Finisar Corporation Securities Litigation

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Judge declines to certify a class of investors in this Section 10(b) case for lack of price impact.

Retained by DLA Piper

A U.S. district judge denied plaintiffs’ motion for class certification in this Section 10(b) case involving Finisar Corporation, a technology company. Plaintiffs alleged that on December 2, 2010, during market hours, a statement by Finisar’s CEO misled investors to believe that the company’s growth was the result of an increase in demand and not a build-up of inventory for future use.

Defendants have rebutted the Basic presumption of fraud-on-the-market reliance by demonstrating through a preponderance of evidence that the alleged misstatement had no price impact when made or thereafter.

Defense counsel retained Dr. Alexander “Sasha” Aganin of Cornerstone Research to assess the effect of the alleged misrepresentation on Finisar’s stock price.

In his expert report, Dr. Aganin opined that if the alleged misstatement had an impact on Finisar’s stock price as asserted by plaintiffs, one would expect the price impact to be discernible by market close on December 2, 2010. Accordingly, Dr. Aganin conducted an event study to analyze Finisar’s stock price. Specifically, he analyzed changes in Finisar’s trading prices from the time just before the alleged misstatement through the remaining trading hours following the statement and to the end of the next trading day. He concluded that the alleged misstatement did not result in a statistically significant increase in Finisar’s stock price.

Plaintiffs claimed Dr. Aganin’s report was unreliable and criticized numerous aspects of his event study methodology. The judge cited Dr. Aganin’s responses to these criticisms, and roundly rejected plaintiffs’ arguments. “The [regression] results confirm Aganin’s opinion that [the alleged misstatements] on December 2nd did not result in [a] statistically significant increase of Finisar’s stock price on December 2 or 3.”

In denying the motion for class certification, the judge again cited Dr. Aganin’s report: “The Court finds Aganin’s conclusion persuasive.”

In 2019, after considering another report from the plaintiffs’ expert and a reply report by Dr. Aganin, the judge ruled that there is no basis for reconsideration. He stated that “[m]any of Defendants’ criticisms [of plaintiff expert’s new report] are valid” and struck the plaintiff’s improperly renewed motion for class certification.


For additional information on this case, contact Sasha Aganin.

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Alexander “Sasha” Aganin

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