 Baker Hughes notified Hi-Crush that it 10 A. That's not my determination
11 was tenninating its supply contract. 11 to make.
12 According to Baker Hughes --
12 Q. Do you know, or have you
13 THE WITNESS: Am Igoing too 13 done, any independent research to
14 fast? 14 determine when, during the day on
15 Q. No. 15 September 19th, Hi-Crush received a
16 THE COURT REPORTER: I'm 16 letter from Baker Hughes?
17 there. 17 A. 1don't believe so.
18 A. Not for you. 18 Q. Are you familiar with you --
19 Hi-Crush had breached the
--
19 mentioned earlier Form 8-K, are you
20 confidentiality clause of the supply 20 familiar with the instructions for Form
21 contract by attaching aversion of the 21 8-K?
22 contract to its IPO registration 22 A. Not asi sit here.
23 statement. Hi-Crush, however, did not 23 Q. Soifl was to ask you bow
24 publicly disclose Baker Hughes' 24 many days after an event that requires
25 determination until November. In fact, 25 disclosure, under Form 8-K, aregistrant
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2 is obligated to file its Form 8-K, you 2 this --in their complaint, but that was
3 wouldn't know the answer to that; would 3 when the information was reflected in the
4 you? 4 stock price.
5 MR. STRAUSS: Objection. 5 Q. And what do you know, or
--
6 A. Idon't believe so. 6 are you aware -- and you can certainly
7 Q. Is it still your 7 refer to your report are you aware of
-
8 understanding, as you sit here today, 8 what happened on November 12th with
9 that the class period ends on November 9 respect to Hi-Crush that well, what
--
10 12th, 2012? 10 occurred with respect to Hi-Crush on
11 MR. SIRAUSS: Objection. 11 November 12th, 2012?
12 Q. If you look at Footnote ion 12 A. (Pause.)
13 page]. 13 Idon't specifically recall.
14 A. Ibelieve that is correct. 14 If Icould look at the complaint.
15 Q. So, again, like lasked you 15 MR. PARADISE: Do we have a
16 before, that date, you're taking that 16 copy of the complaint?
17 from what's been alleged in this lawsuit 17 MS. BRANDON: lthink wedo.
18 rather than any independent determination 18 Q. While we're looking for that,
19 of your own; is that right? 19 let me see if this helps.
20 A. Well, Iguess. 20 Look at paragraph 12 of your
21 Q. Well, you seem pll77led. 21 declaration.
22 A. You know, again, Idon't 22 A. Right-
23 think you're asking me to make alegal
-- 23 Q. You have areference in there
24 determination, which is not anything I've 24 to November 12.
25 thought about. 25 A. Oh.
Page 103 Page 105
I Dr. Adam Werner I Dr. Adam Werner
2 It's not my job to determine 2 Q. Ican represent to you that,
3 when and the class period should start
-- 3 what happened, that you recite in here,
4 and end. 4 is Hi-Crush formally terminated the
5 Q. No, that's exactly what I 5 supply agreement
6 asked you. Ididn't ask you to make a 6 Do you see that?
7 legal determination. 7 A. Yes.
8 Isaid, you're accepting the 8 Q. Do you want to still see the
9 period that's been set forth in this 9 complaint?
10 lawsuit rather than having done anything 10 A. And its suit, filed suit,
11 independent to determine when the class 11 against Baker Hughes.
12 period should end. 12 Q. Right, do you still need to
13 MR. STRAUSS: Objection. 13 see that, (indicating)?
14 What do you mean by "accepting"? 14 A. No.
15 You mean that he's accepting as an 15 Q. Turning to page 2of your
16 assumption? 16 declaration, Footnote 2.
17 MR. PARADISE: Yes. 17 You discuss, in this
18 MR. S11{AUSS: Okay. 18 Footnote, the what you call, or
--
19 A. Ibelieve that's correct. 19 define, as the "test period", which is
20 Imean, the only thing 20 from September 19th, 2012 until November
21 that the only confusion Ihave about
--
21 13th, 2013.
22 this point is that, you know, you see the 22 Do you see that?
23 stock price reaction on November 13th, so 23 A. Yes.
24 do Iconsider that part of the class 24 Q. Okay. And you say, in
25 period? Not as formally defined in 25 parenthetical, after November 13th, 2013
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2 a-- and this is the parenthetical: A 2 from ayear from the corrective
3 year after the impact of the corrective 3 disclosure, so I'm assuming, from that,
4 disclosure on Hi-Crush's stock price, 4 that the corrective disclosure has some
5 which Idefine as the "test period", you 5 significance to you, so Iwant to have
6 continue on from there but for my 6 your understanding as to what you
7 purposes I'm going to stop there. 7 consider to be the corrective disclosure,
8 A. Okay. 8 to see if that's avalid time period that
9 Q. What do you mean by 9 you're using.
10 "corrective disclosure", as you use it in 10 MR. STRAUSS: He testified
11 Footnote 2? 11 he's using that date as an
12 A. Iguess corrective of the 12 assumption, not that he rendered an
13 alleged fraud. 13 opinion on the corrective
14 Q. And what was the disclosure 14 disclosure period.
15 that you believe was corrective of the 15 Na. PARADISE: Well, Idon't
16 alleged fraud, for purposes of your 16 think so.
17 (iudicatiug) opiuiou? 17 Iasked about on the class
18 MR. STRAUSS: Objection. 18 period, he said he accepted it, but
19 A. Well, going back to the 19 1dou't think Iasked him why he
20 paragraph you pointed out --
20 used November 13th, so Ican ask
21 Q. 12? 21 him that question.
22 A. Yeah. Hi-Crush formally 22 Q. Why did you use November
23 terminated its supply agreement ou 23 13th? What was the reason for using that
24 November 12th, 2012 but, at the same 24 date?
25 time, it filed suit agaiust Baker Hughes, 25 A. It's corrective of the
Page 107 Page 109
1 Dr. Adam Werner 1 Dr. Adam Werner
2 seeking damages --
2 omission of information.
3 THE WITNESS: Sorry. 3 Q. Right, and what was the
4 A. -- over the contract 4 omission that occurred?
5 termination. 5 A. That Baker Hughes had
6 Q. And what misrepresentation or 6 terminated its contract.
7 omission do you believe this corrective 7 But let me hold on one
--
8 disclosure corrected? 8 second.
9 MR. STRAUSS: Objection. 9 MR. STRAUSS: Are you asking
10 Once again, you're askiug him for 10 him what happened on November 13th
11 legal conclusions, you're not 11 or why he selected November 13th,
112 asking him for or, to recite the
--
12 as opposed to any other date, to
13 allegations, you're not asking him 13 start this test period? Is that
14 for his opinion or the analysis 14 what you're asking?
15 that led him to his opinion and, as 15 MR. PARADISE: Well, he said
16 such, it's not the proper scope of 16 he used November 13th in his
17 the deposition. 17 opinion as -- because that's one
18 MR. PARADISE: Okay, I 18 year from the corrective
19 disagree. 19 disclosure, so I'm trying to
20 Q. But you can answer. 20 understand what makes him think
21 If you don't have an opinion, 21 that was the corrective disclosure,
22 you can say: Idon't have an opinion, 22 why was that the right date to
23 but you-- I'll just say, the reason I 23 start from.
24 don't agree with Mark is because you say 24 MR. STRAUSS: November 13th,
25 you've created this test period that runs 25 2013?
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2 MR. PARADISE: 12, he said 2 A. Yes.
3 one year from that date, he said. 3 Q. But that was released on
4 He's in the middle of 4 November 13th, 2012.
5 answering, so.... 5 That's outside the class
6 A. No, I'll stick with my 6 period.
7 answer. 7 A. No, Ibelieve Imean
-- --
8 Q. Okay. Whydoyou -- didyou 8 okay, now we're getting into semantics,
9 feel it was necessary to use this test 9 The termin-- the information
10 period, which, as you point out, runs 10 was released either post-closing of the
11 from ayear you know, ayear following
-- 11 market on the 12th versus or prior to
--
12 the class period, to establish or 12 the opening of the market on the 13th.
13 determine whether the market for Hi-Crush 13 Q. I'll represent to you that it
14 was efficient? 14 was the latter, it was prior to the
15 A. Because there was very little 15 opening on the 13th.
16 information disclosed about Hi-Crush 16 And I'm going to show you the
17 during the class period. 17 press release in asecond.
18 Now, that having been said, I 18 A. Okay. Idon't under-- for
19 would have been more than happy to just 19 me, Idon't understand the legal
20 look at the class period, where we have 20 distinction of why the class period ends
21 one significant disclosure that moves the 21 on the 12th versus the 13th and how, if
22 stock price, but I'm sure your experts 22 legally, whether you determine that if
23 would then complain about the fact that I 23 information is released prior to amarket
24 was only looking at aone- or two-month 24 opening it should be reflected, the
25 period of time, and Iwas only looking at 25 correct proper date that you need to look
Page 111 Page 113
I Dr. Adam Werner Dr. Adam Werner
2 one disclosure. 2 at for the class period is the prior day,
3 So, Imean, I'd be happy to 3 1don't know.
4 do it. The problem is, if Ido it, you 4 Q. Okay, fair enough.
S guys are going to complain about it, or 5 A. That's nothing Iunderstand
6 your-- the people you hire are going to 6 or but that's it.
--
7 complain about it. That's why Idid it, 7 Q. Okay, so, but, just for the
8 Q. Well, but, are you saying -- 8 record, the disclosure to which you are
9 or was that ahypothetical, are you 9 referring, to which you referred earlier
10 saying there was asignificant disclosure 10 as having occurred during the class
11 during the class period, that's defined 11 period, is the disclosure that you
12 as September 19th, 2012 to November 12th, 12 discuss in paragraph 12 (indicating) of
13 2012? 13 your declaration.
14 A. I'm saying there was one 14 A. It's disclosure,
--
15 significant piece of information released 15 conveyance of information, whatever you
16 to the market during that time period. 16 want to call it.
17 Q. And what was that? 17 It's --so, yes, apress
18 A. The Hi-Crush formally
- 18 release was issued, they filed alawsuit
19 terminated its supply agreement on 19 Ibelieve on the prior day, Idon't --
20 November 12th, 2012 while, at the same 20 Q. I'm just trying to establish
21 time, it filed suit against Baker Hughes 21 that there's no other disclosure that you
22 seeking damages over the contract 22 were referring to. That's all. You were
23 termination. 23 referring to this disclosure, whether it
24 Q. You're referring to paragraph 24 happened on the 13th or at the end of the
25 12 again? 25 12th, that's the disclosure that you're
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2 talking about. 2 Q. During this last break, did
3 A. Ibelieve that is correct. 3 you and Mr. Strauss discuss anything that
4 Q. Okay. Let me just hand you 4 bears upon any of my prior questions or
5 the press release, just to show it to 5 any of your prior answers?
6 you, so can see the date on it, and all 6 A. Ibelieve we discussed
7 that. 7 analyst coverage.
8 MR. PARADISE: Can you please 8 Q. Anything else?
9 mark this as Exhibit 2? 9 A. Not that Ican think of.
10 (Whereupon Deposition Exhibit 10 Q. Let's come back, for a
11 2, Press release, dated November 11 moment, to the test period that we were
12 13th, was marked for 12 discussing.
13 identification, as of this date.) 13 1don't have any questions on
14 A. Actually, you know what, can 14 the press release, just on Exhibit 2,
-
15 Itake abreak? 15 but Iwanted to show it to you just to
16 Q. Sure. 16 show you that it's dated November 13th,
17 (Recess taken: 12:09 p.m. -.
17 if you see at the beginning of the press
18 12:19 p.m.) 18 release there's adate, (indicating),
19 BY MR. PARADISE: 19 that was the only purpose of me showing
20 Q. Before we broke, Ihanded you 20 that to you at this point.
21 what the court reporter has marked as 21 A. Right. But, in this press
22 Exhibit 2, just so we have it on the 22 release that is issued on November 13th.
23 record. 23 it specifies: On November 12th, 2012,
24 And uow you've advised me 24 Hi-Crush formally terminated the supply
25 that you'd like to clarify one of your 25 agreement and filed suit in the State
Page 115 Page 117
Dr. Adam Werner I Dr. Adam Werner
2 previous answers, Ibelieve? 2 District Court of the Harris County, that
3 A. Correct. 3 in and of itself is information.
4 Q. Go ahead. 4 Q. I'm not disagreeing with you.
5 A. So, when we were talking 5 The only question is when was that
6 about analyst coverage and analyst 6 information released to the market, and
7 following, Ido want to point out that, 7 the date of the press release is November
8 in terms of companies that were following 8 13th.
9 Hi-Crush, as opposed to as Idefine
--
9 That's that was the only
--
10 it, part of that was based on the idea 10 thing--
11 that they had previously issued reports 11 A. But the lawsuit was filed on
12 on Hi-Crush, prior to the class period, 12 the 12th.
13 so that's, to me, evidence that or, --
13 Q. Correct.
14 additional evidence that they were, in 14 A. That information --the fact
15 fact, following Hi-Crush. 15 that the lawsuit was filed on the 12th
16 Q. Just for the record, you're 16 would be conveyed to the market on the
17 referring to Exhibit 6of Exhibit 1, and 17 12th, if the market was still open, or in
18 you're referring to the some of the
--
18 terms of the calendar day, which seems to
19 brokerage firms that are listed as having 19 be what you're focusing on here, that was
20 issued reports prior to the class period; 20 released on the 12th, that information
21 is that right? 21 about the lawsuit, the fact that a
22 A. Correct. 22 lawsuit had been filed would -have been
23 Q. Okay. Is there anything 23 information on the 12th.
24 else? 24 Q. Is it your opinion, or I --
25 A. No. 25 mean-- Imean, because Iwant to make
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2 sure Fm understanding you now, is it 2 let's talk about Iwant to talk more
--
3 your opinion that the market was aware 3 about the test period, because you
4 that the lawsuit had been filed on 4 explained that there that you didn't
--
5 November 12th? 5 feel there was well, you said you
--
6 A. Define "the market. 6 thought that if you had used the period
7 Q. You used the word "market" in 7 of September 19th to September 9th,
--
8 your answer. 8 2012, through November 12th, 2012, that
9 A. Well -- nh -- during -- I 9 our experts would have criticized you as
10 defined "the market" as during trading 10 using an insufficient period of time; is
11 hours, Ido not believe that the market 11 that right? Is that fair?
12 was aware of it on the 12th-- 12 A. Well, with regards to the
13 Q. Okay. 13 release --
14 A. during trading hours.
--
14 Q. Right.
15 Anyone who owned shares in a 15 A. --of information.
16 stock, who lives 24 hours aday, though, 16 Q. So, that's why you said you
17 may have seen this information after the 17 used an extended period of time.
18 market closed. 18 is there anything about the
19 Q. Are you aware of any 19 one-year period, is there any reason why
20 published information on the internet -- 20 you went one year out from November I --
21 analyst reports, news reports, Motley 21 guess November 13th, 2012, to November
22 Fool, Seeking Alpha-- any other source 22 131h, 2013?
23 of information, that reported, on 23 A. imean,most — many event
24 November 12th, whether it be during or 24 studies use aone-year window to measure
25 after market hours, that Hi-Crush had 25 as ameasurement of time.
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Dr. Adam Werner 1 Dr. Adam Werner
2 filed alawsuit against Baker Hughes. 2 Q. So you didn't look ata
3 A. Idon't believe so, but hold 3 different period of time and then, you
4 on asecond, let me review Appendix A. 4 know, sort of cherry pick that one-year
5 (Pause.) 5 period, because that was afavorable time
6 Idon't believe so. 6 period; did you?
7 Q. And stay with Appendix A for 7 A. No.
8 amoment, if you don't mind. 8 Q. Now, when you look at the
9 So, looking at the date of 9 period outside of the class period,
10 November 12th, did the in your event
-- 10 right, so you're looking at that November
11 study, did your-- I'm sorry, this is 11 13, 2012 to November 12th, 2013, is it
12 your event study; right? 12 your opinion that if the market for the
13 A. Yes. 13 stock was efficient during that time
14 Q. Okay. Did the price of the 14 period or some, you know, time period
15 stock move on November 12th in amanner 15 other than the class period that's at
16 that suggests to you that the market 16 issue, that means that the market was
17 absorbed the news of the filing of that 17 also efficient during the class period?
18 lawsuit? 18 MR. STRAUSS: Objection.
19 A. Did it move in away --
19 Q. That was abad question. Let
20 Q. Ina — letmeuseyour 20 me rephrase the question.
21 lingo, if you don't mind, so I'm using it 21 A. Okay, Iwas going to say --
22 right did it move in astatistically-
--
22 Q. Let me ask it more generally,
23 significant way on November 12th, 2012? 23 and then we'll get specific.
24 A. it did not. 24 What I'm trying to get at is,
25 Q. Okay. So lefs stay -- well, 25 in your opinion, if the market for the
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2 stock is efficient in one time period, 2 outside the class period, that's what I'm
3 does that mean it is always efficient? 3 trying to say by "subsequent period".
4 MR. STRAUSS: Objection. 4 A. That informs my opinion.
5 A. Idon't know how to answer 5 Q. And, now, coming back to my
6 that 6 original question, that you said you
7 Q. Why? 7 didn't know how to answer it, can you
8 A. Imean, Idon't know how to 8 explain to me how you're able to
9 answer it. 9 conclude, based on the presence of
10 That's my answer. 10 statistically-significant events during
11 Q. Okay, then let's talk 11 this subsequent period -- can we just
12 specifically. 12 have an understanding that that means
13 Do you agree with me that, in 13 November l3,2012 through November 13,
14 your event study, Appendix A to Exhibit 14 2013?
15 1, there are no statistically-significant 15 A. Okay.
16 dates during the class period? 16 Q. How does that form your
17 So that's September 19, 2012 17 opinion that the market was efficient
18 through November 12, 2012. 18 during the class period?
19 And let me just further say 19 A. Well, there are no Imean,
--
20 that I'm drawing that conclusion because 20 Idon't --you're right, Idon't see any
21 Idon't see any asterisks during the 21 statistically-significant price
22 during the during that time period, on
-
22 movements, but there was also no
23 any of the dates, and Ido see numerous 23 significant news issued during that
24 asterisks for the subsequent period of 24 period.
25 November 13th, 2012 through November 25 So, Imean, ifl saw all
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1 Dr. Adam Werner Dr. Adam Werner
2 13th, 2013, so I'm assuming sorry,
--
2 sorts of crazy stock price movements on
3 it's very long but Pm assuming that
-
3 no information, that might inform me that
4 the asterisks signify astatistically- 4 the stock wasn't efficient.
5 significant date. Is that afair 5 Q. So, Iunderstand Ithink I
--
6 assumption? 6 understand what you're saying so is it
--
7 A. That is afair assumption. 7 fair to say that you're drawing an
8 Q. Now, after that long-winded 8 inference based upon your observation of
9 question, my question to you is, are 9 the subsequent time period that the
10 there any statistically-significant dates 10 market was also efficient during the
11 during the class period. 11 class period?
12 A. During the class period, 12 A. That's part of it. Again, it
13 again, I'm using your definition, or 13 informs my opinion.
14 everyone's definition --
14 Q. What else informs your
15 Q. Right. 15 opinion, besides that?
16 A. --of September 19th through 16 A. Well, Ican look at the
17 November 12th, no. 17 analyst coverage during the class period,
18 Q. Okay. So is it fair to say 18 trading volume during the class period,
19 that your opinion in this case, that the 19 the fact that it was traded on the NYSE,
20 market is efficient was efficient
--
20 it had adesignated market maker, a$290
21 during the class period, is based on your 21 million company, the bid/ask spread was
22 observation of efficiency during the 22 less than Ibelieve Ibelieve it was
--
23 subsequent period of November you --
23 .49 percent, but Idon't recall off the
24 know, when Isay "subsequent period", 24 top of my head, which is less than the 2
25 it's part of your test period, but it's 25 percent threshold established in other
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2 court cases urn (pause)
-- let's -- --
2 I'll leave it at that.
3 see we can go
-- well, those are --
3 Q. Lets stay with Appendix A
4 certainly examples of things that inform 4 for amoment.
5 my opinion, the absence of auto- 5 Just looking at the first
6 correlation -
6 four entries, Inotice that the data on
7 THE WITNESS: And this one is 7 the first four trading you know, the
--
8 atough one, "autocorrelation" -- 8 first four trading dates that you list
9 A-U-T-O-C-O-R-R-E-L-A-T-I-O-N. 9 there: September 19th, September 20th,
10 Q. So, essentially, the 10 September 21, and September 24, is all
11 other and, again. Itake it you are
-- 11 identical, and that strikes rue as maybe
12 referring or referring to or--
12 an error; is that --
13 consulting your opinion, your 13 A. Ibelieve that is an error.
14 declaration, paragraph 4, for those items 14 Q. Okay.
15 you just listed to me, they're listed 15 A. But Ialso Ido know there
--
16 here among the letters under the 16 was no statistically-significant price
17 paragraph 4; is that right? 17 movements on those dates.
18 A. Ibelieve so. 18 Q. But the data was not
19 Q. Okay. 19 replicated like this on those four days;
20 A. Imean, Iwas doing it off 20 was it? The trading day, the volume, the
21 the top of my head at the time, but I 21 price, the return?
22 believe that was correct. 22 A. As Isit here, Idon't know,
23 Q. All right. We're going to 23 but Ibelieve that you are correct.
24 come to we're going to talk about a
--
24 Q. Just and just coming back
--
25 bunch of those as we move forward, but 25 to your definition of "event window", for
Page 127 Page 129
1 Dr. Adam Werner I Dr. Adam Werner
2 it's fair to say so Ijust wanted to
--
2 purposes of looking at Exhibit 7 --
3 make an understanding, though, that the 3 A. Oh.
4 event study itself, though, is being used 4 Q. --my --
5 as an inference, that piece of your 5 A. Ijust marked this, I'm
6 analysis is being used as an inference 6 sorry.
7 for the class period. 7 Q. That's okay.
8 A. Idon't Iguess Idon't --
8 MR. PARADISE: For the
9 understand the question because the 9 record, we'll note that the witness
10 event the event study is the time
-
10 marked--
11 period that you look at with regards to 11 Q. What is that? What page is
12 information. 12 that?
13 What you're defining is the 13 A. Appendix A, the first page of
14 "event window" in which you estimate the 14 Appendix A.
15 event study, but you then use that, those 15 MR. PARADISE: Off the
16 results, to look at-- you can look at a 16 record.
17 broader period. 17 (Discussion off the record.)
18 So I'm not quite under- 18 Q. Take alook at Exhibit 7for
19 standing what you're talking about. 19 amoment.
20 Q. The "event window", is that 20 1just want on this event
--
21 the what do you consider the "event
--
21 study time period-- Imean— sorry, the
22 window" in this case? 22 "event window", on Exhibit 7, the period-
23 A. November 13th, 2012 to 23 that you put down there is November 14,
24 November 13th, 2013. 24 201210 November 13th. Idon't know if
25 That's the time that the --
25 that's also just atypo?
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2 A. No, that is November 4th -- I 2 (gesturing).
3 did not include the price reaction on 3 Q. Back to Appendix A for a
4 November 13th in my analysis. 4 second.
5 Q. I'm looking at yours. Does 5 So, with respect to the dates
6 yours say November 14? Oh, okay. 6 that are asterisked, my from reading
--
7 So the reason why you used 7 your declaration and observing or
8 that is could you just explain that
--
8 reviewing your event study, my
9 again, why you didn' tlook at November 9 observation is that you starred those
10 13th? 10 days and have at-stat of greater or --
11 A. Idid look at November 11 greater equal to or greater than one
--
12 13th in my Iguess my confusion is, is
--
12 absent value of 1.96; is that --
13 you I'm not understanding your
--
13 A. Ibelieve that is
14 definition of an 'event study". 14 Q. correct?
--
15 Could you define what you 15 A. correct.
--
16 mean by "event study"? 16 Q. And that's if I'm reading
--
17 Q. Well, the only thing Imean 17 your report correctly, that corresponds
18 by "event study" is whatever you mean, 18 to aconfidence level of 95 percent; is
19 quite frankly, your event study. 19 that right?
20 A. Well, okay. So Idid 20 A. Correct.
21 estimate it 1did some regression
--
21 Q. Okay. Why do you why is --
22 analysis over this time period, but the 22 that the confidence level that you chose
23 event study encapsulates the class 23 to use?
24 period. 24 A. Oftentimes, that's the
25 Q. Yes, Iunderstand that. 25 confidence level that an economist will
Page 131 Page 133
1 Dr. Adam Werner 1 Dr. Adam Werner
2 You mentioned "event window" 2 use in doing an econometric analysis.
3 before, and you said the period you-
3 Q. Other times, in your report,
4 told me was November 13th. 2012 to 4 Isee references to a99 percent
5 November -
5 confidence level and Ialso saw some
6 A. That was - 6 references to a90 percent confidence
7 Q. —12th,2013. 7 level.
8 I'm just trying to understand 8 99 percent, obviously, is
9 why here it's November 14th. 9 higher than 95 percent, but do you also
10 A. It is No-- because Ishould 10 consider, in certain circumstances, in
11 have said November 14th. 11 this report in this declaration, I
-
12 Q. That's what lb getting at, 12 keep calling it a"report" in this
--
13 okay. 13 declaration, do you consider some of the
14 And, just so Iunderstand, 14 events that had astatistical
15 why don't you start with November 13th-- 15 significance of-- I'm sorry —the
16 A. Because-- 16 confidence level of 90 percent, to be
17 Q. 2012.--
17 statistically-significant?
18 A. Right. 18 A. "The events"?
19 Because that was the day 19 Q. Or — letme -- maybel
20 where large information was released to 20 should show you specifically what I'm
21 the market. Including that day would 21 talking about. It may be easier that
22 probably -- Idon't want to say "mess 22 way.
23 up" --
23 For example, look at
24 Q. Skew? 24 paragraph 49 for amoment.
25 A. It might skew my analysis --
25 A. (Pause.)
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2 Okay. 2 at a90 percent confidence level --
3 Q. Please read as much of it as 3 closed parentheses to the
--
4 you would like, but the sentence to which 4 net-of-market industry index over
5 Iwas referring, or am referring, is the 5 the event window.
6 fourth sentence, beginning with: The 6 Q. I'm just trying to understand
7 coefficient? 7 if it has any meaning with respect to
8 A. Right. 8 your overall opinion about the efficiency
9 Q. So there you see a 9 of the market.
10 statistically-- it says: Statistically- 10 MR. STRAUSS: Objection.
11 significant at a90 percent confidence 11 A. Ibelieve it informs my
12 level. 12 opinion.
13 Fm just curious as to how 13 Q. And does it support your
14 you would how you reconcile the 95
-- 14 opinion?
15 percent confidence level with the 90 15 A. Idon't think that one piece
16 percent confidence level for purposes of 16 of information supports or does not
17 determining how something is 17 support my opinion.
18 statistically-significant. 18 Q. Do you remember, is 90
19 MR. STRAUSS: Objection. 19 percent rounded? Is that arounded
20 Q. If you do. 20 number there?
21 A. It's what the confidence 21 And if you take alook at
22 level is, ifs 90 percent for this 22 Exhibit 7, because --
23 observation, or in this analysis. I 23 A. Ibelieve it might have been.
24 don' tknow what else to tell you about 24 Q. Okay. Is that acceptable, to
25 that. 25 round up like that? Because Ithink,
Page 135 Page 137
1 Dr. Adam Werner I Dr. Adam Werner
2 Imean, by definition, it's 2 technically, it was at 89.6 percent. If
3 statistically significant that a90 3 you look at Exhibit 7, you have this peak
4 percent confidence level. 4 greater than an absolute value of T of
5 Q. What does that mean with 5 .104,so--
6 respect to your opinion about the 6 A. Fm sorry, what exhibit?
7 efficiency of the market? I.e. that it's 7 Q. Exhibit 7.
8 statistically significant at a90 percent 8 MR. PARADISE: Off the
9 level versus being statistically 9 record.
10 significant at a95 percent confidence 10 Q. If I'm doing my math correct,
11 level, if anything? 11 it's actually a.89—.896, and ljust
12 MR. STRAUSS: Objection. 12 want to make sure that you're rounding up
13 Which what are you specifically
-- 13 to 90?
14 referring to? 14 A. You are correct.
15 MR. PARADISE: Paragraph 49, 15 Q. And just because I'm not the
16 where it refers to the t-stat of 16 expert, that's acceptable, in your
17 1.67 being statistically 17 experience, to round up to 90 percent?
18 significant at 90 percent 18 A. Idon't -- Pve never
19 confidence level and then, later 19 seen-- Idon't know whether it's
20 on, in that same paragraph, Dr. 20 acceptable or unacceptable.
21 Werner says that the-common stock 21 Imean, tech-- you're more
22 returns are I'm going to just
- 22 than welcome to change that to 89.6.
23 read it: highly sensitive to 23 Q. That wouldn't change your
24 movements in the market index and 24 opinion; is that
--
25 fairly sensitive parenthetical
-- -- 25 A. No.
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1 Dr. Adam Werner I Dr. Adam Werner
2 Q. Okay. In terms of the five 2 for Exhibits 7and 8than you did for the
3 Cammer factors that you analyzed, do you 3 remainder of the exhibits.
4 consider any one of the five factors to 4 A. 1think this goes to the
5 be more important than any other? 5 question that we discussed earlier, about
6 A. 'More important" from what 6 the definition of an "event study".
7 perspective? 7 Q. Could you enlighten me again,
8 Q. More important or more 8 if you don't mind?
9 valuable in determining market 9 A. The control period is from
10 efficiency. 10 November 14, 2012 to November 13, 2013.
11 A. Ibelieve factor five is more 11 That's where Iperformed my regression
12 informative than the other factors. 12 analysis.
13 Q. Infactorfive --let'sjust 13 Q. Aud that's the control
14 turn to your declaration for amoment. 14 period, because you Ithink, if I
--
15 It is discussed at the beginning on page 15 understood you earlier, you wanted to
16 24, am Iright, paragraph 61? 16 eliminate the 13th because you thought
17 A. Ithink it started earlier. 17 that might skew the results, and this is
18 MS. BRANDON: Page 16. 18 aperiod that doesn't have an event that
19 MR. KEABLE: Page 16. 19 would skew the results. Is that the
20 Q. You're right, Iapologize, 20 idea?
21 page 16. 21 A. Idon't know if this has an
22 A. Right. 22 event that would skew the results or not,
23 Q. Okay. All right. I'm 23 but as this-- as the 13th is the largest
24 looking at the exhibits that Ithink 24 stock price movement, at least during
25 correspond to your analysis of factor 25 this entire period, Ichose not to
Page 139 Page 141
1 Dr. Adam Werner Dr. Adam Werner
2 five, which Ibelieve are Exhibits 7and 2 include that.
3 8. 3 Alternatively, Icould have
4 Isthat -- amlrightabout 4 used --Icould have included that date
5 that? 5 and used the dummy variable to correct
6 A. There are many exhibits, 6 for that large fluctuation in price.
7 there's more exhibits than that, I 7 Q. And excuse my naivete here
8 believe. 8 but, with respect to the exhibits beyoud
9 Exhibit 7through I -- 9 Exhibits 7and 8, so Exhibits 9through
10 believe, Exhibit 13 through Exhibit
--
10 14, the reason that you were able to use
11 13, speaks to factor five. 11 the entire test period, because you were
12 Q. I'm just looking Fm
--
12 not performing your regression analysis
13 trying to get an understanding as to the 13 in those exhibits? Is that - am I
14 time periods that you used for these 14 understanding you?
15 various analyses that you performed. 15 I'm just trying to understand
16 So1 see that in Exhibit 7 16 why it's okay to use the longer period
17 and Exhibit 8you use the period of 17 for those other exhibits but, the shorter
18 November 14th through November 13th, 18 period, you felt it was important to use
19 which is aportion of your test period, 19 the shorter period for the Exhibits 7and
20 but for Exhibits 9, 10, 11, 12, and 13 20 8.
21 you used the entire test period and
--
21 A. Imean, I'm look-- Iuse the
22 14, Iapologize, and 14. 22 longer periods because Pm interested in
23 I'm just tying to get an 23 how the stock price reacts to information
24 understanding as to why it is that you 24 during those periods.
25 used the different periods for these -- 25 Q. But for Exhibits 7and 8,
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I Dr. Adam Werner I Dr. Adam Werner
2 you're not interested in that? 2 November 14th, 2012 to November
3 That's what I'm trying to 3 13th, 2013.
4 understand. 4 A. Ibelieve that is correct.
5 A. So, the nature of an event 5 Q. And the sample and you
--
6 study is to test whether astock responds 6 also mentioned asample period.
7 to news; right? And normally what you 7 So--
8 want to do is you want to use aclean 8 A. Well--
9 period, which isn't which does not
--
9 Q. --what period is that?
10 have some kind of you know, I'm not 10 A. That was my misuse of the
11 even quite sure bow to explain it. 11 language.
12 What Idid was the standard 12 Q. Okay.
13 event study methodology, it is what it 13 A. That, Ishould have said the
14 is. 14 period in which Iwant astudy how
15 Q. And is this like an outlier 15 infonnation impacts the stock price.
16 event? You're trying to eliminate like 16 Q. And is that the test period,
17 an outlier event? 17 the full test period?
18 Is that the idea? 18 A. That is the full test period.
19 A. Well, Idon't want to use the 19 Q. Got it, okay.
20 term "outlier", but you -- 20 MR. PARADISE: Take abreak?
2! Q. In other words -- 21 MR. STRAUSS: Yes.
22 A. You try to-- 22 MR. PARADISE: Do you want to
23 Q. --an aberrational -- 23 break for lunch?
24 A. It's like any statistical 24 (Luncheon recess: 12:50 p.m.)
25 test that you do; right? 25
Page 143 Page 145
1 Dr. Adam Werner Dr. Adam Werner
2 1want acontrol period and 2 AFTERNOON SESSION
3 then Ilook at my sample period. Iused 3 (1:43 p.m.)
4 the control period, so it doesn't -- 4
5 whatever happens in the other period 5 DR. ADAM WERNER,
6 doesn't influence my control period. 6 resumed, having been previously duly
7 Q. Okay. And your control 7 sworn, was examined and testified as
8 period --
8 follows:
9 A. But it's like any scientific 9
10 experiment. 10 MR. PARADISE: Dr. Werner has
11 MR. PARADISE: Off the 11 indicated that he'd like to
12 record. 12 clarify, or attempt to clarify, a
13 (Discussion off the record.) 113 prior answer.
14 Q. Ijust want to ask you, just 14 CONTINUED EXAMINATION
15 the two terms you used there, Iwant to 15 BY MR. PARADISE:
16 make sure that Iunderstand what you mean 16 Q. Go ahead, please.
17 by it. 17 A. Yeah, Ithink Iwas just --
18 So the "control period", for 18 before the break, my blood sugar was
19 these purposes, means the period of 19 crashing, Ithink Iwas fairly
20 November 14th, 2012 to November 13th, 20 inarticulate with regards to how one
21 2013; correct? 21 conducts an event study.
22 A. I-- 22 So Ijust wanted to point to
23 MR STRAUSS: Ithink it's 23 something like --Imean, the methodology
24 November 14th. 24 Iuse is very similar to that used in
25 MR. PARADISE: Right, Isaid 25 the this St. John Law Review article,
--
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I Dr. Adam Werner Dr. Adam Werner
2 by Ferrillo, Tabak, and Dunbar, that I 2 Q. Does it apply to any one of
3 cited in my report. 3 the five Cammer factors?
4 There are other examples that 4 A. Well, you have volume, which
5 Ican point to that mirror discussions of 5 Cammer factor one Ibelieve is average
6 this type of methodology. 6 weekly volume. Bid/ask spread deals
7 Q. And, just to be clear, the 7 with that's aKrogmaxi factor, I
--
8 type of methodology you mean is the -- 8 believe.
9 what you described as the use of a 9 Q. Could you spell that?
10 control period, as opposed to the -- 10 A. Yeah, K-R-O-G-M-A-N.
11 A. Okay, can Ihave the article? 11 Market capitalization, that
12 Q. Yeah, sure, Iwant to make 12 goes to factor four as well as Ibelieve
13 sure Iunderstand what you're clarifying, 13 that's another Ishould say Cammer
--
14 because Ithought Iunderstood your 14 factor four as well as aKrogman
--
15 answer. 15 factor.
16 A. Oh. 16 Q. Is Krogman acourt decision
17 Q. So you talked about acontrol 17 or is that an academic person?
18 period and then another period, which is 18 A. Oh, it's acourt decision.
19 the period that you're evaluating, which 19 Here, Ican --
20 Iguess here would be the class period. 20 Q. Look at if you would, look
--
21 Is that 21 at the second page of Exhibit 3, on the
22 A. Well, that would be the test 22 back Idon't know if it's double-
--
23 period. 23 sided yeah, it's double-sided the
-- --
24 Q. Right. 24 line that's dated October 31, 2012,
25 A. Ievaluate the test period --
25 there's acouple of places in there where
Page 147 Page 149
Dr. Adam Werner I Dr. Adam Werner
2 Q. Okay. 2 you have no data, and Ijust want to make
3 A. - which includes the class 3 sure, is that an error, is that a
4 period. 4 mistake?
5 Q. Got it. Thank you. 5 A. No, Bloomberg did not have
6 Iwant to come back to your 6 data.
7 declaration and some of the other Cammer 7 Q. Oh, couldn't you compute
8 factors, because we spent alot a -- 8 the for example, couldn't you compute
-
9 bunch of time on factor five, which I 9 the day's average bid/ask spread based on
10 want to come back to, as well, but Iwant 10 the information that you do have?
11 to just get some of these other ones on 11 A. No. We get all the bid!ask
12 the record, for asecond, and make sure 12 spread data from Bloomberg.
13 that Iunderstand what's going on with 13 Q. Okay. So when it says: No
14 these other exhibits, if you will. 14 data, across October 31, in three places,
15 So starting with-- Exhibit 15 that just meant that there's no data
16 3. 16 available from Bloomberg.
17 A. Is it Exhibit 3to Exhibit 1? 17 A. Correct.
18 Q. Yes. 18 Q. So, I'm sorry, look at the
19 if you could just explain 19 column that's headed: Percentage of
20 what Exhibit 3is showing or what 20 outstanding shares sold short. And
21 conclusions you reached based on Exhibit 21 there's aformula there: C equals A
22 3or-- 22 divided by B.
23 A. It's just more support with 23 So, that one, you could have
24 regards to the efficiency of the market 24 just divided A by B; right?
25 for Hi-Crush. 25 A. Ibelieve, technically, that
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I Dr. Adam Werner 1 Dr. Adam Werner
2 is correct. 2 along, I'll tell you that, rerunning the
3 1-- yeah, we get those 3 rest of the calculations, Icame up with
4 numbers from Bloomberg, as well. I 4 aturnover analyzed turnover, of 269
--
5 mean-- yes, I-- 5 percent.
6 Q. Ijust want to make -- 6 A. Ibelieve that looks like
--
7 A. -- could have calculated. 7 it would be in the ballpark.
8 Q. Again, just for the purpose 8 Q. Would that have any impact on
9 of making sure Iunderstand why it said 9 your ultimate opinion in this case?
10 no data. 10 A. No. It's still part of the
11 A. As Isit here now, it's going 11 NYSE average, of 67 percent.
12 to be 1.25 percent 12 Q. Imeant to ask you earlier,
13 Q. Exhibit4isjusta 13 have you in reviewing this, have you
--
14 straight --is that just astraight 14 reviewed the declaration, Exhibit 1,
15 computation that's made based upon data 15 since you've submitted it?
16 that you obtained from some other source 16 Like, for example, did you
17 oris that -- 17 review it in preparing for today?
18 A. Correct. 18 A. "This" (indicating) being
19 Q. Okay. Let's look at Exhibit 19 Exhibit I?
20 5for asecond. 20 Q. Yes.
21 The number that you have for 21 A. Ibelieve so.
22 the line: Average traded volume per 22 Q. Did you discover any errors
23 year, Iwent back with my trusty old 23 or mistakes that needed to be corrected?
24 HP 12C, and did some math here, and I 24 A. Obviously not.
25 believe that Ifound amistake, and I 25 Q. Ijust wanted to get an
Page 151 Page 153
Dr. Adam Werner 1 Dr. Adam Werner
2 just want to make sure you agree with me. 2 understanding as to whether there are any
3 Do you have acalculator? I 3 others that Imight not have seen.
4 think we have -- 4 Okay. Turning to page 2of
5 A. Ican't use that thing. 5 your Exhibit 1, page 2of Exhibit 1,
6 Q. Do you want to use this, 6 where you list the various bases for your
7 (indicating)? 7 finding of market efficiency, Iwant to
8 A. Ican get my computer out and 8 talk for amoment about the letter E,
9 use it itself, that's
-- 9 which is the strong correlation between
10 Q. Sure. 10 Hi-Crush's common unit price and the
11 MR. PARADISE: Off the 11 movement in the market and the industry
12 record. 12 indices.
13 (Discussion off the record.) 13 You chose for the industry
--
14 Q. Just look at: Average traded 14 indice that you compared Hi-Crush to, you
15 volume per year, F equals E divided by D. 15 chose the Dow Jones-- if I'm
16 And, when Jran that 16 understanding correctly, you chose the
17 calculation, Icame up with amuch 17 Dow Jones Mining Industry --
18 different number. Icame up with 18 A. Ibelieve —
19 36,674,570. So I'm wanting to just make 19 Q. --Index?
20 sure,isthatanerrororisthat -- aml 20 A. --that is correct.
21 doing something wrong? 21 Q. Why did you choose the Mining
22 A. Class period --(pause) -- 22 Industry Index?
23 (using calculator) -- no, you that is
-- 23 A. Ibelieve that was one of
-
24 an error. 24 the reasons was Hi-Crush was included in
25 Q. Does that --just speed this 25 it.
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2 1should say that, in doing 2 companies within this index.
3 my analysis, Iexcluded Hi-Crush from the 3 A. Correct.
4 index. 4 Q. Okay.
5 Q. Do you know what the date of 5 A. Correct.
6 the withdrawn.
--
6 Q. You mentioned that you
7 The companies that are 7 excluded Hi-Crush from the index that you
8 included in indexes change over time, so 8 used, but did you exclude any other
9 Fm trying to get an understanding as to 9 companies or is it just --
10 what date, you know, of the index you 10 A. Just Hi-Crush.
11 looked at or examined, because the 11 MR. PARADISE: So we'll
12 indexes that Ipulled up did not indicate 12 need --just for the record, we'll
13 that Hi-Crush is part of the index. And 13 need to see what the index was, I
14 we can show it to you, but Idon't know 14 guess, and then we can make the
15 if this is the one that you used, and you 15 assumption that Hi-Crush was
16 might have used something different, I 16 eliminated.
17 don't know. 17 MR. STRAUSS: Sure.
18 MR. PARADISE: Let's mark 18 Q. And then Iguess the
19 this as Exhibit 3. 19 weighting, was this aweighted index?
20 (Whereupon Deposition Exhibit 20 A. Equally weighted.
21 3, Document, DJU SMG Index, as of 21 Q. Oh, it was equally weighted,
22 January 18th, 2013, was marked for 22 so it's not like --
23 identification, as of this date.) 23 A. Like Isaid, it was like 200
24 A. Yeah no, this isn't.
--
24 companies --
25 Q. This is I'm going to try
--
25 Q. Right, right, right. Igot
Page 155 Page 157
1 Dr. Adam Werner I Dr. Adam Werner
2 to find adate for you here, this is -
2 you.
3 this is as of January 18th, 2013, so it's 3 A. It was not like asmall
4 during your test period. 4 sample.
5 A. Right, no, this is not the 5 Q. Okay.
6 index we used. 6 A. In fact, Imean, Ican e-mail
7 It was much larger, it was a 7 someone in my office, if you want.
8 more general I'll have to check with
--
8 Q. Oh, that would be great, if
9 my analyst, but Iknow there was 9 you could. You can do that on abreak,
10 something like 200 components in the 10 too, if you want.
11 index-- 11 I'm just trying to find in
12 Q. Okay. 12 your report where you discuss this index,
13 A. we used.
--
13 because Ithought --
14 Q. Iappreciate it. 14 MR. KEABLE: Paragraph 44,
15 MR. PARADISE: Mark, if you 15 page 17.
16 conld, Idon't know if that's 16 Q. Okay, just paragraph 44, you
17 been Idon't think that's been
--
17 call it the Dow Jones U.S. Mining Index,
18 produced. If so-- 18 which is what Ithought this was, but
19 MR. STRAUSS: We'll identify 19 perhaps there's another version of it, or
20 it. 20 something, because this is clearly a
21 MR. PARADISE: Iappreciate 21 weighted index.
22 that. 22 A. Right.
23 Q. But, as best -- as you sit 23 Q. All right, we'll come back to
24 here today, the best of your 24 that. If you're able to get it, we'll
25 recollection, Hi-Crush was one of the 25 come back to that.
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2 Maybe this might be it. 2 A. Iknow.
3 Let's see if this is it. 3 Q. What I'm trying to understand
4 MR. PARADISE: Will you 4 is, because Exhibit 3, you know, clearly,
5 please mark this as Exhibit 4. 5 you can see that this is some sort of a
6 (Whereupon Deposition Exhibit 6 basket that was created by Dow Jones, and
7 4, Document, Dow Jones U.S. Mining 7 its easy to see that they must have
8 Index, with alist of the 8 some the stock price movement of
--
9 companies, was marked for 9 these, of this index. Iwasn't sure if
10 identification, as of this date.) 10 there was asimilar thing for this longer
11 Q. So the court reporter has 11 list.
12 handed you what's been marked as Exhibit 12 A. Oh, yeah.
13 4. 13 Q. Okay.
14 Is this the index? 14 A. Yes, Ishould say.
15 A. Ibelieve so. 15 Q. I'm just going to keep these
16 Q. So, obviously, this is -- 16 here. if you need to refer back, here
17 Exhibit 4is alist of the companies. 17 they are, (indicating).
18 And Itake it, then, that you 18 A. Okay.
19 have some other information that shows 19 Q. InletterF,thespeed — you
20 you the performance of these stocks? In 20 say: The speed at which Hi-Crush's
21 other words, that you're comparing the 21 common unit price reacted to news during
22 performance of these stock to Hi-Crush 22 the test period.
23 stock. 23 Is that when you say
--
24 A. Ibelieve that's what a 24 "news" there, are you referring to
25 regression analysis does. 25 Hi-Crush-specific news or any news?
Page 159 Page 161
1 Dr. Adam Werner 1 Dr. Adam Werner
2 Q. Right. So, what I'm saying 2 A. Ibelieve, in this instance,
3 is, do you have something that gave you 3 I'm talking about Hi-Crush-specific news.
4 the performance of this of these
-- of--
4 Q. And then the same question
5 this basket of companies over that period 5 for G. When you refer to "news days", as
6 of time? 6 compared to "non-news days", is that news
7 A. Ibelieve so. 7 days reflecting Hi-Crush-specific news?
8 Q. Imean, is that something 8 A. Presumably.
9 that you had to create or is that 9 Imean, it's possible that
10 something that you were able to go to 10 there's some market news that included
11 Bloomberg or to some other source? 11 Hi-Crush (gesturing).
--
12 A. To the extent that Icould 12 Q. Turning to paragraph 9, did
13 use Bloomberg but then Ihad to remove 13 you write this paragraph?
14 Hi-Crush. 14 A. Ibelieve this was drafted
15 Q. What Imean, though, is does 15 for me.
16 Bloomberg like report -- 16 Q. By whom?
17 A. Yes. 17 A. Haley --
18 Q. as in the aggregate the
-- 18 Q. Somebody --
19 performance of that basket of stocks or 19 A. Johnson.
--
20 did you have to go and manually do that 20 Q. Somebody at the firm?
21 to come up with your measurement? 21 A. Yes.
22 A. Ibelieve Bloomberg includes 22 Q. Okay. The second I'm --
23 them. 23 sorry, the last sentence of paragraph 9
24 Q. No, it's not atrick 24 says, and I'll read it into the record:
25 question. 25 This case arises in response to
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2 information Hi-Crush failed to publicly 2 should or should not have been publicly
3 disclose during the third quarter of 3 disclosed.
4 2012. 4 Q. So you're essentially
5 Just to make sure were 5 accepting the allegations as set forth in
6 complete, what information are you 6 the Amended Complaint for purposes of
7 referring to there, that Hi-Crush failed 7 your analysis without making any
8 to publicly disclose? 8 independent determination as to whether
9 A. If you give me the 9 those that information should or
--
10 Consolidated Complaint, I'll be happy to 10 should not have been disclosed; is that
11 tell you. 11 fair tosay?
12 Q. Is it fair to say it's based 12 Na. STRAUSS: Objection.
13 npon information that you took out of the 13 A. Idon't think I've --
14 Amended Consolidated Complaint? 14 MR. STRAUSS: So you're
15 A. Ibelieve so. 15 asking him whether he's taking the
16 MR PARADISE: Let's mark 16 allegations as an assumption?
17 this as Exhibit 5. 17 MR. PARADISE: Yes.
18 (Whereupon Deposition Exhibit 18 MR. STRAUSS: Are you taking
19 5, Amended consolidated class 19 the allegations as an assumption?
20 action complaint for violations of 20 THE WITNESS: Idon't know.
21 the federal Securities Laws, was 21 A. I'm not sure if— Iguess
22 marked for identification, as of 22 so (gesturing)
-- Imean, it doesn't
--
23 this date.) 23 affect my it's an exclusion, so it
--
24 Q. To speed this along, you 24 doesn't affect my analysis, either way.
25 reference in your footnote, you give a
-
25 Q. What do you mean, by "it's an
Page 163 Page 165
1 Dr. Adam Werner Dr. Adam Werner
2 citation to page 1to 5of the complaint. 2 exclusion"?
3 A. (Pause.) 3 A. They failed to--
4 Okay. 4 Q. Oh.
5 Q. Can you tell me what 5 A. -- make the announcement.
6 information you're referring to? 6 Q. You mean an "omission"?
7 A. Oh, the termination of the 7 A. An omission exclusion,
--
8 Baker Hughes contract. 8 omission.
9 Q. Which paragraph of the 9 Q. We looked at paragraph 12 a
10 Amended Consolidated Complaint are you 10 little bit earlier, and Ishowed you the
11 looking at? 11 press release, but we never looked at
12 A. Well, Ithink it's discussed 12 them in conjunction with each other. So
13 throughout (pause)
-- paragraph 7,
--
13 I'm going to ask you to take alook at
14 paragraph 8, paragraph 10, paragraph 9 --
14 the press release for amoment.
15 Q. I'm sorry, just slow down for 15 In paragraph 12, as you
16 asecond. 16 testified to earlier, and as it's
17 7,8,9, and l0. 17 reflected in your declaration, you say
18 So is it your testimony that 18 that: Hi-Crush disclosed the termination
19 all of the information that's referred to 19 of the supply agreement with Baker
20 in those paragraphs, of the Amended 20 Hughes, and then you go on from there to
21 Complaint, should have been publicly 21 say that: Hi-Crush said it had --
22 disclosed during the third quarter of 22 quote engaged in discussions with
--
23 2012? 23 Baker Hughes, but the parties were unable
24 MR. STRAUSS: Objection. 24 to reach amutually-satisfactory
25 A. Idon't know whether it 25 resolution.
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2 Are you aware of there being 2 that's just a --
3 any other information disclosed in the 3 Q. Is that is that correct?
--
4 November 13th press release that's not 4 A. Urn -- I'm not sure.
5 reflected in paragraph 12 of your 5 THE WITNESS: Can you --Fm
6 declaration? 6 sorry.
7 THE WITNESS: Could you 7 Q. Let me this is what I'm
-- --
8 repeat the question, please? 8 getting to here is damages.
9 (The record was read.) 9 You know, you --as we went
10 MR. STRAUSS: Objection. 10 through your CV earlier, there were a
11 A. Imean, was there additional 11 number of cases where you've testified
12 information released on that day? 12 about damages and anumber of cases where
13 Yeah-- they -- yes. 13 you've testified about market efficieucy
14 Q. Did you do anything or make 14 and, of course, there are other cases.
15 any attempt to quantify the impact, if 15 And Ihad asked you earlier whether or
16 any, of the disclosure of the additional 16 not you have been asked to do any work in
17 news on the stock price of Hi-Crush on 17 connection with damages in this case, and
18 November 13th, 2012? 18 Ibelieve your answer was no.
19 A. "Quantify"? Idon't believe 19 So I'm just trying to make
20 so. 20 sure that I'm right about that.
21 Q. Now, Ihad asked you earlier 21 A. Ihave not been asked to
22 if you had -- 22 opine on damages in this case.
23 A. But-- 23 Q. But you have done on other
24 Q. I'm sorry, go ahead. 24 cases and you feel that you are capable
25 A. That having been said, there 25 of doing so, if you were asked; correct?
Page 167 Page 169
I Dr. Adam Werner 1 Dr. Adam Werner
2 was multiple news reports the next day 2 A. Correct.
3 about people talking about the stock 3 Q. If you were asked to express
4 tanking because of their failure to
- 4 an opinion about damages, would you feel
5 or, their agreement with Baker Hughes 5 it's necessary to isolate the damage
6 having fallen apart, and there wasn't 6 thafs caused by the alleged omission
7 very much other talk or discussion of the 7 from any other I'm sorry, withdrawn.
--
8 financial results. That was the main 8 If you were asked to express
9 thing that people focused on. 9 an opinion about damages in this case,
10 So to the extent that there 10 would you feel it necessary to separate
11 was any effect, I'm not sure-- it might 11 the loss caused by the alleged omission,
12 very well be negligible. 12 which was revealed on November 13th, from
13 Q. Now, you had testified 13 other information that was revealed to
14 earlier, you have not been asked to 14 the market on November 13th?
15 express an opinion or do any work to 15 MR. STRAUSS: Objection.
16 enable you to express an opinion as to 16 A. Ibelieve that's correct, but
17 the loss that was suffered as aresult of 17 that can go both ways. It could be
18 the alleged fraud in this case; is that 18 positive or negative.
19 correct? 19 Like if people thought that
20 MR. STRAUSS: Objection. I'm 20 the earnings were good, or if there was a
21 sorry, could you repeat the 21 pleasant surprise, but for the
22 question? 22 disclosure, you know, it's possible
23 (The record was read.) 23 damages would have been higher, if I
24 MR. STRAUSS: What's your 24 adjust for the fact that there is also
25 question? That's not aquestion, 25 earnings -
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2 Q. Yeah, my question wasn't 2 market information, like news?
3 meant to suggest higher or lower, it was 3 A. Correct.
4 just that you would try to isolate the 4 Q. And you had mentioned earlier
5 harm caused by the alleged by the
--
5 that the September 19 to November 12
6 revelation of the alleged truth. 6 period, you felt if you had only used
7 A. Ibelieve that's correct. 7 that for your event study for Appendix A,
8 Q. Okay. Now, let's go back to 8 that you would have been criticized --
9 the now Iwant to come back to the
--
9 potentially criticized by Defendants'
10 fifth Cammer factor exhibit that we have 10 experts.
11 been going through this morning. 11 Why do you not have the same
12 A. Okay. 12 concern about Exhibit 14?
13 Q. So starting Ithink we
--
13 And, again, I'm not that
14 covered we covered 7and 8, so I
--
14 familiar with this stuff, so I'm not
15 wanted to start for asecond with 9and 15 asking as atrick, I'm just trying to
16 10, to make sure Iunderstand them. 16 really understand the distinction.
17 So looking at Exhibit 9, 17 A. Well, this is the class
18 which is the analysis of the speed --
18 period, it's the period Ilooked at.
19 sorry, let me start with 14. 19 The problem is, when you're
20 A. Exhibit 14? 20 doing an event study, you need events to
21 Q. Yes, please. 21 occur. There was alack of events during
22 So and part of the reason
--
22 the class period. As aresult, I --
23 for this question is just to make sure 23 again, I'd be happy to do an event study
24 that this is accurate, because we've seen 24 just on the class period, but your --
25 acouple of-- and, by the way, nobody's 25 someone might accuse me of cherry picking
Page 171 Page 173
1 Dr. Adam Werner 1 Dr. Adam Werner
2 perfect, but we've seen acouple of 2 my results.
3 mistakes, and Ijust want to make sure 3 Q. And the number of
4 that this is accurate. 4 observations that's listed as 36, that
5 And the part that I'm asking 5 corresponds Ibelieve to the is that
--
6 about is that there is atypo of 6 the number of trading days within that
7 September, but Iwant to make sure that 7 period of September 19 through November
8 the data you considered, in Exhibit 14, 8 12,2012?
9 is for that time period that's revealed 9 A. Ibelieve its either 36 or
10 there, which is September 19th, 2012 to 10 37.
11 November 12th, 2012. 11 Q. And, as far as you're
12 Is that right? 12 concerned I'm sorry, go ahead.
--
13 A. Iread that as correct. 13 A. In order to calculate
14 Q. And that is the class period 14 autocorrelation, you need two days of
15 aswe've-- 15 prices.
16 A. As we've -- 16 Q. So anything greater than two
17 Q. --been discussing today. 17 is sufficient for this --
18 A. --defined it, yes. 18 A. No, that's not what I'm
19 Q. So why in this exhibit 19 saying.
20 (indicating) did you only look at the 20 Q. Okay, I'm sorry. Go ahead.
21 class period and not your test period? 21 A. I'm just -- it's strictly an
22 A. Because, when Iwas looking 22 accounting thing -
23 at my test period, Iwas that only
-- 23 Q. But--
24 dealt with information. 24 A. - Idon't think we should
25 Q. By "information", you mean 25 get hung upon.
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I Dr. Adam Werner I Dr. Adam Werner
2 Q. No, but 36isasufficient 2 far as you're concerned, this
3 number of days to use to draw a 3 (indicating) test that you conducted,
4 conclusion from an autocorrelation 4 that's reflected in Exhibit 14, supports
5 analysis like this, (indicating)? 5 your opinion that the market was
6 A. Idon't know ifit's 6 efficient during the class period;
7 sufficient or not. 7 correct?
8 Q. Well, did you feel it was 8 A. It informs upon my opinion.
9 sufficient in this instance? 9 Q. Is there adifference between
10 A. Ifeel that Ifelt that I
-- 10 "informs upon" and "supports", in your
11 looked at whether or not there was 11 mind?
12 autocorrelation during the class period. 12 A. Possibly.
13 This suggests or, this shows that
-- 13 Q. What would that difference
14 there was no autocorrelation during the 14 be?
15 class period. 15 A. Well, again, as Isaid, the
16 1should also say that the 16 presence or non-presence of auto-
117 absence or inclusion of autocorrelation 17 correlation of, many people have argued,
18 does not necessarily if there is
-- 18 is atest for market efficiency, has been
19 autocorrelation in astock price, it 19 shown that even stocks that are auto-
20 doesn't necessarily mean that the stock 20 correlated are efficient doesn't
21 is inefficient. 21 necessarily render astock inefficient,
22 Q. But here, just to be clear, 22 if there is autocorrelation present.
23 it was you did not find any auto-
-- 23 Q. Turn to page please turn
--
24 correlation; correct? 24 to page 29 of Exhibit 1, paragraph 73.
25 A. During the class period, 25 A. Paragraph 73, okay.
Page 175 Page 177
1 Dr. Adam Werner I Dr. Adam Werner
2 correct. 2 Q. Just read the last sentence,
3 Q. Does the fact that the 3 and see if that changes your answer to my
4 adjusted R-squared is negative suggest 4 question, whether it supports your
5 that the results are not conclusive? 5 opinion.
6 A. I'm sorry, Idon't understand 6 A. (Pause.)
7 the question. 7 1don't believe Isaid it
8 Q. Explain, if you would, what 8 didn't support my opinion.
9 "adjusted R-squared" means. 9 Q. Well, you said it informs
10 A. It's the R-squared adjusted 10 your opinion, Iasked you Idon't want
--
11 for the number of variables. 11 to, you know, duel with you here, that's
12 Q. And here, am Iright, that 12 not the intention.
13 it's anegative that resulted in a
- 13 A. Right.
14 negative number, negative 0 negative
-- 14 Q. Ireally thought that you
15 0.025? 15 answered that to my question, that's why
16 A. That is correct. 16 I'm wondering why you didn't say yes,
17 Q. Does that indicate anything 17 because right here you say that Exhibit
18 to you about the meaningfulness of this 18 14 supports your opinion, and you said:
19 test, (indicating)? 19 It informs my opinion, but Idon't know
20 A. Define "meaningfulness". 20 if it supports my opinion, so I'm just
21 Q. Its relevance to determine 21 trying to understand, does this support
22 whether the market was efficient. 22 your opinion or not?
23 A. I'm not sure Iunderstand the 23 A. You are correct --
24 question. 24 Q. Okay.
25 Q. Okay. The bottom line is, as 25 A. -- it supports my opinion.
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2 Q. Thank you. 2 Q. That's okay.
3 All right. Now, lets go 3 MR.. PARADISE: Take ashort
4 back to Exhibit 9of Exhibit 1. 4 break.
5 Here, you use the entire test 5 (Recess taken: 2:20 p.m. -
6 period; is that correct? 6 2:23 p.m.)
7 A. That is correct. 7 BY MR. PARADISE:
8 Q. And you-- if I'm reading 8 Q. Let's look at Exhibit 10.
9 this correctly, you found seven days in 9 A. Okay.
10 the test period with statistically- 10 Q. Again, this is the -- this
11 significant returns of the 99 percent 11 test, that's reflected in Exhibit 10 to
12 significance level on event day, which 12 your declaration, is for the entire test
13 you described or define as (day T); is 13 period; correct?
14 that correct? 14 A. Ibelieve that is correct.
15 A. That is correct. 15 Q. And here you have, if I'm
16 Q. If you remember and if you
--
16 reading it correctly, there are four days
17 don't remember please feel free to refer 17 where --wait, I'm sorry, let me make
18 to the rest of your report, or your 18 sure I'm reading this correctly.
19 declaration, did any of those seven days 19 Okay. There are four days
20 occur during the class period, because 20 during the test period where there were
21 that would be September 19th through 21 significant what you call significant
--
22 November 12th, 2012. 22 news days; is that right?
23 A. Idon't believe so. 23 Or maybe I'm misreading this
24 Q. And Itake it, then, that 24 or misunderstanding it.
25 Number 6 you know, the number 6, which
--
25 A. Urn-- Idon't know if Isaid
Page 179 Page 181
I Dr. Adam Werner 1 Dr. Adam Werner
2 is essentially T plus 1, that none of 2 there's significant Hi-Crush price
3 those days occurred within the class 3 movement days.
4 period, by definition; correct? 4 Q. Okay, so "significant" there
5 A. Ibelieve that is correct. 5 refers to price movement, not news?
6 Q. So is it fair to say that, 6 A. At one point in the exhibit,
7 effectively, the class period is not 7 "significant" deals with the news, or
8 included within the analysis that's 8 refers to the news.
9 reflected in Exhibit 9. 9 Q. Okay, but I'm looking at
10 A. I-- 10 under the column where it says: Number
11 MR. STRAUSS: Objection. 11 of days, and then, underneath: Number of
12 A. Idon't believe that's 12 days, it says: Significant and not
13 correct. 13 significant.
14 Q. Let me ask you adifferent 14 A. That's statistically-
15 way. 15 significant at a95 percent confidence
16 Is it -- it's fair to say 16 number.
17 that there were no days that reflect the 17 Q. Price movement.
18 speed or reaction to the news at the --
18 A. Correct.
19 you know, the 99 percent significance 19 Q. Okay, in other words, that's
20 level within the class period? 20 not news, that's price movement.
21 THE WITNESS: Could you read 21 And then there were 25 days
22 back the question, please? 22 where there was not asignificant price
23 (The record was read.) 23 movement within the 95 percent confidence
24 A. I'm not trying to be obtuse 24 level.
25 here, 1don't understand the question. 25 A. When the press release was
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1 Dr. Adam Werner 1 Dr, Adam Werner
2 reported. 2 included November 6th, as well; right?
3 Q. Do you remember how many of 3 A. Ibelieve so.
4 these days where there was apress 4 Q. Turning to Exhibit 11, which
5 release issued occurred during the class 5 Ithink is another analysis or test of
6 period? 6 the response of the price to news, if
7 A. Ibelieve it's three, but I 7 I'm arm Iright about that?
--
8 don't --Ihave to check. 8 A. Ibelieve that is correct.
9 Let me go to the appendix 9 Q. So — andthenumberof
10 here. (Pause.) 10 observations Isee is 29, which Ithink
Ii So, one -- 11 corresponds to the sum of the first line
12 Q. Could you just identify 12 of Exhibit 10, four plus 25 is 29, so is
13 the-- 13 this-- would it be the same answers on
14 A. Oh, Pm looking at Appendix 14 Exhibit 11, that either three or four of
15 A. 15 the days occurred during the class
16 Q. Right, and the date. 16 period?
17 So the first one is October 17 A. Of the press release days?
18 11, am Ireadiug that right? 18 Q. Yes.
19 A. Idon't-- as Isit here, 1 19 A. Ibelieve that is correct.
20 don't recall whether or not Hi-Crush 20 THE WITNESS: Can we go off
21 released apress release on 9-21-2012 21 the record for asecond? I'm just
22 about presenting at the Energy Prospectus 22 going to go get some more water.
23 Group but, yes, certainly October 11, 23 MR. PARADISE: Oh, go ahead.
24 2012 would be one of those days. 24 (Pause in proceedings.)
25 Q. Okay, I'm sorry, keep going. 25 A. Thank you.
Page 183 Page 185
1 Dr. Adam Werner 1 Dr. Adam Werner
2 A. Ibelieve October 19th, 2012, 2 Q. On those days within the
3 October 22nd, 2012, and here we need to 3 class period, when there was news that
4 delineate between "new news" and "news". 4 you've just gone through with us, did you
5 On 11-1-2012, Idon't think 5 observe any statistically-significant
6 they had any --yeah, that was not a 6 price movements?
7 Hi-Crush release. 11-6-2012, Ibelieve 7 A. "News" as Idefined it, in
8 there was apress release. And Ibelieve 8 this report? Idon't believe so.
9 that's it. 9 Q. Turning back I'm sorry,
--
10 Q. The one that you referred to, 10 but going back for one second to Exhibit
11 where you have to distinguish between 11 9.
12 "news" and "new news", you said that was 12 A. Exhibit 9.
13 the did you say that was the October
-- 13 Q. Yes, the oue with the speed
14 22 is that the news that came out on
-- 14 reaction to the news.
15 October 22? 15 As you testified, none of the
16 A. Correct. 16 days none of the seven days reported
-
17 Q. How do you -- in your 17 in Exhibit 9occurred during the class
18 parlance, how do you distinguish between 18 period; is that right?
19 "news" and "new news"? 19 A. Ibelieve that is correct.
20 A. Well, on the 19th Hi-Crush 20 Q. How, then, does Exhibit 9
21 filed their Form 8-K. It was reported ou 21 inform your opinion as to the efficiency
22 the U.S. Fed news service on 10-20-2012, 22 of the market for Hi-Crush stock units
23 it would be respect-- 23 during the class period?
24 Q. Understood, okay. 24 A. It informs it because it's --
25 And you mentioned you-- 25 any analysis Idid related to news Idid
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2 over this longer period, because there's 2 difference between the analysis that's in
3 alack of news during the class period. 3 Exhibit 12 and the analysis that's in
4 Q. Does that in your expert
--
4 Exhibit 13?
5 opinion, does that allow you to draw any 5 A. In 12, the dependent variable
6 conclusion as to how the price of the 6 is stock returns. In the or, Ishould
--
7 stock would react during the class period 7 say, the absolute value of stock returns.
8 to the issuance of news? 8 In Exhibit 13, it's excess-- absolute
9 A. Ibelieve so. 9 value of the excess stock returns.
10 1believe there was alack of 10 Q. And, by "stock returns",
11 issuance of news during the class period, ii you're referring to the returns for
12 and there were no price reductions. 12 Hi-Crush?
13 Q. Oh, you're doing the 13 A. Correct.
14 inverse is that the inverse analysis,
--
14 Q. And, for my edification, what
15 rather than measuring how the price moves 15 is meant by "returns", as opposed to
16 in response to news, you're looking at 16 "excess returns"?
17 110w the price reacts to the absence of 17 A. Excess or abnormal returns,
18 news, is that what you're saying? 18 it's just Iuse my regression analysis in
19 A. Ibelieve that is correct. 19 the same way Iguess instead of
--
20 Q. Take alook at Exhibit 12, 20 "excess" you could say "abnormal
21 please. 21 returns".
22 A. Okay. 22 Q. And abnormal when measured
23 Q. For this Idon't know if
--
23 against what?
24 its atest or an analysis, is it one or 24 A. Against my regression
25 the other? 25 analysis.
Page 187 Page 189
Dr. Adam Werner 1 Dr. Adam Werner
2 What would you call this? 2 Q. Coming back to the Dow Jones
3 A. Analysis. 3 Index, which was Exhibit 4, Ibelieve,
4 Q. For the purposes of this 4 did you consider here as you
-- --
5 analysis, Ijust want to confirm that you 5 yourself said earlier, this is quite a
6 used the entire test period; is that 6 broad grouping of companies, that is, the
7 right? 7 companies that are listed in Exhibit 4.
8 A. Ibelieve that is correct. 8 And they run the gamut, as
9 Q. Does this enable you to 9 best Ican tell, from mineral mining
10 draw this analysis, that's reflected
--
10 companies, gold you know, gold mining
--
11 in Exhibit 12, does it enable you to draw 11 companies, nickel, copper, silica,
12 any conclusions as to the relationship 12 etcetera.
13 between returns and volume during the 13 Did you consider creating
14 class period, just the class period? 14 your own index that would more accurately
15 A. Ibelieve so. 15 replicate acompany that competes or is
16 Q. Can you explain? 16 in the same business as Hi-Crush, or is
17 A. Well, there were no if I --
17 that not necessary to do?
18 remember correctly, there were no volume 18 A. May Itake exception with
19 spikes during the class period, and there 19 your term "accurate" --
20 was alack of information during the 20 Q. Go ahead.
21 class period, so that would agree with 21 A. --or "more accurate".
22 these (indicating) results. 22 Q. Yeah.
23 Q. And Exhibit 13, which I 23 A. Iconsidered other indices
24 think, if I'm understanding you 24 and possibly creating an index, acustom
25 correctly, is -- well, what is the 25 index.
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2 Q. And why did you not create a 2 percent conf-- it tells us the level of
3 custom index? 3 significance.
4 A. Well, Ifind that, 4 Q. Are all of the numbers --
5 oftentimes, when you create acustom 5 under the Coefficient, are all of the
6 index, defense expert will criticize one 6 numbers that are in that chart, under
7 for being subjective in their choice of 7 coefficient, and that means standard
8 companies. 8 error Std.Err?
--
9 Q. Under-inclusive, in other 9 A. Correct.
10 words? 10 Q. Are all these numbers the
11 A. Under-inclusive, right. 11 product of your regression analysis?
12 Q. Or, Iguess over-. 12 A. Ibelieve that's correct.
13 A. Or over-. 13 Q. And what are the inputs that
14 That having been said, if 14 led to the numbers that appear under:
15 you've looked at Idid look at other
-- 15 Coefficient?
16 indices, it didn't change my results. 16 What data do you input to
17 Q. Okay, that's agood answer. 17 come up with the coefficient?
18 But did you actually go about creating 18 A. Hi-Crush's stock price, the
19 your own you know, your own index?
-- 19 S&P 500 returns or, Ishould say
-- --
20 A. Idon't believe so. 20 yeah, S&P 500 returns, and Dow Jones
21 Q. Here's where were going to 21 returns.
22 go back in time to my class in 22 And then Iran the second
23 undergraduate. Ijust want to get an 23 regression, to control for the fact that
24 understanding of some of the terms that 24 there's the S&P 500 Mining Index is
--
25 you used in your test. 25 highly correlated with the market index,
Page 191 Page 193
Dr. Adam Werner I Dr. Adam Werner
2 So going back to Exhibit 7. 2 so, to exclude that combined effect, I
3 A. Okay. 3 included an error term as part of my
4 Q. Can you just explain the 4 regression from adifferent regression I
5 different abbreviated terms that are used 5 ran.
6 in the chart. 6 Q. So, that, in other words, the
7 So at the bottom where you 7 error term essentially backs out the I--
8 have on the top co-- Ithink that means 8 don't know if that's the right term, but
9 coefficient, standard error, t, P greater 9 backs out the S&P 500 return?
10 than absolute value oft. 10 A. It backs out the impact of
11 MR. PARADISE: Absolute value 11 the S&P 500 on the index the company
--
12 oft is (indicating) two lines with 12 index, the industry index.
13 atin the middle. 13 Q. And just turning to the table
14 Q. And then we already discussed 14 or chart that appears above that one, the
15 95 percent confidence interval, but could 15 "SS", capital "SS", does that mean
16 you just explain the first four, what is 16 statistically-significant?
17 meant by each of those? 17 A. No, sum of squares.
18 A. The coefficient, coefficient 18 Q. What does "DF" mean?
19 is the regression coefficient Standard 19 A. Degrees of freedom.
20 error is the standard error of the 20 Q. And "MS"?
21 regression, or for that observ-- or for 21 A. Youknow,asthe -- aslsit
22 -that variable. T statistic is just the 22 here, Idon't remember.
23 coefficient divided by the standard 23 Q. But these are a11 statistical
24 error. And the Pvalue is -- gives us 24 terms?
25 basically the same thing as the 95 25 A. Yeah.
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1 Dr. Adam Werner 1 Dr. Adam Werner
2 Q. These are all they're
--
2 Q. Letmeask -- I'mnotsurel
3 typical --
3 know where I'm going, but let me get
4 A. Yeah. 4 there.
5 Q. The number of observations is 5 But you see that the
6 252. 6 percentage of revenue reported by
7 Is that-- to the best of 7 Eli-Crush was you know, from the Baker
--
8 your recollection, does that correspond 8 Hughes contract, was 18 percent, but the
9 to the number of trading days in this 9 stock price went down by 26 percent.
10 period? 10 Does that suggest that the
11 A. Ibelieve that is correct. 11 market was inefficient?
12 Q. What does: Stata 9mean, 12 A. No.
13 which appears under Footnote 2? 13 Q. Why not?
14 A. It's acomputer program. 14 A. "Why not?"
15 Q. Turn to page liii sorry
-- --
15 Q. Yeah.
16 turn to paragraph 10 of Exhibit 1. 16 A. It doesn't-- Imean, if you
17 If you look at the next page, 17 can give me an example of why it would be
18 the spillover of the paragraph, where it 18 inefficient, by all means, go ahead,
19 continues onto page 5? 19 but--
20 A. Okay. 20 Q. Well, if the market --
21 Q. You state here that: Sales 21 assuming the market was efficient, and
22 to Baker Hughes represented 18.2 percent 22 was taking into account the value of the
23 of Hi-Crush's expected contract revenue 23 Baker Hughes contract, and being about 18
24 in 2012. 24 percent, and then the market goes down by
25 Do yon see that? 25 26 percent--
Page 193 Page 197
I Dr. Adam Werner I Dr. Adam Werner
2 A. ido. 2 A. i8 percent ofrevenue.
3 Q. And according to your report, 3 Q. Right seems like the
--
4 or declaration, you took that from 4 market overreacted to the news -- well,
5 Hi-Crush's Form S-i registration 5 and by where I'm sitting.
6 statement. 6 Imean, I--
7 A. Right. 7 A. Your drawing acorrelation
8 Q. In paragraph 12, further down 8 between the 18 percent and the 26.2
9 the page, which we've covered afew times 9 percent is not, necessarily, alinear
10 today, you report, or state, that the 10 correlation.
11 units the value of the units dropped,
--
Ii Q. And what do you mean by that?
12 from looking at the top of page 6, over 12 A. Well, Imean revenue may have
13 26 percent when the what you've called
--
13 changed by 18— or, what they, people,
14 "corrective disclosure", was made on 14 believe was 18.2 percent and, again, this
15 November 13th. 15 was 18.2 percent as of July of 2012,
16 Am Ireading that correctly? 16 whereas now we're in--
17 A. 1believe that's correct. 17 Q. November.
18 Q. If the value of the Baker 18 A. -- November 2012.
19 Hughes contract, or if the Ishould
-
19 it's not clear there's
--
20 say the percentage of the revenue that 20 just no clear delineation between market
21 was supposed to be provided by the Baker 21 value and revenue. Imean, there's not a
22 Hughes contract, was 18 percent looks --
22 one-- there's not, necessarily, a
23 like you're ready for this one --
23 one-for-one relationship, Iguess is what
24 A. Well, Ididn't think about it 24 I'm saying. There are other factors that
25 beforehand, but Isee where you're going. 25 goes into afirm's market value beyond
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1 Dr. Adam Werner Dr. Adam Werner
2 revenue. 2 Index returns?
3 MR. PARADISE: Off the 3 A. Ah,ah.
4 record. 4 Q. You know, Imeant with the
5 (Discussion off the record.) 5 adjusted --
6 MR. PARADISE: Back on the 6 A. With the adjusted --
7 record. 7 Q. for or without the S&P
--
8 Q. In Appendix A, if you look at 8 movement.
9 the news from November 13th November
--
9 Did you look at any other
10 13th, 2012, that is, you seethe-- 10 specific competitors of Hi-Crush and the
11 towards the bottom of 5or 6up from the 11 movement in their stock price on November
12 bottom for that day, Hi-Crush plunges 35 12 13, 2012 in connection with the work that
13 percent below IPO price, and then it says 13 you did?
14 U.S. Silica falls 11 percent. 14 THE WITNESS: Could you
15 Do you see that? 15 re-read the question?
16 A. Yes. 16 Q. That was abad question, let
17 Q. Do you know what U.S. 17 me try again.
18 Silica -- what they do, what business 18 Did you look specifically at
19 they're in? 19 the stock price of any of Hi-Crush's
20 A. lassume that they are a 20 other competitors, on November 13th, to
21 competitor of Hi-Crush's. 21 see whether there was any movements in
22 Q. Do you have any did you do
-- 22 those stock prices that correlated to the
23 anything to determine what may have 23 movement you saw in Hi-Crush and
24 caused U.S. Silica's stock price to go 24 Silica's-- U.S. Silica's?
25 down by 11 percent on that same day? 25 A. 1believe so, by looking at
Page 199 Page 201
1 Dr. Adam Werner 1 Dr. Adam Werner
2 A. 1believe so. 2 the movement of the industry index I
3 Q. What did you conclude? 3 used.
4 A. Iconcluded that there was 4 If you're asking me did I
5 some correlation between the two price 5 specifically look at the stock
6 movements, which is why U.S. Silica is 6 performance of individual companies?
7 also in my Dow Jones U.S. Mining Index, 7 Q. That's what Imeant, yes.
8 which is in Exhibit 4. 8 A. Or individual competitors? I
9 Q. Was there was that did
-- --
9 don't believe so.
10 you conclude that that was an industry 10 Q. Iassume you feel that wasn't
11 effect or did something happen that day, 11 necessary for your work?
12 was there some news that affected U.S. 12 A. Well, to the extent that
13 Silica, that caused its price to go down 13 there was any industry effect, Iadjusted
14 that same day? 14 for that.
15 A. As Isit here, 1don't know, 15 Q. Through the index of the
16 but to the extent it was an industrywide 16 roughly Idon't know if we talked
--
17 effect, it's reflected in my regression 17 about how many companies, but Ithink the
18 analysis by controlling for an industry 18 exhibit said roughly 200 companies.
19 index, or using an industry index. 19 A. Correct, including Hi-Crush
20 Q. With the errors or without 20 and U.S. Silica, which was mentioned in
21 the errors, in either case; right? 21 Appendix A.
22 A. Errors? 22 Actnl1y, can we take ashort
23 Q. What you called the 23 break?
24 "error" -- what you called the "error", 24 Q. Yes.
25 "error" term, on Dow Jones U.S. Mining 25 A. Thank you.
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2 Q. Go ahead. 2 BY MR. PARADISE:
3 (Recess taken; 2:51 p.m. - 3 Q. There is anumber of court
4 3:23 p.m.) 4 filings that you describe as "court
5 MR. PARADISE: Back on the 5 filings" listed in Exhibit 2that you
6 record. 6 relied upon, and some of these are
7 BY MR. PARADISE: 7 reported decisions.
8 Q. You had said earlier that you 8 How did you choose which
9 were going to send an e-mail to see if 9 reported decisions to rely upon?
10 you could get acopy of your --
10 A. Well, some of them are
11 A. Oh, Icompletely forgot. 11 standard, like Cammer and Krogman, Basic,
12 Q. Okay. 12 Ibelieve, was it --
13 A. But now remind me what Iwas 13 Q. Mm-hmm.
14 supposed to get acopy of? 14 A. --was in there. Hold on,
15 Q. The index that you used. You 15 let me--
16 thought that might be what Ihanded to 16 Q. It was Exhibit 2.
17 you as Exhibit 4. 17 A. Okay. (Pause.)
18 A. Oh, itis. 18 Yeah. So the ones I'm
19 Q. A hundred percent? 19 familiar with, Ijust in general, is
--
20 A. 99.99 percent. 20 Basic -v- Levinson --
21 Q. Okay. 21 THE WITNESS: It's under:
22 A. Imean, that was definitely 22 Court filings, on Exhibit 2, you'll
23 the index Isaw. 23 find it, they'
re all there.
24 Q. But Ithink, if Fm not 24 A. --Cammer versus Bloom,
25 mistaken, that you also there was also
--
25 Cheney versus CyberGuard. Krogman versus
PaEe 203 Page 205
I Dr. Adam Werner 1 Dr. Adam Werner
2 apart of it, maybe something additional 2 Sterritt.
3 to what is on that list, that showed the 3 The other ones were cases
4 movement of those the price movement
--
4 like Ilearned about from discussions
5 of those 200-- 5 with other ecouomists.
6 A. That-- 6 Q. And these are cases that you
7 Q. companies?
--
7 relied upon for what purpose? The other
8 A. That should have been 8 ones that you mentioned, not the standard
9 produced. 9 ones.
10 Q. We haven't-- 10 A. They support the analysis
11 A. Not yeah, didn't you get
--
11 that Iused. They were cases in which
12 all the Bloomberg data? 12 the analysis that I've used have been
13 MS. BRANDON: We have the 13 found to be sufficient by the court to
14 separate Bloomberg no, we don't
--
14 establish market efficiency. And I
15 have all of that. 15 should mention that it the analysis in
--
16 THE WITNESS: You didn't get 16 these cases are both by plaintiff and
17 like the returns on-- Ithougbt 17 defendant.
18 that-- okay. 18 Sol believe inthe
19 MS. BRANDON: No. 19 Polymedica Corporation was acase that
20 THE WITNESS: Iwas under the 20 Fred Dunbar did in which he did the same
21 impression that you had already 21 type of analysis that Idid, in
22 received that. 22 arguing Imean, Idon't know what
--
23 (Discussion off the record.) 23 he right, he was arguing against
--
24 MR. PARADISE: All right, 24 market efficiency, but he was using the
25 back on. 25 same analysis.
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2 Q. And in that case, he, Mr. 2 THE WITNESS: Paragraph 77,
3 Dunbar, found that or, Dr. Dunbar
-
3 Q. In your own words, can you
4 found that the market was inefficient? 4 explain what it is that arbitrageurs do
5 A. Idon't recall, as Isit 5 and --well, leave it at that.
6 here. 6 A. Okay. Theoretically, an
7 Q. Did you consider are you
--
7 arbitrageur, or someone who engages in
8 familiar with acase, at the United 8 arbitrage, is supposed to be able to earn
9 States Supreme Court from last year, 9 aprofit without enduring any risk.
10 called Comcast? 10 So people will talk about an
11 A. Ibelieve I'm familiar with 11 arbitrage opportunity. Like if Iknow --
12 it. 12 (Discussion off the record.)
13 I've certainly heard of it, I 13 Q. You had said that they should
14 don't know why. 14 be --or, they toy to earn aprofit
15 Q. It was aruling involving a 15 without incurring any risk.
16 class cert-- you know, it went to class 16 A. That's, theoretically, what
17 certification. It was an antitrust 17 someone engaging in arbitrage should be
18 case-- 18 doing, but that's not what people whore
19 A. Iwas going to say, it was an 19 called "arbitrageurs" are actually
20 antitrust case, yeah, I'm definitely
-- 20 performing.
21 I'm familiar with it. 21 Imean, they do incur risk in
22 Q. You didn't consider it in 22 trying to make aprofit.
23 connection with the work you did here; is 23 Q. So--
24 that right? 24 A. But--
25 A. No. 25 Q. Go ahead, sorry.
Page 207 Page 209
I Dr. Adam Werner 1 Dr. Adam Werner
2 Q. Are you familiar with acase 2 A. So, again, that's more aterm
3 out of your neighborhood, Northern 3 ofartasopposedto -- or, an
4 District of California, called Diamond 4 industry afinancial industry term, as
--
5 Foods? 5 opposed to an economic definition of an
6 A. Again, I've heard of it, but 6 "arbitrageur".
7 Idon't.... 7 Q. And, for purposes of your
8 Q. You didn't consider it in 8 opinion, and the way you used the term, I
9 connection with the work that you did 9 take it you're referring to the second
10 here. 10 (indicating) category, rather than the
11 A. Idon't believe so. 11 first, meaning the ones that do actually
12 Q. Okay. Iwant to turn now to 12 incur risk?
13 paragraph 77 of your declaration, where 13 A. That is correct.
14 you discuss Ithink the pronunciation
--
14 Q. --profit.
15 is, "arbitrageurs"? 15 How, in your opinion, do
16 A. Right. 16 arbitrageurs, and the activities in which
17 Q. A-R-B-I-T-R-A-G-E-U-R-S. 17 they engage, contribute or fail to
18 A. And that is Ishould say
-- 18 contribute to market efficiency?
19 that that is aterm of art and not a 19 A. Well--
20 term not atechnical economic
-- 20 THE WITNESS: 1'm Sony,
21 definition of what an arbitrageur should 21 could you read the question back,
22 be. 22 please?
23 MR. STRAUSS: Which 23 (The record was read.)
24 paragraph? 24 A. To the extent that there
25 MR. PARADISE: Paragraph 77. 25 are there might be pricing
--
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2 discrepancies in asecurity, or that the 2 extent that they are more informed, which
3 arbitrageurs believe the securities are 3 Itook to mean that you don't,
4 mispriced, they can they will try
--
4 necessarily, believe that they always are
5 to --they will attempt to exploit that 5 more informed; is that right?
6 mispricing such as, you know, if they 6 A. Ibelieve that is accurate.
7 believe the stock is too high, the value 7 Q. But they're --to the extent
8 of the stock is too high, and again, 8 that they are successful and good
9 that's their belief, it's not astatement 9 arbitrageurs and are able to be more
10 of fact, they will oftentimes sell those 10 informed, what is your understanding as
11 shares in an attempt to drive the price 11 to how they obtain that additional
12 down to what they believe the true value 12 infor-- you know, that better
13 of the company is. 13 information, you know, i.e. bow do they
14 So to the extent that these 14 become more informed?
15 people are more informed than other 15 MR. STRAUSS: Objection.
16 individuals and, again, Iput
--
16 Q. If you know.
17 "informed" in quotation marks they
--
17 A. Imean, there's all sorts of
18 will attempt to exploit what they believe 18 ways. You know, they may talk to company
19 are mispricings in equities, or other 19 executives.
20 securities. 20 1have, actually, apump-
21 That's my Corporate Finance 21 and-dump case now where, you know, this
22 101 description. 22 guy, like: Oh, 1'm agreat trader, you
23 Q. Is it fair to say, in your 23 should invest with me, he talks about
24 opinion, that arbitrageurs ferret out or 24 banging out with the CFO's of the
25 do more work to obtain and information
--
25 corporations that he's touting for
Page 211 Page 213
I Dr. Adam Werner 1 Dr. Adam Werner
2 that research companies and obtain
--
2 investment. That would be one form of
3 information that enables them to engage 3 information. You know, general research.
4 in the activity that youjust described? 4 Idon't -- Imean, there are multiple
5 MR. STRAUSS: Objection. 5 ways--
6 A. Is it fair? Define "fair". 6 Q. That's fair.
7 Q. Well, do you agree with that 7 A. --that people can attempt to
S statement? 8 be more informed.
9 A. Idon't know if Iformed an 9 Q. And, again, in your
10 opinion, one way or the other. 10 experience, or in your opinion, is one
11 Q. And, again, if you don't have 11 way or one method that they use to go
12 an opinion, please just say so, but you 12 out-- and, for example, let's use
13 described, Ithought very ably, the 13 Hi-Crush as an example, and this is a
14 activities that arbitrageurs supposedly 14 hypothetical but we'll use Hi-Crush to
15 engage in to exploit mispricing of 15 form the hypothetical.
16 securities, and you yourself said --
16 So Hi-Crush sells fracking
17 A. And they -- 17 sand. Would you expect that
18 Q. Pm sorry, Ididn't mean to 18 arbitrageurs, if they were engaged in
19 interrupt. 19 arbitrageur activity, for Hi-Crush, might
20 A. They do engage in these 20 go and do research on the customers of
21 activities. 21 Hi-Crush to analyze potential demand for
22 It's aquestion of whether or 22 Hi-Crush's product?
23 not they're more informed. 23 A. I'm--
24 Q. No, that's what Iwas going 24 MR. STRAUSS: Objection.
25 to get to, because you had said to the 25 Go ahead.
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2 A. That soundsreasonable. 2 Q. Okay. By the way, just
3 Q. Youtalkaboutthe -- in 3 for just to when you say you are
--
4 paragraph 77, the last sentence, you say: 4 uncomfortable with the definition, I'm
5 If the price is this is aquote: If
-- 5 trying to use the definition that you
6 the price is too high, however, the 6 used before, not any other defluition.
7 arbitrageur might attempt to quote -- -- 7 So, you know, exploiting, mispricing
8 short closed quote the stock.
-- -- 8 securities, essentially, is the
9 How would an arbitrageur know 9 definition I'm working off of.
10 if the price is too high in that 10 A. Is there abelief that those
11 circumstance? 11 securities are rnispriced, or you could --
12 A. It would be their opiniou. 12 Iguess there are forms of arbitrage, if
13 Q. And do you know well, have -- 13 you think about this flash trading
14 you ever engaged in arbitrage activity on 14 phenomenon, if Iknow the price of the
15 your own? 15 stock on one exchange and Isee that it's
16 A. (Gesturing) have I -- 16 being traded at another price on another
17 ever -- 17 exchange well, you know, Itake back.
--
18 MR. STRAUSS: Objection. 18 Iguess there is still risk involved
19 A. I'm not sure -- 19 there.
20 MR. STRAUSS: Yeah, Imean, 20 There is apossibility that I
21 come on, that's you're asking
-- 21 won't get my trades won't get
-
22 about his personal investments? 22 executed, so --
23 It's, you know --
23 Q. Right.
24 Q. Well, do you know-- 24 Turning to paragraph 78, for
25 MR. STRAUSS: Has he ever 25 amoment, of Exhibit 1. Here, if I'm
Page 215 Page 217
1 Dr. Adam Werner 1 Dr. Adam Werner
2 been employed at an investment firm 2 understanding this correctly, you're
3 and engaged professionally in 3 comparing the amount of the short
4 trading? You can ask him that, 4 interest in Hi-Crush's stock I'm --
5 but-- 5 sorry in Hi-Crush's units, to the
--
6 MR. PARADISE: Okay. 6 average for all New York Stock Exchange-
7 MR. STRAUSS: Idon't -- 7 listed stocks during the class period; is
8 think it's fair to -- 8 that correct?
9 MR. PARADISE: That's fine. 9 A. Ibelieve that is correct.
10 MR. STRAUSS: ask him --
10 Q. And, according to your
11 about his personal finances. 11 calculation, the shortages for Hi-Crush
12 Q. I'll accept Mr. Strauss's 12 was .47 percent as compared with --
13 comment question.
-- A. Between--
14 A. Have Iever worked for an 14 Q. Wait, I'm sorry I'm sorry,
--
15 investment firm? 15 between .47 percent and 1.53 percent, and
16 Q. And engaged in arbitrage 16 the average shortages for the New York
17 activity. 17 Stock Exchange, during the comparable New
18 A. Again, I'm uncomfortable with 18 York Stock Exchange-listed stocks --
19 this definition of "arbitrage" because 19 during the comparable during the class
--
20 it's ahuge umbrella. 20 period of 3.1 percent; is that right?
21 All sorts of things can be 21 A. That is correct.
22 termed as "arbitrage". 22 Q. Okay. So, turning to so --
23 Q. I'm sorry -- 23 turning to Exhibit 3, Ijust want to make
24 A. So in terms of the academic 24 sure I'm seeing where these numbers
25 sense? No. 25 appear on there.
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Dr. Adam Werner I Dr. Adam Werner
2 These first off, so
--
2 percentage?
3 Exhibit 3, just to make sure, is for the 3 A. Ihaven't formed an opinion,
4 class period; right? It goes from 4 one way or the other.
5 September 19, 2012 through November 12th, 5 Q. ln any event, what isthe
6 2012; right? 6 basis for your opinion that -- and Pm
7 A. Ibelieve that is correct. 7 reading from paragraph 78 -- that the
8 Q. So the New York Stock 8 level of short interest in relation to
9 Exchange average is you say, is 3.1
--
9 common units outstanding provides no
10 percent. 10 indication of any constraint on short-
11 Is that where is that
--
11 selling activities during the class
12 found on here? Is that --
12 period, such as the inability to locate
13 A. That's just taken from the 13 or borrow the necessary common units to
14 NYSE. 14 initiate ashort position. And thafs
15 Q. No, Imean, where is --
15 from paragraph 78.
16 that I'm going to point to the exhibit
--
16 A. Right Idon't believe that
17 for aminute (indicating)
-- is that-- 17 there were--
18 this number? 18 THE WITNESS: Could you re-
19 Again, I'm pointing to the 19 read the question, please?
20 second page of Exhibit 3. 20 (The record was read.)
21 A. Ali you mean the column to
--
21 Q. And it's just the last
22 the one over from the right? 22 sentence of paragraph 78.
23 Q. Right. 23 A. So what's the question?
24 A. Ibelieve that is correct. 24 Q. 1want to understand the
25 Q. And Where on Exhibit 3do you 25 basis for your opinion that you expressed
Page 219 Page 221
I Dr. Adam Werner 1 Dr. Adam Werner
2 find that the corresponding numbers
--
2 there.
3 for the Hi-Crush, the .47 percent to the 3 A. Ididn't see any indication
4 1.53 percent? Could you just point me to 4 that people were could not short stock
--
5 the column? 5 in Hi-Crush.
6 Is that this column, 6 1believe there were
7 (indicating)? I'm pointing to the --
7 stoppages. There may have been two
8 A. Ican't see it. 8 during the entire test period, where Rule
9 Q. I'm sorry, I'm pointing to 9 202 went into effect.
10 the fifth (indicating) from the right. 10 Q. That's during the entire test
11 A. Ibelieve that is correct. 11 period, so that's the class period plus
12 Q. And then the average ofl.07 12 the supplemental period that we talked
13 percent, is that at the bottom of the 13 about.
14 second page under that same column, the 14 A. Correct, but Idon't that
--
15 column that's headed: Percentage of 15 did not occur during the class period.
16 outstanding shares sold short? 16 Q. You don't know, though,
17 A. Right. 17 whether or not anyone during that we--
18 Technically, it's 1.068 but I 18 talked first about the class period,
19 rounded up. 19 whether anyone who wanted to sell
20 Q. Do you consider the 20 Hi-Crush stock units short was unable to
21 difference between the average for 21 borrow the units necessary to complete
22 Hi-Crush, of 1.068, and the average for 22 that transaction; do you?
23 all New York Stock Exchange-listed 23 MR STRAUSS: Objection.
24 companies, at 3. 1, do you consider that 24 A. Idon't personally know of
25 to be alarge gap, alarge difference, in 25 anyone who was unable to short the stock.
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1 Dr. Adam Werner 1 Dr. Adam Werner
2 Q. Is there any way to that --
2 A. Iunderstand.
3 you know of, to find out that 3 Q. --Imay be mistakenly
4 information, any, you know, publicly- 4 referring to stock or shares, and what
5 available means to find out that 5 have you, but --
6 information. 6 MR. STRAUSS: No problem.
7 A. I'd have to think about that. 7 Q. -- forallintentsand
8 Q. Please do, and let me know if 8 purposes I'm talking about units, but why
9 you come up with an answer. 9 is the presence of institutional
10 (REQUEST.) 10 investors important for market
11 Is it true that shares --
11 efficiency?
12 withdrawn. Is it true that -if you 12 Generally speaking, not
13 know, that institutional holders of stock 13 specific to Hi-Crush.
14 are often -- or, stock or units, are 14 A. Quoting, in paragraph 74 of
15 often the parties that loan stocks or 15 my report, this is Ibelieve quoting
16 units for short sales? 16 Barbara Griffin and Lev L-E-V: The
--
17 MR. STRAUSS: Objection. 17 institutional investors e.g. mutual
18 A. Idon't know, one way or the 18 funds, money managers, banks, are
19 other. 19 presumed to be better informed about the
20 Imean, Iknow Icertainly 20 securities they bold and better able to
21 had seen examples of people's brokerage 21 interpret new information than individual
22 accounts having loaned out shares. 22 investors.
23 Q. You mean individuals? 23 Q. So is it fair to say that
24 A. Yeah. 24 their better information or better
25 Q. Does the presence of 25 knowledge enables them to trade the stock
Page 223 Page 225
1 Dr. Adam Werner Dr. Adam Werner
2 institutional unit holders for Hi-Crush 2 so that it gets to its true value? Is
3 units suggest that there were units 3 that what you're saying?
4 available to borrow -- suggest to you 4 MR. STRAUSS: Objection.
5 that there were units available to 5 Q. rm just trying to get an
6 borrow? 6 understanding as to why that means that
7 A. It's possible. 7 the market is more efficient.
8 That having been said, 8 A. I'm sorry, Idon't understand
9 Hi-Crush isn't the type of stock that 9 the question.
10 most institutions would bold, because 10 Q. Well, you, in response to my
11 it's adividend-paying stock, and 11 question as to why the presence of
12 dividends are treated different for tax 12 institutional investors makes amarket
13 purposes. 13 more efficient, you just read from your
14 Q. So — okay,that'sagood 14 report, or your declaration, you quoted
15 segue into my next line of questioning, 15 from this resource that you relied upon,
16 which is about institutional holders, 16 and I'm just not understanding why that
17 because you speak about that in your 17 means that the market is more efficient
18 report, as well. 18 or why that makes the market more
19 A. Correct, 19 efficient.
20 Q And let me ask you ageneral 20 A. Well, if one believes the
21 question first, before we get to the 21 premise that these people are better
22 specifics, but why is the presence of 22 informed than other market participants,
23 institutional holders, or investors, if 23 then their presence would suggest that
24 you will -- and these are units, so Imay 24 more information, possibly information
25 be-- 25 that uninformed investors, or
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2 individuals, could not receive, would be 2 opposed to the test period?
3 incorporated into the stock price. 3 A. Correct.
4 Q. Because of their trading; 4 Q. Look at Exhibit-- if you
5 right? 5 would, please look at Exhibit 15 for a
6 A. Because of their trading. 6 moment.
7 Q. Okay, that's what Ithought 7 Would this he the backup for
8 you were saying, maybe Ididn't 8 those -- for the numbers that appear in
9 articulate it that way. 9 paragraph 76?
10 In that same paragraph, you 10 A. Yes.
11 actually refer, two sentences later, to 11 Q. Why do you say, in paragraph
12 an arbitrageur again --actually, an 12 76, that the level of ownership is 15.4
13 arbitrageur, groups among institutional 13 percent to 32.6 percent, and I'm reading
14 iuvestors, in the first sentence, and 14 from your declaration, paragraph 76:
15 then you talk about arbitrageurs again in 15 provides no additional support to my
116 the last sentence. 16 opinion that the market for Hi-Crush was
17 Are you distinguishing, in 17 inforinationally-efficient during the
18 this paragraph, between an "arbitrageur" 18 class period.
19 and "institutional investor" or could 19 A. Why do Istate that?
20 this be one -- could this also be one and 20 Q. Yes.
21 the same? 21 A. Well, Ibelieve the courts
22 Do you understand my 22 have found that and this is off the
23 question? 23 top of my head Ibelieve you need
--
24 A. Not really. 24 something like 80 institutional investors
25 Q. Are you suggesting that an 25 to be deemed as being sufficient for the
Page 227 Page 229
Dr. Adam Werner I Dr. Adam Werner
2 "institutional investor" is one category 2 finding of market efficiency.
3 of investor and an "arbitrageur" is 3 But, again, that's one
4 another separate, or might there be some 4 standard. Fm sure other courts will
5 arbitrageurs who are also institutional 5 have had different findings.
6 investors? 6 Q. Understood. No, Ijust
7 A. That's certainly a 7 wanted to come understand why you
--
8 possibility. 8 didn't feel that those numbers provided
9 Q. But, by distinguishing, or 9 you additional support, but you talked
10 using both terms here, you're not trying 10 about the number, the absolute number, of
11 to suggest that it's either one or the 11 institutional investors rather than a
12 other. 12 percentage.
13 A. Idon't believe so. 13 Do you know what the number
14 Q. Let's look at paragraph 76, 14 of institutional investors was during the
15 for am oment, where you provide some data 15 class period that corresponds to these
116 about the institutional investors holding 16 percentages?
17 units of Hi-Crush. 17 A. 11 believe it was between one
18 Do you see that, in the first 18 and ten.
19 sentence of paragraph 76? 19 Q. How did you go about
20 A. Yes. 20 determining what the number of
21 Q. And you the numbers that
--
21 institutional investors was during that
22 you include there is roughly 15 percent 22 period of time?
23 to 33 percent. 23 A. Ilooked up the data on
24 Is that during the that's--
24 Bloomberg, or someone did that at my
25 during the class period, right, as 25 behest.
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2 Q. Did you does Bloomberg
-- 2 A. That is correct.
3 provide that, you know, wrapped in abow, 3 Q. So it looks like the data
4 or did you have to go to like the 4 remains unchanged from September 16th
5 Schedule 13 aps and actually compute the 5 through October 14th.
6 numbers yourself'? 6 So, am Ireading that
7 A. I'm not sure "wrapped in a 7 correctly?
8 bow" is atechnical term, but -- 8 A. Ibelieve so.
9 Q. It's not. 9 Q. So, if that's correct, that
10 A. Ibelieve that is correct,
-- 10 would mean that, at the end of the third
11 it is wrapped ma bow. 11 quarter of 2012, the number of
12 Q. Bloomberg provides the number 12 institutional units held was 2,097,326.
13 for you rather than you having to go and 13 A. Approximately.
14 compute it yourself? 14 Q. And then, aweek later, which
15 A. Correct. 15 is now into the fourth quarter of 2012,
16 Q. That being said, did you, or 16 it remains at that same number, and it
17 anyone on your at your behest, look at
--
17 remains at that same number the following
18 any of the SEC forms, 13-F, for Hi-Crush 18 week, as well.
19 during this period of time, during the 19 Does that strike you as
20 class period? 20 unusual, that the institutional holdings
21 A. Yes. 21 would not change after aquarter ends?
22 Q. You did. 22 A. Ididn't say the
23 A. Yes. 23 institutional holdiugs didn't change.
24 Q. Was that done as acheck, to 24 Q. Okay.
25 verify that the information you obtained 25 A. I'm saying the data is what
Page 231 Page 233
1 Dr. Adam Werner 1 Dr. Adam Werner
2 from Bloomberg was accurate? 2 it is.
3 A. Yes. 3 Q. Oh.
4 Q. And did you find that 4 A. And you alluded previously to
5 anything was not accurate in the 5 the fact that these things are often
6 Bloomberg information? 6 filed quarterly. Ibelieve that
7 A. Not that I'm aware of. 7 that-- this phenomenon that you're
8 Q. And turning back to Exhibit 8 discussing is aresult of data being
9 15 for amoment, you will see that -- 9 filed quarterly.
10 well, let me take it one step back. 10 Q. Iguess what I'm really
11 So my nnderstanding is that 11 getting at is, is this possibly another
12 Schedule 13 Schedules 13-F
-- or Forms
--
12 error or mistake in the report, or your
13 13-F, are filed on aquarterly basis. Is 13 declaration, Ishould say.
14 that your understanding, as well? 14 A. No, it's an estimation.
15 A. Ibelieve that's correct, but 15 Icould have just said
16 Idon't think there's any limitation on 16 between September 16, 2012 and
17 when on how many you can file. I
--
17 10-21-2012, there were approximately
18 mean, you could file them weekly, if one 18 2.097326 shares held, based on
19 chose to (gesturing).
-- 19 Bloomberg's review of the 13-F filings
20 Q. Looking at the data in 20 for these companies that held shares in
21 Exhibit 15, you'll see that the 21 Hi-Crush.
22 institutional holdings remains unchanged 22 1don't know their exact
23 from September Iguess you're listing
-- 23 number of holdings each day, nor do they
24 it here on aweekly basis, it looks like; 24 have to report them.
25 is that right? 25 Q. Okay. But, as far as you
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2 know, Bloomberg reported the same number 2 your numbers in Exhibit 15 to these
3 on September 30th as it did on October 3 numbers, because they are vastly
4 7th. 4 different.
5 A. Ibelieve that is correct. 5 So you see that your number
6 Again, I'm more than happy to 6 is 2,097,326, and you also see, Ithink
7 change that to adate range, in which 7 on line 12, that one institutional holder
8 case Iknow for sure that that represents 8 has that exact number of shares or, --
9 the average number of shares held by 9 units, but the total units held by
10 institutional investors during that time 10 institutional investors, as of September
11 period. 11 30, is actually 7,838,548. And that
12 Q. No, I' m not quibbling with 12 makes the percentage of shares
13 that. 13 outstanding actually 57 percentage of
--
14 Ijust want to make sure that 14 shares held by institutional investors
15 this is -- that these numbers are right, 15 outstanding, as 57 --rounded down to 57
16 that's all. 16 percent.
17 A. (Gesturing) okay.
--
17 Do you have any explanation
18 Q. So, as far as you know, they 18 for this discrepancy?
19 are, that's your testimony. 19 A. Yeah.
20 A. Correct. 20 Q. What's that?
21 Q. And 1have no reason to doubt 21 A. Thomson Reuters is terrible
22 that. 22 at collecting data.
23 Just seemed odd that they did 23 Q. Okay.
24 not change, that's all. 24 A. Imean, I've found that,
25 MR PARADISE: I'm sorry, off 25 especially when it comes to these type of
Page 235 Page 237
1 Dr. Adam Werner 1 Dr. Adam Werner
2 the record for one second. 2 filings, they're oftentimes it's like
--
3 (Recess taken: 3:59p.m.- 3 significantly off, but and to the
--
4 4:10p.m.) 4 point where I've called them before, when
5 BY MR. PARADISE: 5 1used to use Thomson Reuters, and said,
6 Q. So let me hand you what I'm 6 like: Oh, look, you know, this here, --
7 asking Wendy to mark as Ibelieve Exhibit 7 I'm looking at the filing, it's not --
8 6. 8 you know, whatever it is, these numbers
9 MR. PARADISE: Is that right? 9 not right. And they'll be like: Oh, you
10 (Whereupon Deposition Exhibit 10 know what, you're right.
11 6, Document, represented to be a 11 Now, that having been said,
12 compilation of information 12 if you want me to take these numbers on
13 retrieved from Thomson Reuters of 13 face value, these numbers would only
14 13-F filings as of September 30th, 14 boost my opinion that the market for
15 2012, was marked for 15 Hi-Crush was inefficient, but Iwill tell
16 identification, as of this date.) 16 you that data garnered on-- from 13-F
17 Q. This is --Wendy's just 17 filings, is terribly inconsistent across
18 handed you the court reporter's just
-
18 all data providers, and Thomson Reuters
19 handed you what is marked as Exhibit 6, 19 is one of the worst iu providing that
20 which I'll represent to you is a 20 data.
21 compilation of information that we 21 Q. Perhaps not now, but perhaps
22 retrieved from Thomson Reuters of 13-F 22 wheu you go back to San Francisco, you
23 filings as of September 30th, 2012. 23 can take a have somebody take another
--
24 And Ijust wanted to show 24 look, and if it turns out, in this
25 this to you and see if we can reconcile 25 instance, that Thomson Reuters is right,
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2 or that perhaps somebody at Gnarus, other 2 think Ishould say, Jthink we were
--
3 than you, I'm sure, might have made a 3 able to find it, but you will have to
4 mistake, you could let us know and we 4 tell us if I'm right or wrong.
5 can you know.
-- 5 MR PARADISE: So let's mark
6 (REQUEST.) 6 this as Exhibit 7.
7 A. Well, Ican tell you now that 7 (Whereupon Deposition Exhibit
8 this data was taken from Bloomberg, this 8 7, Document, which says Dow Jones
9 is what Bloomberg represents as 9 U.S. Mining Index (Index DJUSMG),
10 institutional holders. So Iwouldn't say 10 was marked for identification, as
11 anyone made amistake. (Indicating) --
11 of this date.)
12 someone else looked at Thomson Reuters 12 Q. So the court reporter has
13 and took these numbers off the Thomson 13 handed you what's been marked as Exhibit
14 Reuters. 14 7, which Ican represent to you came from
15 Did they make amistake? I 15 the documents that were provided by
16 don't know. 16 Plaintiffs' counsel in connection with
17 Q. Okay. 17 your deposition.
18 A. Iassume they accurately 18 Can you identify this for the
19 entered this data onto this page. 19 record?
20 Q. Well, you had said earlier-- 20 A. Asl sit here, no.
21 it's your declaration so, obviously, you 21 Q. Okay.
22 dont have to do any of this, but you had 22 A. Imean, if Pm reading it, it
23 said earlier that you verified the 23 says Dow Jones U.S. Mining Index (Index
24 Bloomberg data by reviewing the 13-F. 24 DJUSMG).
25 So, obviously, if you go to the 13-F's -- 25 MR. PARADISE: Off the record
Page 239 Page 241
1 Dr. Adam Werner 1 Dr. Adam Werner
2 you don't have to go to all of them, if 2 for one second.
3 you even went to just afew of them, 3 (Discussion off the record.)
4 because there's 29 institutional 4 Q. You're not disputing that
5 iuvestors on this list, and you had I 5 this came from your --
6 think said there were ten so, obviously, 6 A. Ibelieve you.
7 that would be pretty easy to see, if 7 Q. Okay. You said earlier that
8 there was amistake by either Thomson 8 you had accounted for Ibelieve you
--
9 Reuters or perhaps Bloomberg or perhaps 9 testified earlier, that you had accounted
10 someone at Gnarus, but that's all I'll 10 for U.S. Silica in your event study; is
11 say on that. It is what it is. 11 that correct?
12 If--you said this 12 A. Isaid Jadjusted for the
13 strengthens your opinion on market 13 industry industry effects of my
--
14 efficiency, anyway, "this" being the data 14 analysis.
15 in Exhibit 6. 15 Q. And the reason and we were--
16 A. That is correct. But, again, 16 looking at U.S. Silica, because they -
17 I'd be very suspect of delineating that 17 there was some news about U.S. Silica
18 data trusting that data.
-- 18 reported in that same headline in your
19 Q. Understood. 19 event study in Appendix A on November
20 We were able to find the 20 13th.
21 spreadsheets -- or, the Excel 21 Do you remember that, that we
22 spreadsheet, that you said you thought 22 talked about that?
23 you had provided regarding the Dow Jones 23 A. Iremember discussing that,
24 Index, so Iwant to show it, if Ihave 24 yes.
25 a-- dolhaveacopyofthat? And 25 Q. Well, let me ask you, did you
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2 account for the price movement in U.S. 2 event study, in your opinion, if U.S.
3 Silica on November 13th in your event 3 Silica was not part of the index?
4 study? 4 A. Ihaveno -- it'sa
5 MR. STRAUSS: Objection. 5 hypothetical, Ihave no way of being able
6 A. "Objection", asked and 6 to answer it.
7 answered? 7 Q. Well, do you think it's
8 Q. You can answer. 8 important, for the purpose of your event
9 A. To the extent that U.S. 9 study, to account for acompetitor like
10 Silica is part of this industry index, I 10 U.S. Silica?
11 would say yes. 11 A. Ithink --
12 Q. And to the extent that U.S. 12 MR. STRAUSS: Objection.
13 Silica is not part of this industry 13 Go ahead.
14 index, would that have any impact on your 14 A. Ithink it's important to
15 event study, in your opinion? 15 account for market- and industry-specific
16 MR. STRAUSS: Objection. 16 factors in my analysis.
17 MR. PARADISE: Okay. 17 Q. Turning back to Exhibit 7for
18 MR. STRAUSS: Are you sure 18 amoment and, again, this came from
19 that's the question you want to 19 your -- Imean, either your files or
20 ask, you' re assuming that it's not? 20 Kirby McInerney files, but it was
21 MR. PARADISE: Isaid to the 21 represented to us that this was an
22 extent that it is not. He said to 22 information or data that was relied upon
23 the extent that it is that he 23 in connection with you're the
--
24 accounted for it. 24 preparation of your declaration. Okay?
25 Q. Fm asking to the extent that 25 A. Okay.
Page 243 Page 245
1 Dr. Adam Werner 1 Dr. Adam Werner
2 it's not, would that have any impact on 2 Q. So, if you look at the top
3 your event study. line, number 1, you see at the top of the
4 MR. STRAUSS: Objection. I 4 page, line 1, there's areference to an
5 don't understand your question. 5 index DJX:DJTJSMG.
6 You mean did he evaluate it 6 Do you see that?
7 individually into that study? Do 7 A. Yes.
8 you want to ask that? 8 Q. Now turn back to Ithink
--
9 MR. PARADISE: My question 9 it was Exhibit 3.
10 stands. 10 Do you know what that symbol
11 Q. Do you understand my 11 is, the DJUSMG?
12 question? 12 A. Exhibit 3 I'm sorry, where
--
13 A. ldonot. 13 is Exhibit 3?
14 Q. Okay, let's do this again. 14 Q. Well, the first the
-
15 You testified earlier that 15 reference to the DJUSMG, on Exhibit 7,
16 you accounted for U.S. Silica and you
-- 16 that Ijust read to you.
17 justsaiditagain,justnow -- inyour 17 Do you know what that
18 event study to the extent that it was 18 represents, DJUSMG?
19 part of the index, the Dow Jones Index-- 19 A. This is irrelevant to Exhibit
20 Iprobably should have the Dow Jones
- 20 3.
21 Industry Index to which you relied; 21 Q. No, I'm asking you, do you
22 correct? 22 know what DJUSMG, from Exhibit 7, means?
23 A. Ibelieve that is correct. 23 A. It could be the index symbol,
24 Q. If it was not part of that 24 it could be the Bloomberg code for the
25 index, would that have any effect on your 25 symbol.
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2 As 1sit here today, Idon't 2 price change from the 12th to the 13th?
3 know. 3 Q. Correct.
4 Q. So, here's Exhibit 3. And if 4 A. Okay. So I'm taking the
5 you look at the upper left side, in 5 quantity of 140.07 minus 141.72 and
6 black, it says: DJUSMG Index. 6 dividing that by 141.72.
7 Do you see that? 7 Q. (Using calculator.)
8 A. Isee that. 8 A. Oops, Iforgot the equal
9 Q. And you said to us earlier 9 sign.
10 that this was not the index that you 10 So negative 1.2 percent,
11 relied upon. 11 that's with rounding.
12 A. Ibelieve that is correct. 12 Q. Right. And Ihave the
13 Q. Okay. So, even though the 13 HP 12C, so going all the way, four
14 index that's identified on your documeut, 14 decimal places, Igot negative 1.16.
15 Exhibit 7, is DJ1JSMG, and even though 15 A. Negative 1.16?
16 this Bloomberg screen shot is of the 16 Q. Well, because it went down,
17 DJUSMG index, it's your testimony that 17 the price went down.
18 these are not the same index the same
--
18 A. Oh, you've converted into
19 indices. 19 percentages.
20 A. (Pause.) 20 Q. Well, you had 1thought
--
21 As Isit here today, Idon't 21 you had 1.2; didn't you?
22 know. 22 A. Percent.
23 Q. Okay. Let's see if we can do 23 Q. Right.
24 it this way. 24 A. Yeah, Ithought you were
25 Let's take alook at the 25 reading off the screen.
Page 247 Page 249
1 Dr. Adam Werner 1 Dr. Adam Werner
2 Exhibit 7for amoment, and if you need 2 Q. Oh, oh, oh. No, I'm sorry, I
3 to get your computer out, that's fine, 3 have negative 1.16 percent, okay.
4 but if you can use the more simple 4 Turn now to your Appendix A,
5 calculator, I'll give you that again, but 5 and tell me what the industry return was
6 if you need to do it, I'm going to ask 6 on November 13th, 2012.
7 you to do acalculation with me, so if 7 A. (Pause.)
8 you need to get your computer Iknow-- 8 Minus 1.16.
9 you don't like the HP l2C, but oh, you
--
9 Q. Yes, okay.
10 have acalculator right in front of you. 10 So do you find it odd that
11 If you need to get your computer, please 11 that's the same number that is on your
12 feel free to do so. 12 report, even though you didn't you say
--
13 A. I'm going to hold off. 13 you didn't use -- well, withdrawn,
14 Q. Okay. lwant you to look at 14 withdrawn.
15 line 63 and line 64, and Iwanted you to 15 A. I'm sorry, Idon't understand
16 compute with me the percentage change in 16 the question.
17 the price from the l2thtothe 13th. 17 Q. Its okay.
18 So-- 18 There's no question, I
19 A. Okay, I'll need it. 19 withdrew it.
20 Q. Yeah. And, if you don't 20 A. May Iput away my computer?
21 mind, can you just tell me out loud how 21. Q. Yes, thank you.
22 you're doing that, just to make sure that 22 Just for the record, if you'd
23 I'm doing it the same way? 23 take alook at Exhibit 3for one moment.
24 A. (Using computer.) 24 Ijust want you to agree or disagree with
25 Okay, you want me to do the 25 me.
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2 Ido not see U.S. Silica on 2 MS. BRANDON: Off the record.
3 this list, or this index, if that's 3 (Discussion off the record.)
4 represented by Exhibit 3. Do you agree 4 BY MR. PARADISE:
5 with me on that? 5 Q. Now, let's go back to
6 A. Ido. 6 paragraph our favorite paragraph on
--
7 Q. Okay. 7 your declaration, paragraph 12, the one
8 A. Maybe you can represent for 8 we spent the most time talking about
9 me why these numbers start on 11 and go 9 today, Ithink.
10 through 23? 10 Iwant to just make sure --
11 Q. Iactually asked that same 11 I'm not asking you to answer, Ijust want
12 question. And the answer is that's the 12 to make sure Iunderstand what you
13 Bloomberg thing, Ithink, because it says 13 answered earlier, that I'm on the right
14 13 members. 14 track.
15 If you look at the line below 15 When Iasked you earlier
16 alert, where it says: 7alert, on the 16 about what the corrected disclosure was,
17 top of the page, (indicating). 17 you directed us to paragraph 12 and to
18 A. Right, okay. 18 the Amended Complaint, but Ithink we
19 Q. It says 13 members --
19 were able to do it in paragraph 12, and
20 A. Okay. 20 you pointed to the information that you
21 Q. and even though it starts
--
21 quote here, which was that Hi-Crush
22 at 11 it still has 13 members. 22 terminated the contract with Baker
23 Look, all we're trying to get 23 Hughes Hi-Crush terminated the supply
--
24 at is, we're trying to figure out 24 agreement I'm paraphrasing now, but if
--
25 what we're trying to just figure
--
25 anything Isay is not accurate you'll
Page 251 Page 253
1 Dr. Adam Werner 1 Dr. Adam Werner
2 out we think, no surprise, that this
--
2 correct me that Hi-Crush terminated
--
3 (indicating) is this, and we think this 3 the supply agreement with Baker Hughes --
4 is the index this represents, and you're 4 full stop.
5 telling us it's not, so perhaps you can 5 Is that --
6 give us the backup to show what companies 6 A. Ibelieve that's correct.
7 are --comprise this DJUSMG Index that's 7 Q. Okay. Would you agree with
S represented in this spreadsheet, if you 8 me that Hi-Crush could not have disclosed
9 know, if you have an employee to do that, 9 the fact that it had terminated the
10 so that's we're just trying to get--
--
10 contract with Baker Hughes any earlier
11 to make sure that we're all on the same 11 than November 12th, 2012?
12 page here. 12 MR. STRAUSS: Objection,
13 A. Iunderstand. 13 that's not an expert Idon't
-
14 Q. So, that's all. Imean, we 14 understand, you're asking him
15 just you know, we have this,
--
15 whether they had alegal obligation
16 (indicating), we have Exhibit 7, but we 16 todoit?
17 don't have and Ihad asked you earlier
--
17 MR. PARADISE: No, not a
18 if you had alist of the companies, you IS legal obligation, I'm asking him a
19 said you think you do, and you're going 19 factual question.
20 to ask to get that but, you know, we 20 Q. Could you disclose something
21 don't have it. 21 that hasn't happened yet?
22 We have what we gave you, you- 22 MR, STRAUSS: Can you re-read
23 said it was the list, but we don't think 23 the question, please?
24 that's right, frankly. So that's it. 24 And you're making alegal
25 A. Okay. 25 argument, you're not making a --
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2 you're not asking for an expert 2 A. Idon't believe so.
3 opinion. 3 Q. You know, you are familiar
4 But go ahead, what was the 4 with, and you cite to, an article by I --
5 question again? 5 think it's Brad Cornell, and I'm not sure
6 (The record was read.) 6 of Morgan's first name, but it's somebody
7 MR. STRAUSS: That's not an 7 Morgan.
8 expert question that's not a
-- 8 Do you know are you
--
9 proper expert qnestion for the 9 familiar with that article?
10 scope of this deposition. 10 A. Yes.
11 You want to ask him about his ii Q. You cite to them on page 10,
12 opinion, did he render an opinion 12 Footnote 31.
13 about when they could or would have 13 A. Oh, I'm sorry, page 10.
14 disclosed something, then you can 14 Q. Yes, paragraph I'm --
15 ask him, but he didn't render an 15 sorry Footnote 31, which appears at
--
16 opinion about that. 16 the top of the page.
17 Q. Can you answer my question? 17 A. Okay.
18 A. No. 18 Q. And you say that that --
19 Q. Okay, why not? 19 well, you cite them as one source of
20 A. Idon't understand it. 20 support for the use of event studies. I
21 Q. Okay, let me try to do it 21 believe you're saying that they are one
22 this way. 22 source of-- withdrawn.
23 if something happens, occurs, 23 You cite why do you
--
24 tomorrow, can Itell you that it happened 24 cite -- let me just ask you, why do you
25 today? 25 cite to Mr. Cornell and Mr. Morgan's
Page 255 Page 257
I Dr. Adam Werner 1 Dr. Adam Werner
2 MR. STRAUSS: Objection. Is 2 article there?
3 this ametaphysics class or an 3 A. Can you hand me the article?
4 expert deposition? 4 Q. Oh, yeah.
5 A. I'm sorry, Ididn't follow 5 MR. PARADISE: Do you have a
6 that. 6 copy?
7 Q. If something happens 7 Q. While she's looking for that,
8 tomorrow, can Idisclose to you that it 8 did you work with Brad Cornell at
9 happened, that it occurred today? 9 Charles was it Charles River?
--
10 MR. STRAUSS: Objection, 10 A. Idid.
11 nonsense. 11 Q. Do you respect him as an
12 A. Ihave noidea. 12 economist?
13 Ihonestly don't understand 13 A. Ibelieve so.
14 the question. 14 Q. Okay.
15 Q. Let's go you've testified
-- 15 MR. PARADISE: Let's have
16 numerous times as an expert on damages, 16 this marked as Exhibit 8.
17 correct, in securities litigation cases. 17 (Whereupon Deposition Exhibit
18 A. Ibelieve that's correct. 18 8, Article, HeinOnline, was marked
19 Q. And we talked earlier 19 for identification, as of this
20 about we touched upon earlier, a
-- 20 date.)
21 situation where we didn't call it
--
21 A. Okay. So what did you want
22 this, but are you familiar with the 22 to ask me about this?
23 concept of an overdiselosure? 23 Q. I'm just asking you what --
24 Have you heard that term 24 for what purpose you cited to Cornell's
25 before? 25 and Brad and Morgan's article.
--
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2 A. Isuppose to back up the idea 2 "overdisclosure".
3 that damage experts have used event 3 Q. Well, they don't term it an
4 studies to calculate losses and under the 4 "overdisciosure" in this case,
5 efficient market hypothesis. 5 They talk about, generically,
6 Q. Have you read this article in 6 that something like that would be an
7 its entirety at some point? 7 "overdisclosure". They weren't speaking
8 A. At some point. 8 of the Hi-Crush case. They're saying
9 Q. Do you recall and it's a
--
9 it's an "over"-- they're calling it an
10 difficult question, so if you don't you 10 "overdisclosure", because they're saying
11 don't, but 1'm going to ask it, anyway -- 11 it is more information than is necessary
12 do you recall if there's anything in this 12 to correct the prior misrepresentation or
13 article that you disagree with? 13 omission, so that's why they're saying
14 A. Idon't recall. 14 "overdisclosure".
15 Q. Iasked you earlier, are you 15 A. Idon't know if that's more
16 familiar with the term "overdisclosure", 16 or less information.
17 and Idon't remember what your answer 17 Q. Okay. many event, turn to
18 was. 18 page 897 for amoment.
19 A. My answer was Idon't believe 19 And I'm looking at this
20 so. 20 paragraph that begins with: In summary,
21 Q. Okay. Well, let me tell you 21 and it says --I'll read it into the
22 what Iunderstand. 22 record: In summary, one can
23 They nsed the term 23 unambiguously define the disclosure date
24 "overdisclosure" in here, Ican't find it 24 and the associated disclosure price only
25 at the moment, but my understanding of 25 in simple situations. In most
Page 259 Page 261
1 Dr. Adam Werner 1 Dr. Adam Werner
2 what it means, and maybe you understand 2 circumstances, the parties must conduct
3 the concept and you call it something 3 financial analysis to determine the price
4 else, is when there is acorrective 4 at which the security would have traded
5 disclosure that reveals more than what is 5 had the misrepresented or omitted
6 necessary to correct aprior 6 information, and only that information,
7 misrepresentation or omission. 7 been disclosed.
8 So, in other words, if you 8 Do you see that?
9 had apress release, we talked about 9 A. Ido.
10 earlier the November 13th press release 10 Q. Do you agree with that
11 disclosed the termination of the contract 11 statement?
12 by --the termination of the Baker Hughes 12 A. Idon't know, as Isit here
13 contract by Hi-Crush, but it also
--
13 today.
14 disclosed earnings. So the earnings is 14 Q. If you were and we touched
--
15 not necessary to cor-- you know, the 15 upon this alittle bit earlier, but just
16 earnings that were described, or 16 to come back to it for asecond-- if you
17 discussed, inthat press release, was 17 were asked by Mr. Strauss, or someone
18 more information than was necessary to 18 else with Kirby McInerney, to construct a
19 correct what was allegedly aprior 19 damages model for this case, what would
20 omission. So that's what they determined 20 you do? How would you go about doing
21 "overdisclosure." 21 that?
22 So does that concept -- 22 MR, STRAUSS: Objection.
23 A. Iunderstand what you're 23 A. Use an event study to measure
24 talking about, but Idon't know why you 24 the abnormal return, I'd investigate what
25 would -- why they term it an 25 other news was released on that day, how
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Dr. Adam Werner 1 Dr. Adam Werner
2 the market viewed that news, all the news 2 Put another way, Ibelieve it
3 that was released. Urn if it turned-- 3 is an incomplete hypothetical.
4 out that, you know, something was --
4 Q. Let's look at another part of
5 there was acompounding factor in what we 5 Morgan and Cornell's article, on page
6 were --in the announcement, I'd take 6 891.
7 that into account. 7 The first full paragraph, and
8 Q. When you say "all" when - 8 for the record I'll just read: Yet cases
9 you refer to "all the news", are you 9 in which acompany announces A and then
10 referring to the company's specific news 10 announces strictly A is not true are
11 or all the news in the market at large? 11 rare.
12 MR. STRAUSS: Objection. 12 Do you agree with that
13 A. Fm speaking of the company- 13 statement?
14 specific news --
14 MR. STRAUSS: Objection.
15 Q. Okay. 15 Go ahead.
16 A. --on the disclosure date. 16 A. In which acompany
17 Q. So and the reason for
-- 17 announces are you asking do companies
.--
18 that, the reason for doing that, where 18 try to hide bad news with other news
19 you said you'd try to let me withdraw
--
19 so --to have these compounding effects,
20 that. 20 so they --
21 So would your would you be -- 21 Q. I'm-
22 trying or attempting to kind of isolate 22 A. confuse the situation
--
23 the drop in the stock price that was 23 about whether or not adisclosure is a
24 attributable to the corrective 24 clear disclosure or not?
25 disclosure? 25 Q. I'm asking simply do you
Page 263 Page 265
1 Dr. Adam Werner Dr. Adam Werner
2 Would that be your objective? 2 agree with the statement that I'm not --
3 MR. STRAUSS: Objection. 3 being pejorative, you put apejorative
4 Once again, you're talking about a 4 description in there, but I'm just simply
5 hypothetical --
5 asking, in your experience, whether you
6 MR. PARADISE: Yes. 6 think it's for the purpose of hiding, or
7 MR. STRAUSS: a -- 7 whatever, is it your opinion, if you have
8 hypothetical exercise. 8 one, that it's rare for companies to
9 MR. PARADISE: Yes, one that 9 simply say A and then announce later on
10 he's done numerous times. 10 that A is not true.
11 THE WITNESS: Could you read 11 MR. STRAUSS: Objection.
12 back the question, please? 12 A. Idon't understand what Brad
13 (The record was read.) 13 means or, Dr. Cornell means, in
--
14 A. It depends on what Iwould be 14 this by simply maybe you're adding
-- --
15 tasked with. 15 "simply" --
16 Q. Tasked with determining the 16 Q. "Strictly."
17 damages caused by the alleged fraud. 17 A. "Strictly", yes, Fm sorry.
18 MR. STRAUSS: Objection. 18 "Strictly".
19 A. Again, it would depend upon 19 Q. He said "strictly", Ididn't;
20 what someone asked me to do. 20 right?
21 Q. Soyoucan!t — youare 21 A. Correct, he did, he said
22 unable to answer the question, based on 22 "strictly", I'm not sure --
23 these this hypothetical?
-- 23 Q. Okay.
24 A. Based on the way you've 24 A. in what coutext he's using
-
25 described the situation, that is correct. 25 that term.
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2 Q. If Isaid 'simply', then I 2 any of those matters were you ever
-
3 misspoke, and Imeant to say "strictly", 3 asked to calculate the share price
4 but Idon't know. 4 inflation at the time of the disclosure
5 MR. PARADISE: Did 1say --
5 that's supposedly, you know, revealed the
6 (The record was read.) 6 truth to the market?
7 MR. PARADISE: Okay, it 7 MR. STRAUSS: Objection.
8 sounds like either Igarbled it or 8 Go ahead.
9 you didn't get it all down. 9 A. "Asked", do you mean as when
10 Q. But, the bottom line is, I 10 Ihave been an expert, or are you
11 think the substance is the same, but I 11 speaking to when I've supported other
12 can correct it in the record. 12 individuals?
13 It's -- whatitshould say 13 Q. If it's adifferent answer,
14 is: Yet cases in which acompany 14 then we can break it out like that, but I
15 announces A and then announces strictly A 15 would say either/or.
16 is not true are rare. That's what I 16 A. Ibelieve, yes.
17 meant to quote. 17 Q. Okay.
18 A. Okay. 18 A. That has been the case.
19 Q. The bottom line is, you can't 19 Q. In those-- in any of those
20 agree or disagree because you're not sure 20 matters, either as an expert or a --
21 of the context in which he's saying it; 21 supporting an expert, did you ever
22 is that right? 22 conclude that what was disclosed at the
23 A. Correct. 23 end of the class period could not have
24 Q. Okay. 24 been disclosed at the beginning of the
25 MR. PARADISE: All right, 25 class period?
Page 267 Page 269
1 Dr. Adam Werner 1 Dr. Adam Werner
2 let's take two minutes. 2 MR. STRAUSS: Objection.
3 (Recess taken: 4:48 p.m. -
3 Idon't understand the
4 5:05 p.m.) 4 question.
5 MR. PARADISE: Back on the 5 A. Well Idon't understand
--
6 record. 6 the question, but Idon't believe I've
7 BY MR. PARADISE: 7 ever been asked to do that.
8 Q. Iwant to take you back to 8 Q. Well--
9 the "halcyon" days, when you worked for 9 A. To the extent that l
10 Defendants. 10 understand what you're saying.
11 Do you remember those days? 11 Q. Well, let me try it this way.
12 A. Iwould say that that 12 What I'm asking is, that
13 rnischaracterizes who Iwork for 13 information that was revealed at the end
14 currently. 14 of the class period -- okay?
15 Q. Who you work for currently? 15 A. Okay,
16 A. Well, Imean, Iwill do 16 Q. could not have been
--
17 defense work. 17 disclosed at the beginning of the class
18 Q. I'm sorry, Iwas being 18 period, for whatever reason, be it that
19 tongue-in-cheek, and Ishouldn't have. 19 that information wasn't available at the
20 Okay. 20 beginning of the class period, that some
21 But you testified that in 21 event hadn't occurred at the beginning of
22 your in the past, you have worked for
--
22 the class period that had occurred at the
23 defendants; is that correct? 23 end of the class period and it was
24 A. Correct. 24 disclosed at the class period, but
25 Q. And have you been asked in 25 couldn't have been disclosed earlier
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2 because it had not yet occurred, that's 2 On day 30, in addition to
3 what I'm getting at. 3 saying that: We've completed the merger,
4 MR. STRAUSS: Objection. 4 they also disclose that: We've been
5 A. 1'm just I'm very confused
-- 5 involved in merger negotiations since day
6 about this notion of has not yet occurred 6 one. Okay?
7 but has occurred or will occur I'm -- 7 A. Okay.
8 sorry, I'm trying to be -- 8 Q. What I'm trying to get at is,
9 Q. No-- 9 could they have disclosed on day one that
10 A. -- ashonestaslcanwith 10 they had completed amerger?
ii you, but Ijust -- Ican't wrap my head 11 MR. STRAUSS: Objection.
12 around what you're trying to get at. 12 Q. That's the whole that's
--
13 MR. SIRAUSS: You're trying 13 what I'm getting at with all of these
14 to back into afactual argument 14 questions I've been trying to ask you.
15 that really has nothing to do with 15 MR. STRAUSS: You're making a
16 his opinion on market efficiency. 16 factual argument, you're not asking
17 And, you know, if you want to 17 an expert opinion question or
18 make your factual argument in your 18 anything about his expert opinion
19 papers, that's great, and Ithink 19 or any of the analyses or
20 you already did but lost on that, 20 assumptions that he offers expert
21 on the motion to dismiss, but it's 21 opinion.
22 just not really appropriate for 22 This has nothing to do with
23 market-- 23 his expert opinion or market
24 Q. Oh, is that why you can't -- 24 efficiency.
25 MR. STRAUSS: efficiency
-- 25 How does this relate to
Page 271 Page 273
1 Dr. Adam Werner 1 Dr. Adam Werner
2 examination. 2 market efficiency?
3 Q. - answer it, or you can't 3 MR. PARADISE: In fairness,
4 answer it because you don't understand 4 I'm trying to get to the answer of
5 it? 5 the question Iasked previously,
6 A. Ican't answer it because I 6 which he said he couldn't answer,
7 don't understand it. 7 because he doesn't understand my
8 Q. Okay, I'm trying to come up 8 question, because he doesn't
9 with ahypothetical to try to see if it 9 understand the has occurred/has not
10 helps you understand it. 10 occurred. So I'm trying to give an
11 So let's take this as an 11 example of why I'm using that term,
12 example. You have acompany that is 12 something that has occurred/has not
13 engaged in merger negotiations on day 13 occurred.
14 one, okay? 14 That's just an example of
15 A. Okay. 15 that.
16 Q. And it tells the market: We 16 MR. STRAUSS: What does this
17 are not engaged in merger negotiations, 17 have to do with market efficiency
18 okay? On day one. 18 or his opinion on market
19 On day 30, the company 19 efficiency?
20 announces that it has completed amerger, 20 MR. PARADISE: Well, he's
21 okay? 21 testified in here that he completed
22 A. Okay. 22 an event study, he testified that
23 Q. So day 30 they complete the 23 there was acorrective disclosure,
24 merger, day one they deny being involved 24 that these are relevant to his
25 in any merger negotiations. 25 analysis of market efficiency.
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2 But if you'll represent to 2 just it seems like some kind of
--
3 us, on the record, that Dr. Werner 3 time-travel thing that I'm not quite
4 is not going to be asked to do any 4 wrapping my head around.
5 other work on this case in 5 Q. Iassure you, it's not the
6 connection with the class 6 "time-travel thing".
7 certification motion, including 7 The bottom line is, you
8 calculating damages, then I'll 8 never you said you've never been asked
--
9 withdraw the question. 9 to express an opinion at least as far
--
10 MR. STRAUSS: I'm not going 10 as you understand my question you've --
11 to represent that. 11 not been asked to express that opinion in
12 MR. PARADISE: Ididn't think 12 any of these other matters that you've
13 you would. 13 worked on in the past for other
14 BY MR. PARADISE: 14 defendants.
15 Q. So does that help you 15 A. Ihave no idea.
16 understand --
16 Q. All right.
17 Na. PARADISE: And again --
17 MR. STRAUSS: Yes, no
18 NM. STRAUSS: If you ask him 18 opinions on time travel.
19 if he's been asked to calculate 19 THE WITNESS: Could be cool,
20 damages or if he has an opinion on 20 certainly go back and fix some
21 damages, and he's said no, so I 21 errors in my life.
22 don't understand why that's not the 22 Q. You list, in Exhibit 2, one
23 end of the analysis. 23 of the documents that you relied upon,
24 If he renders an additional 24 the decision and order granting, in part,
25 opinion on damages, you'll have the 25 and denying in part, Defendants' motion
Page 275 Page 277
1 Dr. Adam Werner 1 Dr. Adam Werner
2 opportunity to depose him on that. 2 to dismiss in this case. Is that right?
3 MR. PARADISE: Will we? I 3 It's Ithink it's Document
--
4 don't know. Not with the schedule 4 Number 2.
5 we have right now, Idorft know 5 A. Okay. You know what? Let me
6 that we will. 6 amend Exhibit 2.
7 So, but let me just answer 7 Ibelieve that it should say:
8 your other objection. 8 Documents reviewed.
9 The hypothetical was only for 9 Q. Okay, as opposed to:
10 the purpose of trying to explain to 10 Documents relied on?
11 him what my question was about. 11 A. Yes.
12 Q. And, Idon't know, did 12 Q. And what's that what's the
--
13 that-- putting aside Mr. Strauss's 13 distinction, in your mind?
14 objections, for the moment, did that --
14 A. These are all things that I
15 do you at least now understand where rm 15 have looked at. I'm not sure that every
16 coming from or what Pin getting at, with 16 little thing on this page has formed my
17 that question? 17 opinion or, helped form my opinion.
--
18 A. It just-- it doesn't make --
18 Q. Well, let me ask you
19 1understand, Ithink, what you're trying 19 specifically about that document, Number
20 to say. 20 two. And if it's okay with Mr. Strauss,
21 It's like you're saying if 21 I'll just refer to it as adecision and
22 something didn't occur, or something is 22 order on the motion to dismiss.
23 going to occur in the future, can I --
23 Is that adocument that you
24 and Idon't know whether it's going to 24 relied upon, as opposed to reviewed?
25 occur, can Italk about it today it's--
25 A. Can I-- Ithink you've
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2 already entered it as an exhibit. 2 Q. Okay, so do you have you --
3 Q. Not the Decision and order. 3 don't agree or disagree with that
4 A. Oh. 4 statement; is that fair to say?
5 Q. But Ican give it to you. 5 A. I'll stick with my answer --
6 A. Yeah, Iwould like to take a 6 MR. STRAUSS: Objection.
7 look at it. 7 A. --Idon't know what that
8 Q. Sure. Always ask that, if 8 means.
9 you like. 9 Q. Wheu you say you don't know
10 A. Iguess you gave me the 10 what it means, what you don't know
--
11 Amended complaint over there. 11 what what means?
12 Q. Right. 12 A. Idon't know what the judge
13 MR. PARADISE: This would be 13 meant by that.
14 Exhibit 9. 14 Q. Okay, I'm sorry, you don't
15 (Whereupon Deposition Exhibit 15 know what you meant what Imeant by
--
16 9, Decisiou and order granting in 16 what Isaid, okay.
17 part and denying in part 17 Let's look at maybe this
--
18 Defendants' motion to dismiss, was 16 will help, let's look sometimes it's
--
19 marked for identification, as of 19 easier to understand things in writing
20 this date.) 20 than oral, look at page 27, this first --
21 THE WITNESS: Okay, now that 21 second full paragraph.
22 Ihave it in front of me, could you 22 Read the first sentence of
23 re-ask the question? 23 that paragraph.
24 Q. The question is, using the 24 A. (Pause.)
25 distinction that you just drew, is this 25 Yeah, Idon't know what the
Page 279 Page 281
1 Dr. Adam Werner 1 Dr. Adam Werner
2 something that you reviewed and relied 2 judge was -
3 upon or just reviewed for the purposes of 3 Q. So you don't agree or
4 your opinion. 4 disagree with her statement there.
5 A. Well, to the extent that I 5 MR. STRAUSS: Which
6 believe this document informed my 6 statement?
7 understanding of what the class period 7 Na. PARADISE: The first --
8 was, Ibelieve to that extent Irelied
- 8 the one Ijust asked about, the
9 upon it and, in relying upon it, I 9 first sentence of-- the first --
10 reviewed it. 10 second full paragraph on page 27.
11 Q. Okay. There is let me ask
-- 11 Do you want me to read it
12 you about some other things, besides 12 into the record?
13 that, and ask quickly if you have an 13 MR. STRAUSS: No, Isee the
14 opinion about them or you even are 14 first sentence.
15 familiar with them. 15 A. Just the first sentence?
16 The court ruled in this 16 MR. STRAUSS: Of the second
17 decision --or this Decision and order, 17 paragraph on page 27.
18 that-- well, she didn't rule, she 18 A. Iwould turn the question
19 stated, in this Decision and order, that 19 over to you, did you counter the Baker
20 the letter that Baker Hughes sent to 20 Hughes purported termination was invalid?
21 Hi-Crush on September 19, 2012 did not-- 21 Q. Idon't usually answer
22 was not an effective termination of the 22 questions at depositions but, I'm
23 supply agreement. 23 curious, Idon't know what you mean by
24 MR. STRAUSS: Objection. 24 that.
25 A. [don't know what that means. 25 A. Maybe I'm looking at the
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I Dr. Adam Werner 1 Dr. Adam Werner
2 wrong thing. 2 it's been awhile but we talked about
3 My thing says: The 10 3 this morning what happened on September
4 Defendants countered the Baker Hughes 4 19th, and you've answered, after we
5 purported-- 5 looked at your declaration, and some
6 MR. STRAUSS: No, the second 6 other documents, that that was the date
7 paragraph. 7 on which Baker Hughes sent the letter to
8 MS. BRANDON: Why don't you 8 Hi-Crush.
9 read it into the record. 9 A. Yeah, Ibelieve that's
10 A. I'm sorry, 10 correct.
11 MR. STRAUSS: Why don't you 11 Q. Okay. So, what the judge is
12 read the second paragraph, 12 saying here is the receipt of that letter
13 please-- 13 by itself did not require disclosure by
14 THE WITNESS: Okay. 14 Hi-Crush.
15 MR. STRAUSS: --and then you 15 Do you have any reason to
16 can-- 16 disagree with that?
17 A. Should lpoint out the typo? 17 MR. STRAUSS: Objection.
18 Q. Yeah, Isee it, too. 118 A. Well, first, that's what
19 You don't point out typos to 19 you're representing the judge is saying.
20 judges. 20 1personally don't read this and say
21 A. Yeah, that's abad idea. 21 that's the conclusion Icome to. Idorft
22 (Pause.) 22 understand it.
23 Idon't understand that. 23 Q. Okay.
24 Q. You don't understand the 24 A. I'm not alawyer.
25 first sentence or did you read more than 25 Q. Okay. Fair to say that
Page 283 Page 285
Dr. Adam Werner 1 Dr. Adam Werner
2 just the first sentence? 2 this the reasoning and the language
--
3 A. Icontinued on. 3 that the judge used in her decision, was
4 Q. Okay, let's take alook at 4 not something you relied upon in coming
5 page 29 of the decision. 5 to your opinion in this case, that you've
6 The second full paragraph, 6 expressed in this case?
7 so --and I'll just read it, to make this 7 MR STRAUSS: Objection.
8 easier, the one that begins, at the 8 Which part of the language or which
9 bottom of the page: The 10 B Defendants 9 part of the decision?
10 are correct that Baker Hughes violated 10 MR. PARADISE: Well, this
11 the agreement's termination provision by 11 language about whether Hi-Crush was
12 sending atermination notice prior to the 12 required to file an 8-K on upon
--
13 occurrence of four serial uncured 13 receipt of the repudiation letter.
14 breaches. Thus, Hi-Crush did not --
14 THE WITNESS: Can you re-read
15 quote receive anotice of termination
--
15 the question, please.
16 pursuant to the terms of the agreement, 16 (A portion of the record was
17 and the agreement was not terminated 17 read.)
18 within the meaning ofitem 1.02. 18 A. Idon't know the answer to
19 Accordingly, this rule did not require 19 that question.
20 Hi-Crush to disclose Baker Hughes' 20 Q. You don't know whether you
21 repudiation via Form 8-K. 21 relied on it or not?
22 Do you see that? 22 A. Idon't believe--- Idon't
23 A. Ido see it. 23 know, as Isit here today, only because,
24 Q. Okay. The letter in which --
24 again, Idon't understand the language.
25 and we talked about this this morning, 25 Q. Well, does it have any
72 (Pages 282 - 285)
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Dr. Adam Werner 1 Dr. Adam Werner
2 bearing on whether the market for 2 control period that you used and the fact
3 Hi-Crush was efficient or not efficient 3 that you excluded November 12th, 2012
4 during the class period? 4 from the control period.
5 A. As Isit here today, Idon't 5 Could you explain why you
6 know. 6 excluded November 12th, 2012 from the
7 Q. Okay. 7 control period?
8 MR. PARADISE: Thank you, no 8 MR. PARADISE: Objection.
9 further questions. 9 A. Ibelieve well, typically,
--
10 (Time noted: 5:21 p.m.) 10 when you do this type of analysis, you
11 MR. STRAUSS: Okay. I'll 11 want to correct - or, not "correct", you
12 just ask afew questions. 12 want to make sure that your sample is
13 EXAMINATION 13 neutral, for want of abetter term, such
14 BY MR. STRAUSS: 14 that Icould have included it in my
15 Q. I'd just like to ask you a 15 analysis, Icould have run the event
16 couple of follow-up questions about the 16 study over adifferent time period. I
17 methodology that you used for your event 17 just would have used adummy variable to
18 study. 18 account for this disclosure.
19 Was the methodology that you 19 Q. And is it-- is either
20 used the methodology that's recognized in 20 method - are you describing two
21 the literature in the field? 21 different methods, there is one method
22 A. Yes, by numerous people. 22 where you would use adummy variable and
23 Ican turn to the articles by 23 include the event that you're evaluating,
24 Tabak, Ferrillo, and Dunbar, and the St. 24 and another method where you would not
25 John's Law Review. Ibelieve they have 25 include the event that you are evaluating
Page 287 Page 289
1 Dr. Adam Werner Dr. Adam Werner
2 another article-- not Ferrillo, just 2 and then you don't have to use adummy
3 Dunbar and Tabak, in the --it's --I'll 3 variable to explain?
4 have to get it, the exhibit here oh,
-- 4 A. Well, no, Imean, it's all
5 so turning to Exhibit 1 well, Exhibit
-- 5 part and parcel of an event study. So
6 2and Exhibit 1 right, in here, Number
--
6 when people do event studies, they can
7 27: The Tabak and Dunbar materiality 7 look at you know, they determine what
--
8 magnitude event studies in the courtroom 8 their measurement period is.
9 in the litigation service handbook, that 9 Oftentimes, people do that
10 was what Iwas looking for, the role of 10 over aclass period, and in doing but,
--
11 the financial expert, so yes, it's 11 when doing so, use dummy variables to
12 recognized, and by other individuals. 12 correct for the fact that you have these
13 Those are just two examples of.... 13 disclosures during the event period --
14 Q. And is the methodology the 14 or, during the class period. Otherwise,
15 same methodology that you used when you 15 people will use what's called a"neutral
16 were at Cornerstone? 16 period" or period that is untainted by,
17 A. Yes. 17 in this case, the alleged fraud and
18 Q. And is it the same 18 estimate their event study over that
19 methodology that you used when you were 19 period.
20 atNERA? 20 Q. And that's what you did here.
21 A. Yes. 21 A. Correct.
22 Q. Okay. I'd like to turn back 22 MR. STRAUSS: Okay, that's
23 to there were some questions earlier 23 it, Idon't have anything else.
24 about the control period that you used 24 MR. PARADISE: Ihave no
25 and whether or not you and about the
-- 25 qnestions, no further questions.
73 (Pages 286 - 289)
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Page 290 Page 292
Dr. Adam Werner
2 April 24,2014
2 Thank you. INDEX
3 PAGE
3 THE WITNESS: Thank you.
4 WITNESS:
4 (Time noted: 5:26 p.m.) S DR ADAM WERNER
5
7 EXAMINATION
6 8 BY MR PARADISE: 4
7 DR. ADAM WERNER BY NM STRAUSS: 286
9
8 10
9 11 EXHIBITS
12 Exhibit 1 Declaration ofDr 6
10 Subscribed and swom to before me Adam Werner April
11 this day of ,2014. 13 15, 2014
14 Exhibit 2 Press release, dated 114
112
November 13th
13 15
14 Notary Public Exhibit 3 Document, DJ1JSMG 154
16 Index, as of January
is 18th, 2013
16 17
Exhibit 4 Document, Dow Jones 158
17 IS US Mininghsdex,
18 with alist of the
19 companies
19
20 Exhibit 5 Amended consolidated 162
20 class action
21 complaint for
21
violations cithe
22 22 federal Securities
23 Laws
23
24 24
25 25
Page 291 Page 293
I
2 Exhibit 6 Document, 235
2 CERTIFICATE represented to be a
3 3 compilation of
STATE OF NEW YORK) information
4 :ss. 4 retrieved from
Thomson Reuters of
COUNTY OF NEW YORK)
5 13-F filings as of
5 September 30th, 2012
6 I, Wendy D. Boskind, an RPR 6
7 and Notary Public within and for the Exhibit 7 Document, which says 240
8 State of New York, do hereby certify: 7 Dow Jones U.S.
Mining Index (Index
9 That DR. ADAM WERNER, the
8 DJUSMG)
10 witness whose deposition is 9 Exhibit Article, HeinOnline 257
11 hereinbefore set forth, was duly 10 Exhibit 9 Decision and order 278
12 sworn by me, and that such deposition granting in part and
13 is atrue and accurate record of the 11 denying in part
Defendant? motion
14 testimony given by the witness.
12 to dismiss
15 1further certify that Iam 13
16 not related to any of the parties to 14
17 this action by blood or marriage, and 15
16 (REQUEST.) 59
18 that 1am in no way interested in the
(REQUEST) 222
19 outcome of this matter. 17 (REQUEST.) 238
20 IN WITNESS WHEREOF, Ihave 18
21 hereunto set my band this 28th day 19
22 of April, 2014. 20
21
23
22
24 23
WENDY D. BOSKIND, RPR 24
25 25
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114
Page 294
1 ERRATA SHEET
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2 1250 BROADWAY
NEW YORE, NEW YORK 10001
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4 CASE: HI-CRUSH PARTNERS LP. SECURITIES LITIGATION
DEPOSITION DATE: 4/24/14
5 DEPONENT: DR. ADAM WERNER
6 PAGE LINE(S) CHANGE REASON
7 I
8
9 I
10 I
11 I
12 I
13
14
15
16
17
18
19
20
21
DR ADAM 'WERNER
22
SUBSCRIBED AND SWORN TO BEFORE ME
23 THIS DAY OF ,20
24
25 (NOTARY PUBLIC) MY COMMISSION E)JRES:
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284:1285:1286:1 64:13 69:22 81:24 158:25 164:7,24 145:13 146:15
287:1 288:1 289:1 82:20 84:5 99:4 170:18 174:5 179:8 168:18 177:3
290:1,7 291:9 292:5 115:4 145:16 184:5 185:25 190:17 222:9 242:8
292:12 294:5,21 166:24 173:12,20 186:14,24 187:3,5 244:6 250:12
add 87:19 184:23 189:20 187:10 188:2,3,18 252:11254:17
adding 265:14 196:18 202:2 188:25 192:11 258:17,19 263:22
addition 272:2 208:25 213:25 199:18 205:10,12 268:13 271:3,4,6
additional 12:18 244:13 254:4 205:15,21,25 273:4,6 275:7 280:5
22:8.944:25 115:14 264:15 268:8 241:14 244:16 281:21285:18
166:11,16 203:2 ainslie 35:4 261:3 273:25 answered 25:22
212:11 228:15 alange 27:4 274:23 288:10,15 36:7 177:15 242:7
229:9 274:24 alert 250:16,16 analyst 66:22 67:3 252:13 284:4
address 4:3 24:23 allegations 107:13 67:15 71:14 72:5,7 answering 110:5
adjust 169:24 164:5,16, 19 73:25 79:20 83:7 answers 50:18 115:2
adjusted 175:4,9,10 alleged 31:5 32:6,7 85:12 88:9 89:13,25 116:5 184:13
200:5,6 201:13 32:15 34:13 36:12 90:15 91:7,8,13,15 antitrust 206:17,20
241:12 36:15 37:3,6,8,16 92:10 115:6,6 116:7 anybody 53:10,13
advised 114:24 37:18,24 42:12,14 118:21 125:17 66:18
advisors 7:14,22,25 98:20 101:8 102:17 155:9 anymore 8:22
affect 164:23,24 106:13,16 167:18 analysts 68:12,15 anything's 97:11
aggregate 159:18 169:6,11 170:5,6 69:6 70:17 71:16 anyway 239:14
ago 49:21 50:24 263:17 289:17 72:1174:1175:3,19 258:11
agree 55:6,25 72:2 allegedly 259:19 76:3 79:7,20 80:2 apart 167:6
79:10,12.J4 80:19 allow 186:5 80:25 81:5 82:11 apologize 45:17
81:4 85:18 86:10 alluded 233:4 83:4 86:18,21,24 90:14 138:20
107:24 122:13 alpha 118:22 88:3,24 89:4,14,18 139:22
151:2 187:21211:7 alternatively 141:3 91:22 92:4,7 appear 33:25 35:9
249:24 250:4 253:7 amazingly 96:3 analyze 91:17 192:14 217:25
261:10 264:12 amend 277:6 213:21 228:8
265:2 266:20 280:3 amended 162:14,19 analyzed 138:3 appeared 35:18
281:3 163:10,20 164:6 152:4
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[appears - background] Page 5
appears 4:2125:8 arises 161:25 172:15 201:4 269:19
31:3 34:4 39:23 armtec 28:2 214:21 235:7 avenue 1:162:6,15
193:14 194:13 art 207:19209:3 242:25 245:21 3:8
256:15 article 145:25 252:11 253:14,18 average 148:5 149:9
appendix 65:20 146:11256:4.9 254:2 257:23 150:22 151:14
67:16 77:6,10 119:4 257:2,3,18,25 258:6 264:17,25 265:5 152:11217:6,16
119:7 122:14 128:3 258:13 264:5 287:2 269:12 272:16 218:9 219:12,21,22
129:13,14 132:3 293:9 aspect 28:24 234:9
172:7 182:9,14 articles 52:4,5 76:14 assisted 53:4,6 aversion 20:18
198:8 201:21 77:3,9 91:11,12 associate 11:6 aware 29:19 32:5
241:19 249:4 286:23 associated 260:24 65:22 74:25 75:14
applied 30:23 73:24 articulate 226:9 assume 59:15 63:4 90:10 104:6,7 118:3
apply 30:21,22 37:2 aside 275:13 74:20 86:13 93:3 118:12,19 166:2
38:6,17 42:15 148:2 asked 14:21 22:5 198:20 201:10 231:7
applying 40:15 24:10,18 25:14,23 238:18 awful 18:12
appreciate 155:14 31:10,21,22 32:13 assuming 82:7 b
155:21 32:23 35:20 42:11 108:3 123:2,3
b 149:22,24207:17
appropriate 270:22 44:24,24 46:23 196:21 242:20
282:3 283:9
approximately 12:6 49:24 50:4,24 51:18 assumption 103:16
back 9:23 15:10
21:6 22:17 232:13 54:22 61:10 64:6,11 108:12 123:6,7
16:13 20:24 31:14
233:17 70:15 80:2 84:9 156:15 164:16,19
32:19 36:6 37:17,17
approximations 95:23 102:15 103:6 assumptions 43:21
37:20 40:13 50:14
12:5 108:17,19 166:21 272:20
50:2169:2170:4,10
april 1:10 6:18 167:14 168:15,16 assure 276:5
76:12 84:1190:23
291:22 292:2,12 168:21,25 169:3,8 asterisked 132:6
91:10 99:5 100:7
aps 230:5 177:10 242:6 asterisks 122:21,24
106:19 116:10
arbitrage 208:8,11 250:11251:17 123:4
124:5 128:24 132:3
208:17 214:14 252:15 258:15 attaching 99:21
147:6,10 148:22
215:16,19,22 261:17 263:20 attempt 145:12
150:23 157:23,25
216:12 267:25 268:3,9 166:15 210:5,11,18
160:16 170:8,9
arbitrageur 207:21 269:7 273:5 274:4 213:7 214:7
178:4 179:22 185:9
208:7 209:6 213:19 274:19 276:8,11 attempting 262:22
185:10 189:2
214:7,9 226:12,13 281:8 attorneys 2:5,14
190:22 191:2 198:6
226:18 227:3 asking 23:14,16 49:17
202:5 203:25
arbitrageurs 207:15 29:8 32:10,12 41:24 attributable 262:24
209:21216:17
208:4,19 209:16 54:15 55:12,14,19 august 68:18
231:8,10 237:22
210:3,24 211:14 57:5,7 58:8,22,23 australia 27:18,23
244:17 245:8 252:5
212:9 213:18 58:24 60:15 69:17 auto 126:5 174:23
258:2 261:16
226:15 227:5 71:15 80:13,20 176:16,19
263:12 267:5,8
area 15:3 16:13,21 82:14,25 83:13,19 autocorrelation
270:14 276:20
argued 176:17 84:2285:8,1187:4 126:8 173:14 174:4
287:22
arguing 205 :22,23 87:6,10 88:13 101:2 174:12,14,17,19
background 7:6
argument 81:21 102:23 107:10,12 176:2Z
53:25
253:25 270:14,18 107:13 109:9,14 available 149:16
272:16 164:15 171:5 222:5 223:4,5
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[backs - bp] Page 6
backs 193:7,9,10 beginning 10:22 128:23 132:13 best 5:10 23:3
backup 228:7251:6 21:4 38:8 63:25 136:11,23 138:11 155:23,24 189:9
bad 32:7 121:19 116:17 134:6 139:2,8,10 144:4 194:7
200:16 264:18 138:15 268:24 148:5,8,12 149:25 better 12:25 15:13
282:21 269:17,20,21 150:25 152:6,21 15:17 37:9 212:12
baird 67:5 72:20 begins 76:14 97:23 153:18,23 158:15 224:19,20,24,24
73:2 98:21260:20 283:8 158:24 159:7,22 225:21288:13
baker 99:10,12,24 behalf 19:14,15 20:4 161:2,14 162:15 beyond 5:14 31:23
100:4,13,14 101:16 21:25 30:14 32:25 166:19 168:18 36:19 44:12 64:9
105:11 106:25 35:14,18 47:23 169:16 170:7 173:5 82:18 87:12 141:8
109:5 111:21 119:2 behest 52:7 229:25 173:9 177:7 178:23 197:25
163:8 165:19,23 230:17 179:5,12 180:14 bid 125:21 148:6
167:5 194:22 belaboring 90:14 182:7 183:2,7,8 149:9,11
195:18,21 196:7,23 belief 210:9 216:10 184:3,8,19 185:8,19 bit 36:24 40:9 45:11
252:22 253:3,10 believe 7:2,7,16,18 186:9,10,19 187:8 55:17 87:17 165:10
259:12 279:20 9:22 11:24 12:8,17 187:15 189:3 261:15
281:19 282:4 13:12,22 16:25 190:20 192:12 black 246:6
283:10,20 284:7 18:23 19:2,25 23:11 194:11 195:17 blair 72:22 73:2
ballpark 152:7 24:13,17 25:12,21 197:14 199:2 blood 145:18291:17
bank 27:18,23 26:4 28:3,9,15 200:25 201:9 bloom 204:24
banks 224:18 29:20 30:2,5,25 204:12 205:18 bloomberg 149:5,12
barbara 224:16 31:8,25 32:21 33:22 206:11207:11 149:16 150:4
barclays 72:19,25 34:15 35:6 36:3,10 210:3,7,12,18 212:4 159:11,13,16,22
bartend 14:7,12 39:20,22 40:7 42:10 212:6 217:9 218:7 203:12,14 229:24
15:9 43:7,19,24 45:22 218:24 219:11 230:2,12 231:2,6
based 16:1243:21 47:4,15,21 48:5,15 220:16 221:6 234:2 238:8,9.24
95:25 98:2 100:11 49:24 50:20 51:7,9 224:15 227:13 239:9 245:24
115:10 123:21 51:12 52:25 53:7,16 228:21,23 229:17 246:16 250:13
124:9 125:8 147:21 53:23 58:5 59:10,17 230:10 231:15 bloombergs 233:19
149:9 150:15 60:3 62:7 63:5 232:8 233:6 234:5 bond 96:16
162: 12 233:18 65:13,19 66:21,25 235:7 241:6,8 bookkeeping 8:20
263:22,24 67:6,10 68:25 69:11 243:23 246:12 books 76:14
bases 153:6 71:4,17,24 72:12 253:6 255:18 256:2 boost 237:14
basic 204:11,20 73:22 74:1178:7 256:21 257:13 borrow 70:2220:13
basically 11:10,12 80:24 82:24 83:11 258:19 264:2 221:21223:4,6
191:25 84:16 85:23 86:3,8 268:16 269:6 277:7 boskind 1:184:7
basis 30:3 60:5 89:2 92:2193:25 279:6,8 284:9 291:6,24
66:20 73:7 220:6,25 94:2195:5,13 285:22 286:25 bother 92:11
23 1:13,24 100:16 101:17 288:9 bottom 175:25
basket 159:5,19 102:6,14 103:19 believes 225:20 191:7 198:11,12
160:6 106:15 107:7 112:7 berkeley 4:4 8:2,14 219:13 266:10,19
bay 16:13,20 113:19 114:3 115:2 8:24,25 9:4,7,18,24 276:7 283:9
bearing 286:2 116:6 118:11 119:3 9:25 10:3,8 18:4,16 bow 230:3,8,11
bears 116:4 119:6 125:22,22 18:18,22,24 19:13 bp 34:23
126:18,22 128:13 19:2124:12
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[brad - class] Page 7
brad 256:5 257:8,25 calendar 117:18 168:17,22 169:9 charles 257:9,9
265: 12 california 4:5 207:4 199:21205:19 chart 191:6 192:6
brandon 2:20 4:18 call 37:8 39:3 43:2 206:2,8,18,20 207:2 193:14
84:10,17 104:17 51:3 105:18 113:16 212:21234:8 260:4 check 51:8 155:8
138:18 203:13,19 157:17 180:21 260:8 261:19 182:8 230:24
252:2 282:8 187:2 255:21259:3 268:18 274:5 277:2 cheek 267:19
brattle 10:5 called 8:2 21:15 285 :5,6 289:17 cheney 204:25
breached 99:19 37:25 63:11 195:13 294:4 cherry 121:4 172:25
breaches 283:14 199:23,24 206:10 cases 11:1420:21 chicago 3:9
break 6:6,10 36:24 207:4 208:J9 237:4 21:9,14,24 22:2 china 27:5,6,9,17
50:9,19 114:15 289:15 26:13 28:5,7,11,19 28:15 29:23
116:2 144:20,23 calling 133:12260:9 29:15 33:4 35:17 choice 190:7
145:18 157:9 180:4 camrner 73:20 74:3 36:11 42:16 44:4 choose 153:21204:8
201:23 268:14 74:7 75:5,22 76:9 48:3 95:14,20,23 chose 132:22 140:25
briefly 7:5 79:5,13,21 80:7 96:10 126:2 168:11 153:13,15,16
brings 13:13 16:4 81:10,10,17,25 82:3 168:12,14,24 205:3 231:19
broad 29:6,7 51:20 82:12 85:13 86:3,25 205:6,11,16255:17 chronologic 13:24
61:24 95:5 189:6 87:21 88:12,14,23 264:8 266:14 chronologically
broader 127:17 89:2 91:4,18 92:13 category 209:10 10:17
broadly 61:23 92:16,21 138:3 227:2 circuiting 87:16
broadway 294:2 147:7 148:3,5,13 caused 169:6,11 circumstance
broke 114:20 170:10 204:11,24 170:5 198:24 214:11
brokerage 115:19 cammer's 80:23 199:13 263:17 circumstances 8:13
222:2 1 capable 168:24 ceases 18:24 133:10 261:2
brought 95:23 capacity 7:22 9:8 cert 206:16 citation 57:13 163:2
bunch 11:13 126:25 11:3 18:10 certain 31:5 89:4 cite 256:4,11,19,23
147:9 capital 193:15 133:10 256:24,25
business 4:3 15:10 capitalization certainly 72:7 95:22 cited 146:3 257:24
62:4,20 63:24 64:18 148:11 104:6 126:4 182:23 citigroup 46:10
189:16 198:18 caps 48:13,14 206:13 222:20 clarify 58:17 114:25
buy 39:4 care 8:19 227:7 276:20 145:12,12
buyer 100:5 case 7:3 14:16 19:21 certification 206:17 clarifying 146:13
C
24:19 25:24 27:3,5 274:7 class 25:226:2
27:6,6,19,23 28:2 certify 291:8,15 32:17 38:8,10 46:15
c 2:2,20 3:2 126:9
28:16 30:21 31:11 cetera 94:13 189:12 49:5,6 69:7,8,18
149:21291:2,2
32:14 34:2,6,12,17 do's 212:24 70:22 71:1172:13
calculate 173:13
34:23,25 35:10 change 17:2 42:23 72:22 74:24 86:18
258:4 268:3 274:19
38:13 39:8,8,23 50:18 137:22,23 97:21,23 98:5,9,15
calculated 150:7
42-12,14 43:12 45:5 154:8 190:16 98:20,25 101:5
calculating 274:8
46:5,5 47:2,2,13 232:21,23 234:7,24 102:9 103:3,11,24
calculation 151:17
48:23 49:15,19 51:6 247:16 248:2 294:6 108:17 110:12,17
217:11247:7
66:6 75:18 90:21 changed 9:17 55:11 110:20 111:11
calculations 152:3
97:24 123:19 1
-97:13 112:5,20 113:2,10
calculator 151:3,23
127:22 152:9 changes 53:17 57:19 115:12,20 121:9,15
247:5,10 248:7
161:25 167:18 177:3 121:17 122:16
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[class - connection] Page 8
123:11,12,21 124:2 combined 193:2 company's 79:8 247:24 249:20
124:18 125:11,17 comcast 206:10 262:10 concept 255:23
125:18 127:7 come 38:1139:16 comparable 217:17 259:3,22
130:23 146:20 42:8 43:4 62:17 217:19 concern 172:12
147:3 151:22 81:16 116:10 compared 153:14 concerned 58:6
162:19 171:14,21 126:24 147:6,10 161:6217:12 173:12 176:2
172:17,22,24 157:23,25 159:21 comparing 158:21 concerning 59:8
174:12,15,25 176:6 170:9 192:17 217:3 conclude 88:5 96:13
178:20 179:3,7,20 214:21222:9 229:7 compartmentalize 124:9 199:3,10
182:5 184:15 185:3 261:16 271:8 51:21 268:22
185:17,23 186:3,7 284:21 compass 3:7 concluded 47:14
186:11 187:14,14 comes 236:25 compasslexecon.c... 95:7 199:4
187:19,21 190:22 coming 20:14 36:14 3:11 concluding 73:8
206:16,16 217:7,19 40:13 50:21 100:7 compensation 61:16 conclusion 28:23
218:4 220:11 124:5 128:24 189:2 competes 189:15 81:16 96:22,24
221:11,15,18 275:16 285:4 competitor 198:21 122:20 174:4 186:6
227:25 228:18 comment 215:13 244:9 284:21
229:15 230:20 commission 294:25 competitors 65:23 conclusions 107:11
255:3 268:23,25 common 24:25 200:10,20 201:8 147:21 187:12
269:14,17,20,22,23 25:25 135:21 compilation 235:12 conclusive 175:5
269:24 274:6 279:7 153:10 160:21 235:21293:3 conduct 261:2
286:4 289:10,14 220:9,13 complain 110:23 conducted 82:17
292:20 communicating 111:5,7 176:3
clause 89:24 99:20 74:11,19 complaint 57:15 conducting 96:23,25
clean 142:8 communications 104:2,14,16 105:9 conducts 145:21
clear 26:23 48:6 54:16 55:2,13,16 162:10,14,20 163:2 conf 192:2
146:7 174:22 66:3 163:10,21 164:6 confidence 132:18
197:19,20 264:24 commute 17:20 252:18 278:11 132:22,25 133:5,6
clearly 157:20 160:4 companies 10:19 292:21 133:16 134:11,15
client 32:8 115:8 154:7 156:2,9 complete 6:3,9 134:16,21 135:4,10
closed 79:9 118:18 156:24 158:9,17 162:6 221:21 135:19 136:2
1.36:3 214:8 159:5 189:6.7,10,11 271:23 181:15,23 191:15
closing 112:10 190:8201:6,17,18 completed 271:20 confidentiality
cm 1:3 203:7 211:2 219:24 272:3,10 273:21 99:20
coast 14:24 16:12 233:20 251:6,18 completely 202:11 confirm 97:22 187:5
code 245:24 264:17 265:8 completeness 31:10 conflict 51:7
coefficient 134:7 292:19 components 155:10 confuse 264:22
191:9,18,18,19,23 company 9:16 72:22 compounding 262:5 confused 30:6 270:5
192:5,7,15,17 74:2 78:8 83:6 264:19 confusion 103:21
colleague 4:17 125:21 189:15 comprise 251:7 130:12
collecting 236:22 193:11210:13 computation 150:15 conjunction 165:12
collectively 48:24 212:18 262:13 compute 149:7,8 connection 62:4,14
column 149:19 264:9,16 266:14 230:5,14 247:16 62:18 66:4 76:17
181:10 218:21 271:12,19 294:1 computer 151:8 77:12 78:10,16
219:5,6,14,15 194:14 247:3,8,11 94:23 168:17
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[connection - court] Page 9
200:12 206:23 196:8,23 252:22 68:21,24 69:5 70:20 106:12,15 107:7
207:9 240:16 253:10 259:11,13 71:4,24 73:2174:22 108:2,4,7,13,25
244:23 274:6 contribute 209:17 77:4 85:23 86:8 109:18,21 195:14
consider 82:9 209:18 94:21 99:3 100:15 259:4 262:24
103:24 108:7 control 140:9,13 100:24 102:14 273:23
127:21 133:10,13 143:2,4,6,7,18 103:19 112:25 correctly 36:8 46:13
138:4 189:4,13 146:10,17 192:23 114:3 115:3,22 68:8 69:16 86:2
206:7,22 207:8 287:24 288:2,4,7 117:13 126:22 90:13 132:17
219:20,24 controlling 199:18 128:23 132:14,15 153:16 178:9
considered 78:8,9 converted 248:18 132:20 137:10,14 180:16,18 187:18
171:8 189:23 conveyance 113:15 141:5 143:21 144:4 187:25 195:16
considers 65:22 conveyed 117:16 149:17 150:2,18 217:2 232:7
consolidated 162:10 cool 276:19 153:20 156:3,5 corrects 57:13
162:14,19 163:10 copper 189:11 167:19 168:3,25 correlated 176:20
292:20 copy 6:14 27:12 169:2,16 170:7 192:25 200:22
constraint 220:10 59:19,21 104:16 171:13 172:3 correlation 126:6
construct 40:25 202:10,14 239:25 174:24 175:2,16 153:9 174:24
41:2 261:18 257:6 176:7 177:23 178:6 176:17 197:7,10
consultant 17:10,12 cor 259:15 178:7,14,15 179:4,5 199:5
consulting 8:3 11:10 cornell 256:5,25 179:13 180:13,14 correspond 138:25
15:11 18:5 52:18 257:8 265:13 181:18 183:16 194:8
126: 13 cornell's 257:24 184:8,19 185:19 corresponding
cont'd 3:2 264:5 186:19 187:8 219:2
contacted 49:16 cornerstone 10:24 188:13 192:9,12 corresponds 132:17
50:23 11:4,20,25 12:7,16 194:11 195:17 173:5 184:11
contained 44:13 12:20,21,23 13:3,6 201:19 209:13 229:15
45:12 53:15 58:12 13:18 14:24 15:22 217:8,9,21218:7,24 counsel 32:13 47:24
64:23 41:17 95:18 287:16 219:11221:14 51:8 53:6,16,18
contains 25:19 corp 27:4 223:19 228:3 54:17 55:10,20 58:3
content 59:3 corporate 210:21 230:10,15 231:15 59:12,13 82:21
contents 55:19 corporation 205:19 232:2,9 234:5,20 98:20 240:16
context 265:24 corporations 212:25 239:16 241:11 count 28:5
266:21 correct 4:24 7:16,23 243:22,23 246:12 counted 72:25
contingent 61:17 7:24 10:20,25 11:2 248:3 253:2,6 counter 281:19
continue 19:20 12:11 14:10 16:5,6 255:17,18 259:6,19 countered 282:4
106:6 16:22 18:8,15,23 260:12 263:25 county 117:2291:4
continued 20:4 19:2,6,7,25 20:16 265:21266:12,23 couple 5:3 148:25
100:4 145:14 283:3 22:7 23:12 24:13,17 267:23,24 283:10 170:25 171:2
continues 76:15 25:12,2126:3,4 284:10288:11,11 286:16
194:19 28:9 30:18,25 31:7 289:12,21 course 48:17 168:14
continuing 21:5 31:8 36:2 40:7 corrected 58:3 court 1:2 5:17 6:20
contract 99:11,21 42:10,25 43:16 107:8 152:23 21:10 27:14 28:12
99:22 100:15 107:4 46:16 47:15 53:20 252:16 28:18,22 29:9,10,14
109:6 111:22 163:8 53:23 54:4 58:5 corrective 38:2 39:6 29:22 30:2,5 74:25
194:23 195:19,22 59:17 60:3 63 :4,5,7 39:17,24 106:3,10 75:12 92:14,16
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99:16 114:21 117:2 101:15 104:9,10 cut 6:2,4 35:12 235:16240:11
126:2 148:16,18 105:4 106:22 cv 1:3 10:1222:11 257:20 260:23
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192:16 203:12
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date 6:1937:8,10,11
criticize 28:21 190:6 curious 134:13 decide 42:7
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158:10 162:23
75:19 86:2199:10 213:20 decisions 75:2 204:7
182:16 234:7
99:19,23 100:4,12 204:9
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declaration 6:15,17 defined 35:24 66:7 depositions 281:22 223:12 229:5 236:4
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228:14 233:13 130:14 135:2 140:6 95:25 98:24 99:25 disagreeing 117:4
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252:7 284:5 292:12 215:19 216:4,5,6,9 103:7 164:8 162:8 253:20 255:8
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defer 82:21 dependent 188:5 dl 193:18 113:14,21,23,25
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130:15 175:20 240:7,17 254:10 61:8 68:17 97:15 discrepancies 210:2
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260:23 278:15 291:10,12 151:18 154:16 discuss 88:25
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dividing 248:6 38:1 39:1 40:1 41:1 185:1 186:1 187:1 56:7,9,11,17 57:6
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djx 245:5 61:1 62:1 63:1 64:1 203:1204:1205:1 drew 278:25
document 56:20 65:166:1 67:168:1 206:1,3 207:1208:1 drive 210:11
15421 158:7 69:1 70:1 71:1 72:1 209:1 210:1 211:1 driving 18:2
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246:14 277:3,19,23 77:1 78:1 79:1 80:1 215:1216:1217:1
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dropped 195:11 econometric 133:2 225:19 228:17 engagement 49:14
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253:10 255:19,20
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280:19 283:8
110:14 121:13,17 211:15,20 establish 87:7
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175:22 176:6,20 213:18 214:14 established 87:22
196:21225:7,13,17 215:3,16 271:13,17 89:17 125:25
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establishing 86:24 exactly 17:9 26:20 114:22 115:17,17 expected 194:23
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146:25 243:6 273:11,14 170:17,20 171:8,19 94:24 95:20 137:16
evaluating 146:19 examples 93:20 172:12 176:4,24 186:4 190:6 253:13
288:23,25 126:4 146:4 222:21 177:17 178:4,4 254:2,8,9 255:4,16
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101:24 119:10,12 exception 189:18 186:20 187:11,23 experts 15:23
120:23 122:14 excess 188:8,9,16,17 188:3,4,8 189:3,7 110:22 120:9
127:4,10,10,14,15 188:20 191:2 194:16 199:8 172:10 258:3
127:20,21 128:25 exchange 66:18 201:18 202:17 expires 294:25
129:20,22 130:14 216:15,17 217:6,17 204:5,16,22 216:25 explain 21:16 46:18
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131:2 132:8 136:5 219:23 218:25 228:4,5 130:8 142:11
140:6,18,22 142:5 exclude 156:8 193:2 231:8,21235:7,10 147:19 175:8
142:13,16,17 excluded 21:10 235:19 236:2 187:16 191:4,16
145:21 172:7,20,23 154:3 156:7 288:3,6 239:15 240:6,7,13 208:4 275:10 288:5
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241:10,19 242:3,15 165:2,7 245:15,19,22 246:4 explained 120:4
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286:17 287:8 executives 212:19 278:14,15 287:4,5,5 211:15
288:15,23,25 289:5 exercise 263:8 287:6 292:12,14,15 exploiting 216:7
289:6,13,18 exhibit 6:14,16,21 292:17,20 293:2,6,9 express 25:23 31:23
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124:10 133:14,18 20:25,25 21:2 25:6 exhibits 138:24 58:1162:5 66:5
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everyone's 123:14 44:14 54:9 56:10,12 141:17,19,25 expressed 44:7
evidence 115:13,14 56:13 57:7 64:24 147:14 292:11 75:18 76:8 80:22
exact 10:3 24:6 65:2,2,18,18 68:2 exist 18:24 100:19 220:25
233:22 236:8 68:14 69:2176:13 expect 96:17 213:17 285:6
78:25 99:8 114:9,10
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expressing 32:2 fail 209:17 fewer 89:9 215:15
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extended 69:18 failure 167:4 fifth 1:16 2:15 firms 19:12 47:20
120:17 fair 11:19 14:20 170:10 219:10 73:10 115:19
extensive 21:3 22:6 25:17 28:4 figure 250:24,25 first 4:59:2449:16
extent 32:3 64:15 38:2 43:7 47:10 figures 46:21 56:5 68:17 79:3
159:12 167:10 49:7,12 54:24 78:6 file 102:2231:17,18 85:16,25 87:25
199:16 201:12 96:8 98:22 113:4 285:12 128:5,7,8 129:13
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242:23,25 243:18 164:11 179:6,16 113:18 116:25 218:2 221:18
269:9 279:5,8 210:23 211:6,6 117:11,15,22 118:4 223:21226:14
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30:6 99:25 110:23
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211:18 212:3,17 267:13
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289:10,13,14,16,16 263:12 282:13 prepared 44:655:8 210:11214:5,6,10
289:19 285:15 59:13 216:14,16 226:3
periods 68:5,17 plunges 198:12 preparing 94:24 242:2 247:17 248:2
97:15 139:14,25 plural 25:7 152:17 248:17 260:24
141:22,24 plus 179:2 184:12 presence 124:9 261:3 262:23 268:3
person 11:22 148:17 221:11 176:16,16 222:25 prices 93:9,10,16,17
personal 214:22 point 42:24 76:21 223:22 224:9 173:15 200:22
215:11 87:8 103:22 110:10 225:11,23 pricing 209:25
personally 60:21 115:7 116:20 present 3:4 176:22 primarily 19:14,15
221:24 284:20 145:22 146:5 181:6 presentation 100:2 53:22
perspective 138:7 218:16 219:4 237:4 presenting 182:22 prior 23:19 45:24
persuasive 79:6,15 258:7,8 282:17,19 president 3:6 56:9 83:22 85:7,8
79:17,18 pointed 106:20 press 40:5,9 62:10 112:11,14.23 113:2
phenomenon 216:14 252:20 65:16,17 77:9 78:3 113:19 115:12,20
233:7 pointing 218:19 78:20 93:12 112:17 116:4,5 145:13
219:7,9 113:17 114:5,11 259:6,19 260:12
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283:12 publicly 26:7 99:24 63:15,16,22 64:3 quote 79:6 165:22
probably 9:13 11:6 162:2,8 163:21 68:13 70:5,11,13 214:5,7,8 252:21
22:24 131:22 164:2 222:4 74:21 76:7 77:19 266:17 283:15
243:20 published 86:6 78:5 80:18 81:22 quoted 225:14
problem 111:4 118:20 82:8 83:13,17,22 quotes 79:9
172:19 224:6 pulled 154:12 84:8,11,18,23,25 quoting 224:14,15
proceedings 184:24 pump 212:20 85:5,7,8 86:12 r
process 47:9 57:3 purported 281:20 87:10,13,19 88:19
r 2:2,18 3:24:2,2,2
produced 155:18 282:5 88:19,20 90:23
63:13 126:9,9 145:2
203:9 purpose 116:19 91:10 92:2 95:5
145:5,5,5 148:10
product 63:2,4 150:8 205:7 244:8 99:6 100:8 108:21
175:4,9,10 207:17
192:11 213:22 257:24 265:6 117:5 121:19,20
207:17,17 291:2
professional 1:19 275:10 123:9,9 124:6 127:9
ran 51:7 151:16
professionally 215:3 purposes 85:13 140:5 159:25 161:4
192:22 193:5
profit 66:13 208:9 86:24 98:23 106:7 166:8 167:22,25,25
range 234:7
208:14,22 209:14 106:16 129:2 170:2,23 175:7,24
rare 264:11265:8
program 194:14 134:16 143:19 177:4,15 179:22,25
266:16
project 61:7 164:6 187:4 209:7 200:15,16 209:21
rate 59:25,25
promote 100:4 223:13 224:8 279:3 211:22 215:13
raymond 71:20
pronunciation pursuant 1:17 220:19,23 223:21
rbc 71:21
207:14 283:16 225:9,11 226:23
reach 165:24
proper 87:13 107:16 purview 64:20 242:19 243:5,9,12
reached 96:23,24
112:25 254:9 put 41:3 42:3 43:3 249:16,18 250:12
147:21
property 12:19 52:8 53:13 56:21 253:19,23 254:5,8,9
react 186:7
proppants 63:8,13 60:17 61:6,9 129:23 254:17 255:14
reacted 160:21
prospectus 62:13,13 210:16 249:20 258:10 263:12,22
reaction 103:23
65:7 182:22 264:2 265:3 269:4,6 272:17
130:3 179:18
prove 75:4 87:21 putting 275:13 273:5,8 274:9
185:14
proven 92:10 puzzled 102:21 275:11,17 276:10
reacts 141:23
provide 24:19 25:14 q 278:23,24 281:18
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25:15 227:15 230:3 285:15,19
qualify 96:20 read 29:12 31:2,13
provided 54:23 questioning 223:15
quantify 166:15,19 31:15,19 32:19,20
59:21 195:21229:8 questions 5:14,22
quantity 248:5 36:6,9 45:8,9,14,19
239:23 240:15 23:15 40:10 46:20
quarter 162:3 45:21 52:3,5 64:21
providers 237:18 46:24 116:4,13
163:22 232:11,15 67:1170:12 76:16
provides 220:9 272:14 281:22
232:21 77:11,20,25 78:2,3
228:15 230:12 286:9,12,16 287:23
quarterly 231:13 78:7 83:17 84:15,24
providing 11:22 289:25,25
233:6,9 85:2,3,24 89:21
237: 19 quibbling 234:12
question 5:9,24 6:8 90:23,24,25 100:20
provision 283:11 quick 26:10
6:9 19:9 29:4 31:14 100:22 134:3
public 1:19 4:6 quickly 5:6,7 279:13
31:17 32:10,19 135:23 161:24
46:22 62:15 93:10 quite 127:18 130:19
34:20 36:6,22 37:22 166:9 167:23
93:17 290:14 291:7 142:11 189:5276:3
40:14 41:7,20 45:8 171:13 177:2
294:25 quotation 210:17
51:20 57:9 61:24 179:21,23 200:15
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receive 226:2 T
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220:20 225:13 283:15 57:14 104:23 related 185:25
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254:6 258:6 260:21 100:12 101:15 referenced 67:16 relation 220:8
263:11,13 264:8 203:22 references 133:4,6 relationship 187:12
266:6 280:22 recess 50:12 114:17 referred 65:17 197:23
281:11282:9,12,25 144:24180:5202:3 113:9 163:119 release 40:5,9 78:3
283:7 284:20 235:3 267:3 183:10 112:17 113:18
285:14,17 recite 105:3 107:12 referring 25:5 49:5 114:5,11 116:14,18
reading 46:12 67:5 recognized 286:20 53:19 69:9 71:19,20 116:22 117:7
98:13 132:6,16 287:12 96:11,12 111:24 120:13 165:11,14
178:8 180:16,18 recollection 155:25 113:9,22,23 115:17 166:4 181:25 182:5
182:18 195:16 194:8 115:18 126:12,12 182:21 183:7,8
220:7 228:13 232:6 reconcile 30:10 81:9 134:5,5 135:14 184:17 259:9,10,17
240:22 248:25 134:14 235:25 160:24 162:7 163:6 292:14
reads 56:23,24 record 4:16 6:24 188:11209:9 224:4 released 71:16
84:12 25:4 26:12 31:15,18 262:10 111:15 112:3,10,23
ready 6:23 195:23 32:20 36:9 45:9,13 refers 135:16 181:5 117:6,20 131:20
real 56:18 45:20 50:1161:20 181:8 166:12 182:21
really 56:18 57:8 61:2170:9 77:20 reflect 93:9,16 261:25 262:3
58:22,23 64:19 78:4 84:14 89:21 113:8 179:17 releases 62:10 65:16
85:4 172:16 177:14 114:23 115:16 reflected 94:17 65:17 77:9 78:21
226:24 233:10 129:9,16,17 137:9 104:3 112:24 relevance 175:21
270:15,22 143:12,13 147:12 165:17 166:5 176:4 relevant 79:24 81:2
reason 8:5 16:18,19 151:12,13 156:12 179:9 180:11 81:8 85:12 273:24
20:9 30:9 39:19 161:24 166:9 187:10 199:17 relied 64:24 204:6
48:25 107:23 167:23 179:23 reflecting 161:7 205:7 225:15
108:23 120:19 184:21 198:4,5,7 refreshes 67:17,20 243:21244:22
130:7 141:10 202:6 203:23 regarding 239:23 246:11276:23
170:22 234:21 208:12 209:23 regards 51:4 120:12 277:10,24 279:2,8
241:15 262:17,18 220:20 235:2 127:11 145:20 285:4.21
269:18 284:15 240:19,25 241:3 147:24 rely 204:9
294:6 249:22 252:2,3 registered 1:18 relying 279:9
reasonable 214:2 254:6 260:22 registrant 101:25 remain 13:10
reasoning 285:2 263:13 264:8 266:6 registration 99:22 remainder 140:3
reasons 153:24 266:12 267:6 274:3 195:5 remains 231:22
recall 27:2131:20 281:12 282:9 regression 130:21 232:4,16J7
33:12 34:24 50:7 285:16 291:13 140:11 141:12 remember 5:20 11:5
62:16 65:25 67:12 redefine 48:9 158:25 188:18,24 40:4 65:12 67:5
67:25 76:1196:12 redo 63:14 191:19,21 192:11 92:6 93:23 96:9,24
97:19 104:13 reductions 186:12 192:23 193:4,4 136:18 178:16,17
125:23 182:20 refer 40:2 48:19,23 199:17 1S2:3 187:18
206:5 258:9,12,14 104:7 160:16 161:5 rejected 28:10 29:22 193:22 241:21,23
receipt 284:12 178:17 226:11 44:8 258:17 267:11
285:13 262:9 277:21
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remind 202:13 reports 11:9 15:22 141:8 183:23 reverse 10:17
remove 159:13 21:13,18,22,25 30:7 257:11 review 62:12 66:22
render 31:11,22 30:17 35:25 52:4 respond 91:4 96:16 76:23 78:23 119:4
33:8 36:12 42:11 66:23 67:3,15 68:15 96:18 145:25 152:17
49:25 50:5,24 51:17 70:7,18 71:15,19 responds 142:6 233:19 286:25
51:18 54:22 61:11 72:9 73:10 74:5,10 response 161:25 reviewed 54:2 62:10
64:11 176:21 74:23 75:14 76:4 184:6 186:16 67:4 90:5,7 91:11
254:12,15 77:8 79:23 80:3,25 225:10 152:14 277:8,24
rendered 32:23 85:14 86:21 115:11 responsibilities 9:17 279 -2,3,10
35:20 39:16 108:12 115:20 118:21,21 12:14,16 15:19,21 reviewing 132:8
rendering 33:20 167:2 rest 152:3 178:18 152:13 238:24
renders 274:24 represent 4:18 result 32:7 42:13 revise 56:25
rep 20:4 33:24 34:16 35:7 83:4 167:17 172:22 rhody 27:4
repeat 77:18 84:8 105:2 112:13 233:8 right 4:235:197:13
166:8 167:21 235:20 240:14 resulted 175:13 10:15 15:4 23:13
rephrase 5:10 63:20 250:8 274:2,11 results 37:2 127:16 31:1146:15 49:8
121:20 representatives 59:6 140:17,19,22 167:8 50:8 52:22 59:2
replicate 189:15 represented 194:22 173:2 175:5 187:22 68:1169:3 71:12
replicated 128:19 235:11244:21 190:16 72:25 78:19 81:18
report 7:3 22:4,6 250:4 251:8 293:2 resumed 145:6 85:13,22 86:7,13
24:22 27:20 30:13 representing 20:18 retained 21:4 26:6 90:17 91:24 92:19
52:9 69:13 71:3,10 284:19 31:4 47:22 92:22 101:9 102:19
80:6,7,17 85:20 represents 234:8 retrieved 235:13,22 104:22 105:12
86:6,15 91:5 93:7 238:9 245:18 251:4 293:4 109:3,22 115:21
94:24 96:4 104:7 repudiation 283:21 return 16:20 37:6 116:21 119:12,22
132:17 133:3,11,12 285:13 128:21 193:9249:5 120:11,14 121:10
146:3 157:12 request 59:20,23 261:24 123:15 124:20
159:16 178:18 222:10 238:6 returns 135:22 126:17,23 131:18
185:8 195:3,10 293:16,16,17 178:11 187:13 132:19 134:8
223:18 224:15 require 283:19 188:6,7,9,10,11,15 138:16,20,22,23
225:14 233:12,24 284: 13 188:16,17,21 139:4 142:7,25
249:12 required 34:12 192:19,20,21200:2 143:25 146:24
reported 79:8 82:2,3 85:12 285:12 203:17 149:24 155:5
86:4,7,14 118:23 requirement 83:24 renters 235:13,22 156:25,25,25
182:2 183:21 requires 101:24 236:21237:5,18,25 157:22,23 159:2
185:16 196:6 204:7 rerunning 152:2 238:12,14 239:9 168:20 171:12
204:9 234:2 241:18 research 10:24 293:4 175:12 177:13,17
reporter 1:19 5:17 51:13,15,24,25 62:2 revealed 40:5 178:3 180:22
6:20 27:14 63:9 62:19 63:23 70:7,17 169:12,13 171:9 182:16,18 184:2,7
99:16 114:21 73:9 95:2 101:13 268:5 269:13 185:18 187:7
158:11240:12 211:2 213:3,20 reveals 259:5 190:11 193:8 195:7
reporter's 235:18 resolution 165:25 revelation 170:6 197:3 199:21
reporting 9:14 resource 225:15 revenue 194:23 203:24 205:23
80:1181:12 294:1 respect 104:9,10 195:20 196:6 197:2 206:24 207:16
132:5 135:6 136:7 197:12,21 198:2 212:5 216:23
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217:20 218:4,6,22 sample 143:3 144:5 sec 62:1164:22 77:9 194:25 195:25
218:23 219:10,17 144:6 157:4 288:12 230:18 196:5 198:10,15
220:16 226:5 san 15:2237:22 second 5:13 27:8 200:21202:9
227:25 231:25 sand 63:6,12,12 30:13 31:17 34:21 216:15 219:8 221:3
234:15 235:9237:9 100:6 213:17 56:25 68:22 79:5 227:18 231:9,21
237:10,25 240:4 satisfaction 54:3 80:23 82:11 86:25 235:25 236:5,6
247:10 248:12.23 satisfactory 165:24 87:21 88:14 89:24 239:7 245:3,6 246:7
250:18 251:24 satisfied 80:24 109:8 112:17 119:4 246:8,23 250:2
252:13 265:20 satisfies 83:23 132:4 147:12 261:8 271:9 281: 13
266:22,25 275:5 satisfy 76:9 79:20 148:21 150:20 282:18 283:22,23
276:16 277:2 82:11 87:18 88:12 161:22 163:16 seeing 217:24
278:12 287:6 88:13,15 170:15 184:21 seeking 107:2
risk 208:9,15,21 savings 11:16 185:10 192:22 111:22 118:22
209:12 216:18 saw 79:25 124:25 209:9 218:20 seen 118:17137:19
river 257:9 133:5 200:23 219:14 235:2 241:2 153:3 170:24 171:2
robert 72:19 73:2 202:23 261:16 280:21 222:21
role 11:20,21 287:10 saying 73:16 80:6 281:10,16 282:6,12 segue 223:15
roughly 201:16,18 86:5 89:10,1190:15 283:6 selected 109:11
227:22 96:21 111:8,10,14 section 53:25 self 21:23
round 136:25 125:6 159:2 173:19 securities 1:6 4:19 sell 14:8,12 15:9
137:17 186:18 197:24 11:13 19:23,2420:6 210:10 221:19
rounded 136:19,19 225:3 226:8 232:25 22:18,20,23 23:7,8 selling 220:11
219:19 236:15 256:21260:8,10,13 23:11,16 24:15 31:6 sells 213:16
rounding 137:12 266:21269:10 33:17 45:24 46:10 semantics 112:8
248:11 272:3 275:21 46:14 66:10 79:7 semi 93:3,8
rpr 4:8291:6,24 284:12,19 83:6 95:12 162:21 send 54:11 202:9
rule 54:19 221:8 says 25:746:12,13 210:3,20211:16 sending 283:12
279:18283:19 56:23 79:4,13 80:7 216:8,11224:20 sense 24:8 52:13
ruled 279:16 81:17 89:5,24 255:17 292:22 82:23,24 215:25
rules 5:2 134:10 135:21 294:4 sensitive 135:23,25
ruling 206:15 149:13 161:24 security 26:8,17 sent 279:20 284:7
run 189:8288:15 181:10,12 198:13 33:2166:19 75:20 sentence 79:3 83:3
runs 107:25 110:10 240:8,23 246:6 83:8 85:21 90:2 84:20 85:25 134:4,6
S 250:13,16,19 95:8 97:6,16 210:2 161:23 177:2214:4
260:21282:3 293:6 261:4 220:22 226:14,16
s 2:2 3:2 63:13 145:2
schedule 23 0:5 see 10:14 27:12,12 227:19 280:22
145:2,2 195:5
231:12 275:4 34:10 35:12 67:17 281:9,14,15 282:25
207:17 294:6
schedules 231:12 68:18,20 103:22 283:2
s&p 192:19,20,24
school 10:23 104:19 105:6,8,13 sentences 226:11
193:9,11 200:7
scientific 143:9 105:22 108:8 114:6 separate 68:5
sake 31:9 74:20 82:7
scope 54:18 64:10 116:17 122:21,23 169:10 203:14
sales 194:21222:16
82:18 87:12 107:16 124:20 126:3 133:4 227:4
salespeople 74:15
254: 10 134:9 139:16 separately 77:16
81:7
screen 246:16 156:13 158:3 160:5 september 68:19,23
248:25 160:7 177:3 184:10 69:9 70:24 97:24
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98:4,17,21 99:6,9 112:16 114:5 simplcr 23:14 173:12,20 175:6
100:3,10,11 101:15 116:15,16 133:20 simply 264:25 265:4 180:17 182:25
105:20 111:12 154:14 235:24 265:9,14,15 266:2 185:9 194:15
120:7,7 122:17 239:24 251:6 sit 22:12,1433:11 208:25 209:20
123:16 128:9,9,10 showed 165:10 44:10,16 65:2167:2 211:18 215:23
128:10 171:7,10 203:3 67:12,24 90:11 217:5,14,14 219:9
172:5 173:7 178:21 showing 116:19 95:15,16 101:22 225:8 234:25
218:5 231:23 232:4 147:20 102:8 128:22 245:12 249:2,15
233:16 234:3 shown 176:19 150:11 155:23 255:5 256:13,15
235:14,23 236:10 shows 74:17 158:19 182:19 193:21 265:17 267:18
279:21 284:3 293:5 174:13 199:15 206:5 270:8 280:14
serial 283:13 side 20:10,15 33:23 240:20 246:2,21 282:10
series 21:14 33:25 35:9 246:5 261:12 285:23 sort 54:25 121:4
service 183:22 287:9 sided 148:23,23 286:5 160:5
set 7:7 103:9 164:5 sign 248:9 sitting 197:5 sorts 125:2212:17
291:11,21 signed 59:16 situation 35:19 215:21
settlement 47:6 significance 108:5 97:14 255:21 sounds 12:4214:2
settlements 46:20 133:15 178:12 263:25 264:22 266:8
seven 28:5 69:11 179:19 192:3 situations 260:25 source 118:22
72:25 79:25 178:9 significant 79:7 82:9 six 15:7 150:16 159:11
178:19 185:16 82:10 83:6 89:25 skew 131:24,25 256:19,22
share 31:5 32:16,24 110:21 111:10,15 140:17,19,22 south 3:8
33:21 34:14 35:2,15 119:23 122:15 slash 62:2 southern 1:2 92:17
35:21 36:13 37:4 123:5,10 124:10,21 slightly 32:9 sparadise 2:23
43:17 268:3 124:23 128:16 slow 55:16 163:15 speak 5:6,6223:17
shares 38:7,9,17,18 133:17 134:11,18 small 157:3 speaking 224:12
40:1820 41:10 135:3,8,10,18 sold 149:20219:16 260:7 262:13
43:15,15,17 90:9 178:11 180:21,21 sole 8:24 268:11
118:15 149:20 181:2,4,7,12,13,15 solely 53:22 speaks 139:11
210:11 219:16 181:22 185:5 somebody 56:22 specific 19:10 48:25
222:11,22 224:4 193:16 161:18,20 237:23 61:25 64:25 65:5,15
233:18,20 234:9 significantly 237:3 238:2 256:6 88:16 121:23
236:8,12,14 signify 123:4 sorry 7:17 8:18 160:25 161:3,7
sheet 294:1 silica 189:11 198:14 13:16,17,23 14:6 200:10 224:13
shenk 34:6 198:18 199:6,13 19:12 27:7,8,17,22 244:15 262:10,14
short 87:16 149:20 201:20 241:10,16 32:18 33:24 35:8 specifically 89:23
180:3 201:22 214:8 241:17 242:3,10,13 45:7 63:9 66:15 104:13 122:12
217:3 219:16 220:8 243:16 244:3,10 68:9 70:23 75:13,24 133:20 135:13
220:10,14 221:4,20 250:2 90:22 91:23 99:4 200:18 201:5
221:25 222:16 silica's 198:24 107:3 119:11 123:2 277:19
shortages 217:11,16 200:24,24 129:6,21 133:15 specifics 49:14
shorter 141:17,19 similar 94:18 137:6 149:18 223:22
shot 246:16 145:24 160:10 161:23 163:15 specifies 116:23
show 75:11 83:7 simple 247:4 260:25 166:24 167:21 specify 23:15
88:22,23 90:2 94:3 168:6 169:7 170:19
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specifying 24:14 stat 132:10 135:16 185:22 186:7 188:6 156:17 163:24
speculate 24:3 stata 194:12 188:7,9,10 192:18 164:12,14,18
speculating 24:2 state 1:20 4:7 196:9 198:24 166:10 167:20,24
61:2 116:25 194:21 200:11,19,22201:5 169:15 179:11
speed 151:25 160:19 195:10 228:19 210:7,8 214:8 207:23 211:5
160:20 162:24 291:3,8 216:15 217:4,6,17 212:15 213:24
170:18 179:18 stated 279:19 217:18 218:8 214:18,20,25 215:7
185:13 statement 43:8 219:23 221:4,20,25 215:10 221:23
spell 148:9 79:1199:23 195:6 222:13,14 223:9,11 222:17 224:6 225:4
spend 4:25 60:23 210:9211:8261:11 224 :4,25 226:3 242:5,16,18 243:4
spent 15:6 147:8 264:13 265:2 280:4 262:23 244:12 253:12,22
252:8 281:4,6 stocks 158:20 254:7 255:2,10
spikes 187:19 states 1:2 89:3 206:9 159:19 176:19 261:17,22 262:12
spillover 194:18 statistic 191:22 217:7,18 222:15 263:3,7,18 264:14
spread 125:21 148:6 statistical 133:14 stop 17:11 68:6 265:11 268:7269:2
149:9,12 142:24 193:23 106:7 253:4 270:4,13,25 272:11
spreadsheet 239:22 statistically 119:22 stoppages 221:7 272:15 273:16
251:8 122:15 123:4,10 stories 62:11 274:10,18 276:17
spreadsheets 239:21 124:10,21 128:16 straight 150:14,14 277:20 279:24
squared 175:4,9,10 133:17 134:10,10 strauss 2:8 9:20 280:6 281:5,13,16
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174:1 175:1 176:1 73:2 50:21 51:5 52:16 284:9
177:1 178:1 179:1 winded 123:8 53:2,5 56:21 59:9 year 10:3 14:7 15:8
180:1 181:1 182:1 window 120:24 60:18 62:4 66:5 16:25 17:13 106:3
183:1 184:1 185:1 127:14,20,22 76:18 77:12 94:22 108:2 109:18 110:3
186:1 187:1 188:1 128:25 129:22 167:15 168:16 1.10:11,11 120:19
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Case 1:21-md-02989-CMA Document 568-17 Entered on FLSD Docket 06/08/2023 Page 114
of 114
Case 1:12-cv-08557-CM Document 97-1 Filed 06/17/14 Page 114 of 114
[year - zero] Page 38
120:20,24 121:4
150:23 151:15
206:9
years J3:12,22 16:3
18:13
york 1:2,16,16,20
2:7,7,17,17 4:7 15:6
66:17 92:18 217:6
217:16,18 218:8
219:23 291:3,4,8
294:2,2
z
zero 91:19 92:4,10
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File and source
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- gov.uscourts.flsd.590042.568.17.pdf
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