In the first insider trading claim litigated to trial in the Delaware Chancery Court, the Chancellor found for the defendant.
Retained by Sullivan & Cromwell
In the first insider trading claim litigated to trial in the Delaware Chancery Court, Chancellor Kathaleen St. J. McCormick found for the defendant, Rock Holdings Inc. (RHI), the majority shareholder of Rocket Companies Inc., a leading mortgage finance firm.
Counsel for RHI retained Cornerstone Research to support four experts: John Coates of Harvard Law School; Mark Garmaise of the University of California, Los Angeles; Terrence Hendershott of the University of California, Berkeley; and Laura Starks of the University of Texas at Austin. All four experts submitted reports and were deposed, and Professors Coates, Garmaise, and Hendershott testified at trial:
- Professor Hendershott showed empirically the implications of the collapse of Archegos Capital Management as market context for the disputed transaction. Chancellor McCormick cited Professor Hendershott’s analysis of the volume of demand for Rocket stock and associated change in its stock price following the Archegos collapse.
- Professor Starks assessed the economic information being considered by equity analysts covering Rocket and its peers. In her discussion of information that was publicly analyzed in the relevant period, Chancellor McCormick’s ruling cites Professor Starks’s report several times.
- Professor Coates performed an empirical analysis comparing Rocket’s insider trading policy and its interim disclosures to those of peers, finding that its practices were consistent with those of comparable companies.
- Professor Garmaise rebutted the plaintiffs’ damages expert, explaining that he had not properly measured the economic value of the alleged material non-public information.
Jeff Scott of Sullivan & Cromwell, one of the lead trial counsel for RHI, commented that “As has been the case in prior matters, the objective and insightful opinions provided by the experts Cornerstone Research supported proved persuasive in this trial.”
In related federal securities litigation last year, the court denied class certification, citing evidence provided by one of our experts.