Exhibit 4 — Case 1:21-md-02989-CMA (Document 583-4)

Summary

Exhibit 4 (Document 583-4) in Case 1:21-md-02989-CMA, entered on the FLSD docket 06/28/2023, is the Expert Report of R. Alan Miller in a NetBank securities litigation in the United States District Court for the Northern District of Georgia, Atlanta Division. The report addresses whether NetBank common stock traded in an efficient market during the Class Period of March 16, 2005 through May 21, 2007 and whether declines in its stock price were caused by the alleged misrepresentations or omissions. Miller, President of Philadelphia Investment Banking Company, states the opinion that NetBank common stock traded in an efficient market and that the declines after the relevant disclosures were substantially related to the allegations in the Complaint. The report notes that NetBank traded on the NASDAQ Global Market and lists Miller's education and work experience.

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Case 1:21-md-02989-CMA Document 583-4 Entered on FLSD Docket 06/28/2023 Page 1 of 39

Exhibit 4
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION

IN RE NETBANE, INC. | CIVIL ACTION FILE
SECURITIES LITIGATION | NQ. 1:07-CV¥-2298-BBM
|
|

EXPERT REPORT OF R. ALAN MELLER

I, SCOPE OF PROJECT AND REPORT

I, R. Alan Miller, state the following to be true to the best of nry
knowledge, based on my experience and expertise in the matters discussed.

1. I have been asked by counsel for the Lead Plaintiif in this matter for
my opinion: a} whether, during the Class Period (March 16, 2005 through May
21, 2007), the common stock of NetBank, Ine, (“NetBank” or the “Company”)
traded in an efficient market and whether its stock price reflected the mix of
information available to the investment community; and b) whether any decline in
the price of NetBank’s common stock was caused by the correction of revelation
of the misrepresentations or omissions alleged by the Lead Plaintiff's operative

Amended and Consolidated Class Action Complaint (“Complaint”}.
2. This Report, inclusive of exhibits, presents my findings and
conclusions, as well as methodologies used. In preparing this Report, the
following is among the information I have reviewed to date:

* Lead Plaintiff's Complaint;

* Defendants’ Answer;

e Order dated January 29, 2009;

e Reports filed with the Securities and Exchange Commission by
NetBank, including its Forms 10-K, 10-Q and §-K which were

filed during 2005, 2006 and 2007;

» NetBank’s stock price and volume information and index data as
orovided by The Bloomberg, L.P.;

e Brokerage industry analyst reports on NetBank from databases
provided by Thomson Financial and Reuters,

e News reports and press releases on NetBank provided by The
Bloombere, L,P, and Reuters;

e Sources of internet information such as NASDAQ.com,
SEC. gov, and various siock message board websites.

Tl. SUMMARY OF CONCLUSIONS

3. Based on my background, experience and expertise as described
herein and the analysis as is set forth herein, it is my opinion that, during the

Class period at issue, NetBank common stock traded in an efficient market. It is
also my opinion that the declines in NetBank’s stock price after the relevant
disclosures during the Class Period were substantially related to the allegations of
wrongdoing set forth in the Complaint, and that the purchase of shares at inflated
prices throughout the Class Period was caused by the omissions and
misstatements described in the Complaint. A fuller statement of all relevant

opinions and the basis and reason for them are expressed below.

I. QUALIFICATIONS

4. lam President of Philadelphia Investment Banking Company
(“PYBC”}, a corporate finance consulting and litigation support firm located in
Villanova, Pennsylvania. I am submitting this Expert Report in connection with
Lead Plaintiff's Motion for Class Certification in the above litigation.

5. PIBC has provided a wide range of corporate finance services to a
diverse clientele of businesses and individuals located throughout the United
States. These services include: raising capital through private placements of
debt and equity financings; financial analysis and advisory services for public
offerings of securities; merger, acquisition and divestiture services, evaluation
and economic analysis services; consulting and litigation support; and other

financial services.
6. PIBC and its principals perform a considerable amount of work in
the areas of evaluation of businesses and securities and the factors involved in
such evaluation. These are done on a formal basis for a variety of purposes, as
well as continuously on an informal basis in the process of performing corporate
finance consulting functions in areas such as raising capital and assisting in
mergers and acquisitions. The factors used in such evaluations and their
importance and materiality to the investment community are areas in which |
have developed expertise and had substantial experience over the last thirty-six
years. Additionally, we have prepared a substantial number of analyses of
market impact and damages in connection with numerous shareholder litigations.

7. Attached hereto as Exhibit A is a copy of my resume, which outlines
the professional experience and expertise I have developed in over thirty-six
years in practice. | have testifved in court as a financial expert in thirty-one
cases. As such, I have been qualified or accepted as an expert on the operations
and efficiency of the securilies markets, damages, materiality issues, investment
banking practices, valuations and related corporate finance matters in numerous
federal and state courts nationwide beginning in 1977. In addition, f have

provided, in these and other cases, many depositions and submitted numerous
Declarations and Affidavits on matters in these areas, including many dealing
with market efficiency questions or the factors relevant to such studies.

8. I received a B.S. in Economics from Cornell University in 1970, and
2 Masters in Business Administration {major in Financial Accounting} from the
Wharton School of Finance and Commerce of the University of Pennsylvania in
1973. | have attended various Practising Law Institute and similar programs and
semimars on topics such as corporate fmance and due diligence. I have been a
guest lecturer at the Wharton School and at LaSalle University on various
corporate finance and capital markets topics.

9, [ have actively worked in the investment banking field for 36 years.

My work experience includes:

e Howard & Co., a corporate finance research and consulting firm,
Philadelphia, 1972 to 1976. Performed research, writing and
consulting on a wide range of corporate finance topics including
bank debt, lone term debt—private and public, mergers and
acquisilions, equity capital—private and public, going public and
being public. Topics included cost of each type af capital or
project, terms, advantages and disadvantages to issuer and
financing party, sources of capital, roles of participants (agents,
underwriters, counsel, accountants, rating agencies, regulators,
issuers, sources of financing}, and time ta accomplish tasks.
Such research included a detailed and comprehensive study of
550 IPO’s that had occurred in the five years prior to L973;
issues studied included determination of required disclosures,
materiality, due diligence practices and procedures, terms and
pricing, roles of participants, costs, timing, other issues that
arose. Authored and/or edited numerous articles in a series of
newsletters on above topics and prepared research for
presentation at seminars and to clients. Comnsuitation to chenis on
corporate finance projects and issues.

e Butcher and Singer, a major regional investment banking firm
headquartered in Philadelphia, carporate finance department 1976
io 1980. Performed corporate finance functions for investment
banking/brokerage firm. Work included private placements and
public offerings of debt and equity securities, merger and
acquisition work, evaluations, fairness opinions, tender offer
management, creating and structuring leasing transactions,
corporate finance advisory and consulting work. Obtained
professional license as registered representative.

e Philadeiphia Capital Advisors, a corporate finance services group
of Philadelphia National Bank, 1980 to 1983. Continued
corporate finance functions, except for public offering activities,

for a wide rage of clients. Supervised and instructed other group
members.

¢ Philadeiphia Investment Banking Company, a corporate finance
services firm, 1983 to present. Continued corporate finance
activities, with increasme work in litigation support.
1). PIBC is being compensated for the time spent by its persannel on
(his matter at its normal! hourly rates on a non-contingent basis. Currenthy my
rate is $495 per hour; athers in the firm are billed at rates from 375 to $435 per

hour, PIBC’s compensation is in no way contingent on the outcome of this

htigation or otherwise.
TV. MARKET EFFICIENCY

Ll. Stock prices are determined by the supply of and demand for a
stock. Atay point in time, if there aré more buyers than sellers, the buyers will
bid the price up to get the (relatively scarcer) seller's shares. Conversely, if
there are more sellers than buyers at any time, they will push the price down
until enough buyers are found. The U.S. stock markeis generally function
smoothly and with adequate liquidity to facilitate those who want to buy and sell.

12. In order to further explain how information is reflected in the price
of publicly-traded stock, economists and financial experts over the last several
decades bave developed what has become known as the Efficient Market
Hypothesis. There are three versions which difter based on what type and
amount of information is believed to be “impounded” or incorporated into stack
prices:

e The weak form suggests that a current stock price is the result of
past stock prices: the implication is that knowledge of past stock
prices, in the absence of other information, will not enable an
analyst to accurately predict future or even near-future stock prices.

e The semi-strong form suggests that all currently public information
available to market participants is reflected in steck prices fairly

rapidly after being obtained by the market. The clarity of the
information and the degree to which it would obviously affect future
39

cash flows, as well as the manner of dissemination, affect the speed
of incorporation of the information into the price.

e The strong version suggests that in addition te known information,
private information or any information that might be knowable 1s
incorporated inte stock pricing. Most observers believe that this
yersion is only theoretical and does not exist in practice.

Most marker practitioners and academics believe that the semi-strong version 1s
operative in the U.S. securities markets, inciuding the NASDAQ, currenily (and
during the Class Period}—that the market price of a stock reflects all information
known to market participants. In my opinion, the semi-strong version was
operative for NetBank’s common stock during the Class Period.

13. The term “Market Efficiency”, as it arises in the class certification
stage Gf securities fraud litigation, is used to describe whether the market for a
particular security is informationally efficient. The relevant inquiry has therefore
focused on whether a market mechanism exists to allow trading to occur if
participants so wish, and on whether information is available to these participants
on which they could base an investment decision. The context of the examination
is important in defining the factors to examine. The central question is whether

stocks trade on, and their prices are set based on, information about the issuer

and whether misinformation could therefore affect the level of prices.
39

(4. When considering whether the market for a stock ts efficient, the
object is to determine whether there are sufficient participants in the market with
capital who are prepared to trade the stock; whether information about the stock
is regularly provided or available te market participants; and whether the stock's
price responds to information. Specific factors to consider in evaluating market
efficiency are addressed in In re Scientific-Atianta, inc. Secs. Litig., No, 1:01-
cvy-1950-RWS5 (N.D. Ga. Sept. 7, 2007), which discussed and applied the widely
accepted factars in Canuner v. Bloom, 711 F. Supp. 1264 (D.N.J. 1989}, and
which are used by the courts to assess whether information is flowing to market
participants and whether there is a mechanism that permits them to incorporate
such information into their decisions to buy, sel] or held a security. Before
reviewing the specific factors, however, several general comments are
appropriate.

15. At least for class certification, it is appropriate to presume that aff
NYSE, AMEX and NASDAQ National Market System (“NMS”) stocks trade on
efficient markets—and this is before considering the vast improvements m
information availability since that text was written in 1988. This premise

comportts with the Casiier court’s analysis, as well ag commentators on the Jaw
39

such as Bromberg & Lowenfels, 4 Securities Fraud and Commodities Fraud
(August 1988}, p. 1292.

16. Although the proper focus in an examination of market efficiency is
on the particular stock in question, factors describing the general market in which
a stock trades can also be relevant. Here, NetBank traded on the NASDAQ
Global Market which is widely considered an efficient marketplace in the
investment community.' Included in Exhibit B hereto are informational materials
on the NASDAQ Global Market which highlight the many reasons for concluding
it 18 efficient as a marketplace,

17. Since Cammer v. Bloom was decided m 1989, markets such as the
NASDAQ Global Market in which NetBank traded, have generally become even
more efficient. Information has been increasingly dissemrmated electronically and

much of it is available for retrieval at an investor’s conventence. SEC

' At the beginning of che Class Period, NetBank traded on the NASDAQ National Market
System. On July 1, 2006, NASDAQ changed this designation and created three new
classifications: the NASDAQ Global Select Market, the NASDAQ Global Market, and the
NASDAQ Capital Market (for small cap stocks}, After this reclassification, NetBank waded
on the NASDAQ Global Market (which was renamed fram the NASDAQ National Market
System). According to information on NASDAQ’s web site on the new designations: “All
companies on NASDAQ, regardless of market designation, must maintain compliance with
rigorous financial and corporate governance listing qualifications standards, NASDAQ
provides the best trading environment for both value and growth stocks in a well-regulated
environment.” See the information on the NASDAQ Markets in Exlubit B.
39

documents, which were previously retrieved physically in Washington, DC or
ihrough a very expensive private copying service have become available, and
were available during the Class Period, via the Internet at no charge, on the
SEC’s EDGAR system as well as other sites. Other news sources, press and
wire releases, and brokerage analyst reports are electronically archived and
retrievable, Trading information—quates, trades, historical price and volume
data, bids, asks, market makers—all are available on-line. Local newspapers or
financial hard-copy publications are no longer the only source of informatton and
trading data. Information is available to market participants, including investors,
much more directly than previously, so the intermediary information distribution
mechanism of analysts and brokerage firm involvement is not nearly as important
as it once was to ensure dissemination of information.

The Setendific-Adlania and Camier Factors

18. In accord with Scientifie-Atiania and Ceaser, the relevant factors
for consideration include: a} the average weekly trading volume expressed as 4
percentage of total outstanding shares; b) the number of analysts following and
reporting on the stock; ¢) the extent to which market makers and arbitrageurs

trade in the stock; d) ihe company’s eligibility to file SEC registration Form $-3

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(as opposed to Form S-1 or S-2); ¢) the existence of empirical facts “showing a
cause and effect relationship between unexpected corporale events or financial
releases and an immediate response in the stock price”; f} the company’s market
capitalization; g) the bid-ask spread for stock sales; and h) float, the stock's
irading volume without counting insider-owned stock.

19. The Average Weekly Trading Volume Expressed as a Percentage
of Total Outstanding Shares

Average weekly trading volume is the total trading volume for the period
being studied divided by the number of weeks in the period. In my experience,
this factor is important as it demonstrates investor interest in the stock.

As shown in Exhibit C, NetBank experienced substantial weekly trading
volume during the Class Period. In Canuner the Court stated that weekly trading
volume of two percent or more of the outstanding shares would justify a strong
presumption that the market for the security is an efficient one. NetBank had
between 46,236,885 and 46,586,415 shares outstanding during the Class Period.
Using the midpoint of this range, two percent of 46,411,650 = 928233 shares.
At 1,368,983 average weekly shares traded, in my experience NetBank had
sufficient investor participation to indicate the existence of an efficient market,

and this 1s supported by Canzer.
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20. The Number of Securities Analysts Following and Reporting on
the Stock

Thomson Financial’s database of analyst reports, Investext, lists 114
analyst reports from 14 analysts during the Class Period; Reuters’ database of
analyst reports, Multexnet, lists 114 reports from 15 analysts. Some of these
may overlap and the two sources sometimes list different types of reports. See
Exhibit D, This is more than adequate coverage to support a conclusion of
market efficiency, even without considering che substantial improvements in
information dissemination since the 1989 discussion in Camimer discussed herein.

21. The Extent to Which Market Makers and Arbitrageurs Trade in
the Stock

a. Market makers function to maintain a fait and orderly market
by providing liquidity, as acknowledged in Scientific-Atanta and Caminer,
This is in accord with the NASDAQ’s elossary on its web site, which defines
market makers as follows:

The NASD member firms that use their own capital,
research, retail and/or systems resources to represent a
stock and compete with each other to buy and seil the
stocks they represent. There are over 500 member
firms that act as NASDAO Market Makers. One of the
major differences between The NASDAQ Stock Market
and other major markets in the U.S. is NASDAQ’s
structure of competing Markel Makers. Each Market
39

Maker competes for customer order flow by displaying

buy and sell quotations for a guaranteed number of

shares. Once an order is received, the Market Maker

will immediately purchase for or sell from its own

inventory, or seek the other side of the trade until it is

executed, olten in a matter of seconds.

b. During the Class Period, NetBank had at least 73 different
market makers participating in the market for its common stock as identified by
NASDAG data. This is certainly sufficient lo provide an interested group of
market participants ready to commit capital upon investors’ receipt of information
affecting their investment opinions. According to NASDAQ’s Going Public
publication in Exhibit B, an average of 20 market makers covered each
NASDAQ stock in 2005. NetBank was covered by at least 66 market makers in
2005; at least 62 in 2006, and at least 50 in 2007. In a 20068 publication,
NASDAQ stated that the average number of market makers for NASDAQ
companies was still 20.

c. What is important to market efficiency is that the mechanisin
is in place to facilitate trading when those who wish to trade receive information.
Here, there is huge capacity for trading fram some of the largest, most active

NASDAQ market-making firms. Of the top ten largest NASDAQ market makers

in October 2006 and March 2007, seven had positions in NetBank; in May 2007,

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six of the ten largest market makers had positions in NetBank. In my opinion,
NetBank enjoyed excellent market-making support.

27. The Company's Eligibility to File SEC Registration Form 5-3

This factor relates primarily to the size of a company’s market
capitalization and technical factors regarding previous filings. Pursuant to Form
S-3, companies which are registered under Section 12(¢) of the Exchange Act
(among other specified sections} may use this form if the company has amely
filed its reports with the SHC for the last twelve months and if it has an aggregate
value of outstanding securities, net in the hands of affiliates, which totals greater
than $75 million. NetBank qualified for this type of registration during the Class
Period based on the market capitalization factor and to the extent it was current
with its SEC filings.

23. Empirical Facts Demonstrating That NetBank’s Stock Price
Responded to News

a. We reviewed publicly available databases to deternune
whether information was regularly provided to the market regarding NetBank,
the nature of that information, whether that information appeared to be
incerporated into the market price and whether the market reacted to apparently

unexpected news. We considered NetBank’s reports filed with the SEC (Exhibit

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EF}, its press releases to the investment community issued during the Class Period
(Exhibit F), the analyst reports discussed heretofore (Exhibit D}, and other news
stories about the Company (Exhibit F).

b. For the Class Period, the Factiva.com news retrieval service
(a service of Dow Jones & Reuters) lists 1,930 articles mentioning NetBank.
The Factiva.com news reirieval service shows 622 articles from “Major” sources
only and 1,930 for “all” sources (which will overlap somewhat with EDGAR)
for the Class Period, There was a substantial amount of information provided to
the marketplace regarding NetBank, See Exhibit F. In addition, NetBank
regularly filed reports with the Securities and Exchange Commission (“SEC”)
through November of 2006. See Exhibit E (EDGAR list). The Company
continued to issue press releases about its results and to conduct investor
conference calls, therefore continuing to inform the market of tts performance
and prospects. While the filing of SEC reports is in itself not dispositive in
determining market efficiency, as the extensive discussion in Canuner shows,
factors such as this are a valid and important componeni of the provision of

information to the marketplace and when coupled with the cther structutal factors

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identified by Scientific-Atlanta and Camimer (market makers, trading volume,
elc.} are exactly the elements that need to be present to have an efficient market,
ce. Attached as Exhibit G are price and volume charts with
markings showing times when information was being provided to the market.
There are many hundreds of pieces of information known to have been available
io the market in and around the time of the Class Period. A few examples of
such information are presented here alongside the price and volume data for

illustration.

Event Renarted | Closing | % Price
Date Volume; Price | Change | News Event

3/5/07 689,488 , $2.68 | -11.55% | On March 5, 2007, Barron’s reported

that the analyst from Sandler O° Neill

‘reduced NetBank’s price target on

worsening financial results.

S/Y7/07! = 922,773) $1.70 | -10.53% | On May 17, 2007, il was reported

| that NetBank received a warning

from NASDAQ because it was late in

filing its mast recent quarterly report.

5/21/07 | 11,218,123 | $0.59 | -66.29% | On May 21, 2007, NetBank

announced that it will be selling most

of its assets to EverBank Financial

| | Corp.

li
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24. The Company’s Market Capitalization

Market capitalization is a recognized factor which contributes to
market efficiency. The market capitalization for NetBank was as follows at times
shown during the Class Period:

Shares Stock Market
Date Outstanding Price Capitalization Source

APTOS 46,322,131 $8.97 $415,509,515.07 12/31/04 10-k
5/1/05 46,236,855 $8.21 $379,604,579.55 3/31/05 10-Q
7/31/05 46,318,407 $9.33 $432,150,737.31 6/30/05 10-Q
1O/SL/05 = 46,359,564 $7.62 $362,331,790.48 9/30/05 10-Q
3/6/06 46,586,415 $7.28 $339,149,101.20 12/31/05 10-K
Af30/06 46,336,115 $7.00 $324,353,085.00 3/31/06 10-Q
731/06 46,373,702 $5.50 $255,055,361.00 6/30/06 10-Q
1Q/31/06 46,400,456 $5.31 $246,386,421.36 9/30/06 10-Q

According to Bloomberg data, at the beginning of the Class Period on March 16,
2005, there were 3,215 stocks in the NASDAQ Composite Index, a market
capitalization-weighted index of stocks comprising the three NASDAQ
classifications. When ranking all these stocks by market capitalization, NetBank
was ranked 913; NetBank’s inclusion in the top 30 percentile signals its
efficiency. On December 29, 2006, NetBank ranked 1,653 out of 3,130 stocks
in the NASDAG Composite.

This level of market capitalization supports a finding of market efficiency.

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25. Bid-Ask Spread for Stock Sales

The bid price is the highest price an investor will pay for a security,
while the ask price is the lowest price a seller will accept for the same security.
The bid-ask spread is simply the absolute value of the difference between these
two prices. Using NetBank’s daily closing bid and ask prices for the Class
Period, the average daily bid-ask spread is $0.016, or 0.29% of the average stock
price. In my experience, these are very tight spreads and low percentages and
further indicate market efficiency in NetBank’s stock.

26. Float

“Float” is considered as the number of shares available for trading
by the public. It is calculated by subtracting the number of shares held by
insiders from the total number of shares outstanding. The following table
summarizes NetBank’s insider holdings as disclosed in its proxy statements filed

from 2004 to 2006 (there was no NetBank proxy statement published in 2007):

shares Insider
Date of Outstanding Amount Holdings as Float
Proxy (Referenced Of Insider a % of asa % of
Report im Proxy} Holdings Outstanding | Outstanding
3/25/04 A7,114,828 2,979,362 6.32% 93.68 %
3/28/05 46,322,131 3,262,948 7.04% 97.96%
| 3/31/06 46,586,415 3,435,189 7.37% 92.03 %

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A conclusion of market efficiency is supported by the high percentage of shares

available for public trading to the total shares outstanding.

¥. LOSS CAUSATION

27. We have reviewed the daily trading prices and volumes for
NetBank’s stock along with news articles, analyst reports, Company SEC filings
and other information which was publicly-disseminated during the Class Pernod.
We have observed market index movements, industry index movements, and
comparative company movements, and compared them with those of NetBank’s
stock price movements. Based on this review and my professional experience, it
is my opinion that the declines in NetBank’s stock price after the relevant
disclosures during the Class Period were substantially related to the issues raised
in the Complaint, and that the purchase of shares at inflated prices throughout the
Class Period was caused by the omissions and misstatements described in the
Complaint and/or discussed heretofore. See Exhibit H.

28. The Complaint contends thai, during the Class Period, NetBank and

the Defendants engaged in a scheme to deceive the market and artificially inflate

20)
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the price of NetBank’s shares. In doing so, Defendants made material
misrepresentations and omissions regarding, among other things, the Company’s
fmancial reporting, financial condition, internal controls, business operations,
corporate restructuring, core banking business, lending practices and exposure to
subprime mortgages. Asa result of their purchases of NetBank stock during the
Class Period at artificially inflated prices and subsequent disclosures which
removed the inflation from such securities, Plamtiffs and other members of the
Class sutitered losses. The type of information which Defendants allegedly
omitted and misstated during the Class Period regarding the financial condition
and performance, and imterna] controls, is of the utmost importance to investors,
as it is used io assess the financial strength of the Company and its iikely future
prospects. The financtal control issues are especially important as without them,
the reliability of the financial mformation cannot be assumed.

29. A regression analysis calculates the relationship between movements
im a dependent variable (stock price} compared with movements in an
independent variable (typically an index of stock prices} as expressed ina
formula, applies the formula to the Class Period to predict ihe movement of the

price given the movement of the index, observes the differences between the
39

actual price movements and the predicted movements, and expresses those
differences in terms of standard deviations. A regression analysis was generated
under my direction whereby the movement of NetBank’s stock price was
compared with that of the NASDAQ Banking Index*. On each date of the Class
Period, the results of the regression were used to segregate the portion of the
price change “explained” by company-specitrc factors and the portion
“explamed” by the index movement, by comparing the company’s actual stock
price movements with a prediction of the same based on the stock price and
index’s respective movements during a “base period”? {assumed to be unaffected
by fraud). On dates when NetBank’s stock price decline was statistically
significant’, we reviewed sources such as news articles and analyst reports to
determine if the disclosures were “corrective” of or related to the ommussions and

misstatements described in the Complaint. The following table summarizes some

> The NASDAQ Banking Index was the industry index used by NetBank in its Proay
statements durimg the Class Periad. The SEC requires filers to include a comparative factor to
Its Stock price performance; NetHank presented this index as its comparative index.

* The base period used here was J anuary 1, 2004 through March 13, 2005.

* The threshold for statistical significance at the 95% confidence level was sel at 4 L-statistic of
1.967903, which represents 1.97 siandard deviations of divergence from the predicted value
(which varies according to the model based on the index change on a given day}. The
threshold for statistical significance at the 90% confidence level was sct at a t-statistic of
1.6499487 with the same mmplicalons.
39

identified in the table above are, in my opinion, statistically significant and
causally related to news and other disclosures of the alleged fraud or of business
reversals related to the alleged fraud. See, for example, the decline on May 21,
2007 with its t-statistic of -39.75.

31. The following Exhibits are attached hereto:

Exhibit A Resume of R, Alan Miller

ExtuhbitB NASDAQ Stock Market Materials

Exhibit C Weekly Trading Volume Data

ExhibitD Securities Analysts’ Reports

Exhibit E EDGAR List

Exhibit F Articles and Press Releases

Exhibit G Price and Volume Chart Marked With
Intormation Provided To Market

Exhibit H News Items on Selected Dates With
Significant Price Movements

VI. LIMITING FACTORS AND OTHER ASSUMPTIONS

32. This report is furnished solely for the parties and the court in the
matter of the In re NetBank, Inc. Securities Litigation identified in the above-
referenced caption, and solely in connection with Lead Plaintiff's Motion for
Class Certification.

33. We have generated this preliminary report in advance of the

conclusion of fact discovery, which may cause us to modify or amplify the
39

opinions expressed in this report. Further analysis may be performed. This

information may also be supplemented or presented in different format(s).

alizlo4 # Bh. Merle.
Date R. Alan Miller

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EXHIBIT A

RESUME OF R. ALAN MILLER
Case 1:21-Mas@2P89-OMB2 2DEclienDaeBihe i G6red BideLOVIDikkePage 22238 Page 29 of
39 EXHIBIT A

PHILADELPHIA INVESTMENT BANKING COMPANY

R. ALAN MILLER

President

Mr. Miller was a founder of PIBC in September of 1983. A summary of PIBC's
services is attached.

From November of 1980 until the formation of PIBC, Mr. Miller served as Senior Vice
President of Philadelphia Capital Advisors, the corporate finance services division of the
Philadelphia National Bank. At Philadelphia Capital Advisors, Mr. Miller was responsible for
corporate finance activities, including private placements of debt and equity capital; mergers,
acquisitions and divestitures; financial consulting, evaluation and expert witness services;

leasing and other alternate sources of capital; and for providing assistance and advice to PCA's
staff on their projects.

Prior to joining Philadelphia Capital Advisors, Mr. Miller was Vice President,
Corporate Finance at Butcher & Singer, Inc., an investment banking firm based in
Philadelphia, from 1976 to 1980. At Butcher & Singer his duties included private placements
of debt and equity capital; mergers and acquisitions; public offerings of securities; leasing,
evaluations, financial consulting and expert witness assignments.

From 1972 to 1976 Mr. Miller was a Senior Associate and General Manager with
Howard & Co., a Philadelphia based financial consulting company. Assignments there
included research and consulting on a wide range of corporate finance topics. Mr. Miller also

edited and wrote many of the articles for a series of newsletters on corporate finance published
by Howard & Co.

Mr. Miller received a B.S. in Economics from Cornell University in 1970 and an
M.B.A. in Financial Accounting from the Wharton School of the University of Pennsylvania in
1973. He served in the United States Marine Corps Reserve from 1970 through 1976. Mr.
Miller has authored several articles on various corporate finance topics and has been a guest
lecturer at the Wharton School and La Salle University. He currently lives in Wayne, Pa.

P.O. BOX 209, ONE ALDWYN CENTER, VILLANOVA, PA 19085-0209
PHONE (610) 527-5346 / FAX (610) 527-1629 / email: pibc@pibc.net
39

PHILADELPHIA INVESTMENT BANKING COMPANY

Summary of Services

The following are specific categories of PIBC services. All situations are unique; we
invite your inquiries as to our capabilities.

FINANCINGS

Private debt and equity financings

Joint ventures

“Operational” or trade financing
Marketing/distribution arrangements as capital sources
Public offerings--advisory

Leasing and "managed" equipment financing

Other specialized financings

EVALUATIONS AND ECONOMIC ANALYSES

Litigation consulting and support

General business valuations

Merger, acquisition and divestiture analyses
Shareholder representation

Fairness opinions

Estate or gift tax; estate planning

Marital or property settlement; other dispute resolution
ESOP transactions/annual evaluations; corporate repurchases
Recapitalizations

Assistance to fiduciaries

Offeree representative, prospective investor analysis

MERGERS AND ACQUISITIONS, LEVERAGED AND MANAGEMENT BUYOUTS

REFINANCING, TURNAROUND "PROJECT MANAGEMENT" AND WORKOUT
FINANCING; BANKRUPTCY PLANS

TRUSTEE/FIDUCIARY, ASSET MANAGER ASSIGNMENTS

CORPORATE FINANCIAL ADVISORY; CONSULTING; "WORKING DIRECTOR"
ASSIGNMENTS
39

R. ALAN MILLER

Expert Witness Testimony in Court

1. Vadakin v. Vadakin. State Court of Ohio Court System, Marietta, Ohio, 1977.

2. Baer v. Fidelco Growth Investors. Court of Common Pleas, Montgomery County, PA,
1978.

3. Shanno v. Magee Industrial Enterprises, Inc. United States District Court for the Eastern
District of Pennsylvania. Civil Action 79-2038, J. Fullam, October 12, 1983.

4. Raymond K. Peil v. Speiser, et al. (Health-Chem Securities Litigation). United States
District Court for the Eastern District of Pennsylvania. Civil Action No. 82-1289, J.
O'Neill, April 1985.

5. Gordon McShane, et al. v. Pennwalt Corporation, et al. United States District Court for
the Eastern District of Pennsylvania. Civil Action No. 85-6020, J. Ludwig, March 10,
1986.

6. Harry Lewis v. John D. DePaul, et al. (Lehigh Press Litigation). Court of Common
Pleas, Philadelphia County, PA. Civil Action No. 4760, November Term, 1986. March
5, 1987.

7. California Natural v. Nestle. United States District Court for the District of New J ersey,
J. Brotman, June 1987.

8. GCA Corporation Securities Litigation. United States District Court for the District of
Massachusetts, Master File No. 85-4693-c, J. Caffrey. October 1987.

9. Van de Walle v. Unimation, et al. Court of Chancery of the State of Delaware, New
Castle County. Civil Action No. 7046, Vice Chancellor Jack B. Jacobs, February and
April 1989. |

10. U.S. Healthcare Securities Litigation. United States District Court for the Eastern District
of Pennsylvania. Civil Action No. 88-0559, J. McGlynn, April 1989.

11. California Natural v. Nestle. United States District Court for the District of New Jersey
(Camden). J. Brotman. April 1989.

12. IA Holdings Corporation Dissenter's Appraisal Action. Court of Common Pleas,
Delaware County, Pennsylvania. Civil Action 86-14981, J. Lawhorne, October 1989.
39

R. Alan Miller / Expert Witness Testimony in Court / Page 2

13. Kulicke & Soffa Securities Litigation. United States District Court for the Eastern District
of Pennsylvania. Master File No. 86-1656, J. Ditter, March 1990.

14. McKinley Allsopp, Inc. v. Jetborne International, Inc. United States District Court for the
Southern District of New York. 89 CIV. 1489 (DNC), J. Leval, May 1990.

15. Kay Jewelers Securities Litigation. United States District Court for the Eastern District of
Virginia, Alexandria Division. Civil Action No. 90-1663-A through 90-1688-A, J. Bryan,

16. Pennsylvania Enterprises Securities Litigation (Lindner Fund, et al. v. Pollock, et al.).
United States District Court for the Eastern District of Pennsylvania. Civil Action No.
91-6901, J. VanArtsdalen, December 1991.

17. O & M Investment Partners v. Windon, et al. United States District Court for the Eastern
District of Pennsylvania. Civil Action No. 91-CV1970, J. Robert F. Kelly, September
1992.

18. National Media (Derivative) Securities Litigation. United States District Court for the
Eastern District of Pennsylvania. Civil Action No. 90-81 13, J. Bechtle, November 1992.

19. First Pennsylvania Securities Litigation (Grossman v. First Pennsylvania Corporation, et
al.). United States District Court for the Eastern District of Pennsylvania. Civil Action
No. 89-9234, J. Brody, July 1993.

20. In the Matter of R. Glen Fenstermacher, et al., Debtors. United States Bankruptcy Court
for the District of New Jersey. Case No. 93-13041, J. Wizmur, July 1993.

21. Sunkyong America, Inc. v. Omega Sports, Inc. United States District Court for the
Eastern District of Pennsylvania. Civil Action No. 93-CV-5355, J. Van Antwerpen,
September 1994.

22. Geriatric & Medical Centers Securities Litigation (Hoffman v. Geriatric & Medical
Centers, Inc., et al.). United States District Court for the Eastern District of
Pennsylvania. Civil Action No. 93-CV-2129, J. Fullam, May and June, 1995.

23. U.S. Banknote Securities Litigation (Vladimir v. U.S. Banknote and Morris Weissman).
United States District Court for the Southern District of New York. 94 Civ. 0255(MGC),
J. Cedarbaum, January 1997.
39

R. Alan Miller / Expert Witness Testimony in Court / Page 3

24.

25.

26.

27.

28.

29.

30.

31.

Lewin, et al. v. Saidel, et al. (MetroBank Proxy/Securities Litigation). Court of Common
Pleas, County of Philadelphia, PA. No. 96-04-SD-0015. J. Levin, November 1997.

Kenney (as Ch. 11 Trustee for Daisy Systems Corp., et al.) v. Bear Stearns & Co., Inc.
United States District Court for the Northern District of California, Oakland Division.
No. C92-1845-DLJ, J. Jensen, April 1998.

Alpha Group Consultants, Ltd., et al., and Pension Reserves Investment Trust Fund of the
Commonwealth of Massachuetts v. Bear Stearns & Co. , Inc. United States District Court
for the Southern District of California. Case No. CV-91-00143-IEG, J. Gonzalez, July
and August, 1998.

Fightertown Entertainment, Inc. v. Robertson, Stephens & Company, et al. Superior
Court of the State of California In and For the County of Orange. No. 750511, J. Kline,
October 1998.

First Pension Cases I—Murray v. Belka. Superior Court of the State of California In and
For the County of Orange. No. 740706, J. Firmat, April 2000.

Krogman, et al. v. Sterritt, et al. (Continental Investment Corp. Securities Litigation).
United States District Court for the Northern District of Texas. Civil Action No. 3-98-CV
2895-T, J. Lynn, November 2000.

Heiser, et al., v. Southeastern Pennsylvania Transportation Authority. City of
Philadelphia Court of Common Pleas. Case No. 9907-3167, J. Shepard, December 2002.

PolyMedica Corp. Securities Litigation. United States District Court for the District of
Massachusetts, Civil Action No. 00-12426 REK, J. Young, March 23, 2006.
39

R. ALAN MILLER

Deposition and Arbitration Testimony

The following list is of matters in which I have given testimony at deposition or in

arbitration since January 1, 1990.

Depositions

1. Shearson/Indian Wells Securities Litigation. United States District Court for the Western
District of Washington at Seattle. No. C88-695WD, May 14, 15 and 16, 1990.

2. Kay Jewelers Securities Litigation. United States District Court for the Eastern District of
Virginia, Alexandria Division. Civil Action No. 90-1663-A through 90-1688-A, May 15,
1991.

3. Rospatch Securities Litigation. United States District Court for the Western District of
Michigan, Southern Division. No. 1:90-CV-805, February 4, 1992, March 6, 1992.

4. National Media (Derivative) Securities Litigation. United States District Court for the
Eastern District of Pennsylvania. Civil Action No. 90-8113, October 21, 1992.

5. Federal Express Securities Litigation. United States District Court for the Western
District of Tennessee. Master File No. 90-2359-4B, November 24, 1992.

6. Gillette Securities Litigation. United States District Court for the District of
Massachusetts. Civil Action No. 88-1858-K, March 12 and 26, 1993.

7. HBO & Co. Securities Litigation. United States District Court for the Northern District of
Georgia, Atlantic Division. Civil Action No. 1:87-CV-657A-JTC, May 6, 1993.

8. American Dental Laser Securities Litigation. United States District Court for the Eastern
District of Michigan, Southern Division. Master File No. 92-CV-71917-DT, August 3,
11, 18, and 31, 1993.

9. Mesa Petroleum Securities Litigation. United States District Court for the Northern
District of Texas, Dallas Division. Case No. 3:91-CV-2376-x, March 28, 1994.

10. Geriatric and Medical Centers Securities Litigation. United States District Court for the

Eastern District of Pennsylvania. Civil Action Nos. 92-CV-5113 and 93-CV-2129,
October 10 and 20, 1994.
Case 1:21-Mase289-OM022DOdDenDERBrhertreBred BnideL G10 Mike Pane B2G23B8 Page 35 of

39

R. Alan Miller / Deposition and Arbitration Testimony / Page 2

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

21.

22.

23.

Moore Medical Corporation Securities Litigation. United States District Court for the
Southern District of New York. Civil Action No. 91 Civ. 3701 (ML), November 3 and 4,
1994,

Cellcor Securities Litigation. Court of Chancery of the State of Delaware in and for New
Castle County. Civil Action No. 12725, April 12 and 13, 1995.

New America Securities Litigation. United States District Court for the District of
Massachusetts. Civil Action No. 90-10782-MA, May 11 and 12, 1995.

U.S. Banknote Securities Litigation. United States District Court for the Southern District
of New York. Civil Action No. 94 Civ. 0255(MGC), February 23, 1996.

U.S. Wireless Data Securities Litigation. United States District Court for the District of
Colorado. Civil Action No. 94-2-2258, April 9, 1996.

Bay Financial Corporation Securities Litigation. United States District Court for the
District of Massachusetts. Civil Action Master File No. 89 2377-WD, April 18 and 19,
1996.

American Mobile Systems, Inc. Securities Litigation. United States District Court for the
Eastern District of Pennsylvania. Civil Action No. 92-1782, May 21, 1996.

Clinicorp Securities Litigation. United States District Court for the Southern District of
Florida--West Palm Beach Division. 94-8163-CIV-RYSKAMP, July 9, 1996.

Circle K Bankruptcy Litigation. United States Bankruptcy Court for the District of
Arizona. Bankruptcy Court Nos. 90-5052-PHX-GBN to 90-5075-PHX-GBN Jointly
Administered, Advisory Proceeding No. 93-1123, August 8, 1996.

People’s Bank Securities Litigation. United States District Court, District of Connecticut.
Civil Action No. B-90-600 (JAC), February 5 and 6, 1997.

Castle Pines Securities Litigation. District Court, County of Douglas, Colorado. Civil
Action No. 91-CV-429, Division 2, August 21, 1997.

Thomas P. Jasin v. Brown & Company Securities Corporation. United States District
Court for the Eastern District of Pennsylvania. Civil Action No. 96-CV-6872, October
31, 1997.

Goldfine v. Steinberg, et al. (Shearson) Litigation. Circuit Court of Cook County,
Mlinois. No. 93L5223, February 11 and 12, 1998.
39

R. Alan Miller / Deposition and Arbitration Testimony / Page 3

24. Kenney (as Ch. 11 trustee for Daisy Systems Corp., et al.) vs. Bear Stearns & Co., Inc.

25.

26.

27.

28.

29.

30.

31.

32.

33.

34.

35.

United States District Court for the Northern District of California, Oakland Division.
Case No. C-92-1845-DLJ, March 20, 1998.

Rolite, Inc. v. Wheelabrator Environmental Systems, Inc. and WMX Technologies, Inc.
United States District Court for the Eastern District of Pennsylvania, No. 94-CV-5894,
April 29, 1998.

Alpha Group Consultants, Ltd., et al., and Pension Reserves Investment Trust Fund of the
Commonwealth of Massachusetts v. Bear Stearns & Co. , Inc. United States District Court
for the Southern District of California, Case No. CV-91-00143-IEG (JAH), July 8, 1998.

Fightertown Entertainment, Inc. v. Robertson, Stephens & Co. Superior Court of the
State of California for the County of Orange, Case No. 750511, August 6 and 7, 1998.

Kidder Peabody Securities Litigation. United States District Court for the Southern
District of New York, Master File Civil Action No. 94-CV-3954 (BSJ) (MHD), January
28, 1999 and February 18, 1999.

Micrion Corporation Securities Litigation. United States District Court for the District of
Massachusetts, No. 96-11596-REK, May 7, 1999.

Mizel IRA et al. v. Butler et al.—Avatex Derivative Litigation. Supreme Court of the
State of New York—County of New York, Index No. 602773/98, September 8, 1999.

First Pension Cases—Coordination Proceeding No. 3131 (Murray v. Belka et al.).
Superior Court of the State of California for the County of Orange, No. 740706,
December 15, 16 and 17, 1999.

Miller Industries Securities Litigation. United States District Court for the Northern
District of Georgia, Atlanta Division, Civil Action, Master File No. 1:97-CV-2811
(TWT), March 15 and 16, 2000.

Continental Investment Corp. Securities Litigation. United States District Court for the
Northern District of Texas, Civil Action No. 3-98-CV2895-T, May 8, 2000.

IKON Office Solutions, Inc. Securities Litigation. United States District Court for the
Eastern District of Pennsylvania, MDL Docket No. 1318 (MK) No. 98-CV-4286,
September 27 and 28, 2000.

PaineWebber Incorporated v. NetRatings, Inc. Supreme Court of the State of New York,
County of New York, Index No. 99/605036, October 20, 2000.
39

R. Alan Miller / Deposition and Arbitration Testimony / Page 4

36.

37.

38.

39.

40.

41.

42.

43.

44.

45.

46.

47.

Jacobs, et al. v. Coopers & Lybrand, L.L.P., et al. (Happiness Express Securities
Litigation). United States District Court for the Southern District of New York, Case No.
97 CIV. 3374 (RPP), January 18, 2001.

Robert Mowbray, et al. v. Waste Management Holdings, Inc. United States District Court
for the District of Massachusetts, Civil Action No. 98-1 1534-WG4,
March 22 and 23, 2001.

Lee Adams v. Western Micro Technology, Inc., et al. Superior Court of the State of
California, In and For the County of Orange, Case No. 810801, June 8, 2001.

BankAmerica Corp. Securities Litigation. United States District Court for the Eastern
District of Missouri—Eastern Division, MDL No. 1264 (Judge Nangle), July 26 and 27,
and December 6, 2001.

Sternbach and Ancowitz v. Network Associates and Lichtman. United States District
Court for the District of New Jersey, Civil Action No. CIV. 00-1576 (JCL),
August 1, 2001.

Sunbeam Corporation Securities Litigation (Debentures). United States District Court for
the Southern District of Florida, Miami Division, MDL No. 1297, November 1 and 2,
2001.

Infocure Corporation Litigation. United States District Court for the Northern District of
Georgia, Atlanta Division, C.A. No. 01-CV-0001-TWT , November 14, 2001.

Equimed, Inc. Securities Litigation. United States District Court for the Eastern District
of Pennsylvania, Master File No. 98-CV-5374 (NS), December 20, 2001.

Merz Pharmaceuticals v. Accupac, Inc. United States District Court for the Eastern
District of Pennsylvania, Civil Action No. 01-CV-1668, January 23, 2002.

Smallworldwide PLC Securities Litigation. United States District Court for the District of
Colorado, Civil Action No. 99-K-1254, March 28 and April 24, 2002.

PSINet Securities Litigation. United States District Court for the Eastern District of
Virginia, Alexandria Division, Civil Action No. 00-1850-A, January 8, 2003.

DaimlerChrysler Securities Litigation. United States District Court for the District of
Delaware, Master Docket No. 00-0993 (JJF), January 13, 2003.
39

R. Alan Miller / Deposition and Arbitration Testimony / Page 5

48.

49.

50.

52.

33.

34.

35.

56.

58.

39.

60.

Hayden v. FleetBoston Financial Corporation and Robertson Stephens, Inc. JAMS
Arbitration, August 27, 2003.

Rollins-Safety Kleen (Proxy) Litigation. United States District Court for the District of
South Carolina, Civil Action No. 3:00-1343-17, October 1, 2003.

AMF Bowling Securities Litigation. United States District Court for the Southern District
of New York, Civil Action No. 99 CIV 3023 (DL), December 17, 2003.

Telxon Corporation Securities Litigation and Hayman v. PricewaterhouseCoopers, LLP.
United States District Court for the Northern District of Ohio—Eastern Division, Case
No. 5:98-CV-2876, January 13 and 14, 2004.

Apropos Securities Litigation. United States District Court for the Northern District of
Iilinois, Civil Action No. 01C8406, January 30, 2004.

Safeguard Scientifics Securities Litigation. United States District Court for the Eastern
District of Pennsylvania, Civil Action 01-3208, June 29, 2004.

Official Committee of Unsecured Creditors of Tri Valley Growers vs. Deloitte & Touche
LLP. Superior Court of the State of California, County of San Francisco, No. 406914,
August 25 and 26, 2004.

Levitan v. McCoy, et al. (Bank One Securities Litigation). United States District Court
for the Northern District of Illinois—Eastern Division, Civil Action No. 00-C-5096,
May 4, 2005.

Commercial Financial Services, Inc. v. Chase Securities, Inc. United States District Court
for the Northern District of Oklahoma, May 25, 2005.

Ahearn v. Credit Suisse First Boston (Winstar). United States District Court for the
District of Massachusetts, No. 03-CV-10956 (JLT), January 3, 2006.

Touch America Holdings, Inc. (Montana Power Company) ERISA Litigation. United
States District Court for the District of Montana—Butte Division, No. CV-02-106-BU-
SHE, June 27 and July 20, 2006.

Fiala, et al. v. Metropolitan Life Insurance Company, et al. Court of the State of New
York, County of New York: Part 49, No. 601181/00, No. 108887/00, July 14, 2006.

Adams Golf Securities Litigation. United States District Court for the District of
Delaware, Consolidated C.A. No. 99-371 (KAJ), August 11, 2006.
39

R. Alan Miller / Deposition and Arbitration Testimony / Page 6

61.

62.

63.

64.

65.

66.

Enron Securities Litigation (Public Employees’ Retirement System of Ohio v. Andrew S.
Fastow, et al.). United States District Court for the Southern District of Texas, Houston
Division, Civil Action No. H-02-4788, December 11 and 12, 2006.

Jack E. Salmon, Jr. v. KPMG LLP et al. Arbitration. May 1, 2007.

Parmalat Securities Litigation. United States District Court, Southern District of New
York, Case No. 04MD-1653 (LAK), August 6 and 7, 2007.

Peregrine Securities Litigation (Bains, et al. v. Moores, et al.). Superior Court of the
State of California for the County of San Diego, No. GIC 806212, August 15, 2007.

Motorola ERISA Litigation (Lingis et al. v. Motorola, Inc. et al.). United States District
Court, Northern District of Illinois, Eastern Division, No. 03C5044, November 2, 2007.

SBA, as Receiver for Acorn Technology Fund, L.P. v. Smith Stratton, et al. United
States District Court for the Eastern District of Pennsylvania, Civil Action No. 05-190,
September 29, 2008.

Arbitrations

1.

Liberty University v. Kemper. American Arbitration Association. AAA Arbitration No.
11-136-00194-91, November 21, 1991.

Raymond James Customer Arbitration. NYSE. November 17 and 18, 1992. NYSE
Arbitration Docket No. 1991-001538.

Saponaro Customer Arbitration. NASD. March 8, 1996. NASD No. 94-01491.

Kennilworth Partners v. Bear Stearns. NASD. February 26 and 27, 2003. NASD
No. 00-01232.

Hayden v. FleetBoston Financial Corporation and Robertson Stephens, Inc. JAMS
Arbitration, September 9, 2003.

Jack E. Salmon, Jr. v. KPMG LLP, et al. May 25, 2007.


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