United States v. Schiff

In a case in which the federal government alleged criminal securities fraud against two former executives of Bristol-Myers Squibb (BMS), Analysis Group supported clients Frederick Schiff and Richard Lane, and counsel Skadden, Arps, Meagher & Flom and Goodwin & Procter, to win dismissals of criminal charges against the former executives in the Federal District Court in Newark, New Jersey. At issue was whether BMS's stock price had been inflated as a result of the company's alleged failure to disclose the inventory levels held by wholesalers. Prosecutors contended that sales incentives induced wholesalers to stockpile inventory, enabling BMS to mislead the market about the demand for its products, and that the stock price dropped when the "truth" was disclosed.

Defense counsel retained Analysis Group to conduct a financial and economic analysis of BMS's stock price drop, examine the factors relevant to valuing BMS's stock, and investigate pharmaceutical wholesale distribution industry practices. Managing Principal Mark H. Egland and Principal Marnie A. Moore led a team including Managing Principal Michael Beauregard in support of our affiliate, finance and economics expert R. Glenn Hubbard, dean emeritus of Columbia Business School, equity analyst expert Charles Porten, CFA, and wholesale distribution industry expert Adam J. Fein, Ph.D. Our experts and supporting analyses helped counsel mount a successful Daubert challenge to the government's expert regarding his attribution of BMS's stock price drop to the disclosures at issue in the case, and his failure to consider or control for confounding events in his analyses. On the eve of Mr. Schiff's trial, Judge Faith S. Hochberg excluded nearly all of the government's expert's testimony, with the exception of his statements establishing market efficiency. The ruling was upheld by the US Court of Appeals for the Third Circuit in April 2010. Two months later in June 2010, the federal government agreed to dismiss all charges against the two former executives as part of the deferred prosecution agreements filed with the court.