Harrington Global Opportunity Fund, Limited v. BofA Securities, Inc.

Background

Harrington Global Opportunity Fund, Limited alleges that CIBC and Merrill Lynch Canada Inc. violated Sections 10(b) and 9(a)(2) of the Securities Exchange Act of 1934 and Rule 10b-5 through a cross-border market-manipulation scheme involving “spoofing” in Concordia stock. The opinion addresses only an expert-discovery dispute.

The plaintiff’s testifying expert, Dr. Jonathan Brogaard, prepared separate reports concerning whether CIBC’s and Merrill’s trading systems were used for spoofing. He used two computer-based methods, called the “Posting” and “Quantity” methodologies, and applied algorithms to trading data produced by the defendants. Before running the algorithms, he made adjustments to the data.

CIBC World Markets Inc. and Merrill Lynch Canada Inc. moved to compel production of the computer code for the two algorithms and the intermediate datasets used in the analysis. They argued that these materials were facts or data considered by the expert and were necessary to recreate and evaluate his conclusions. The plaintiff argued that the materials were protected from disclosure because they reflected the expert’s preliminary analysis and communications with the plaintiff’s lawyers.

Court’s Analysis

Federal Rule of Civil Procedure 26 requires an expert’s report to disclose the facts or data the expert considered in forming an opinion. The court explained that this requirement is broad and includes material containing factual information from any source. An expert must disclose enough information to show how and why the expert reached the conclusions.

The court held that the intermediate dataset was factual material under Rule 26. It was the specific trading data to which Dr. Brogaard applied his algorithms to reach his opinions, rather than a draft or preliminary analysis. To the extent that discussions with counsel contributed to the cleaning or adjustment of the data, any protection for that factual material was waived because the expert considered it in forming his opinions.

The court also held that the algorithms had to be produced. The expert reports described the methodologies but contained ambiguities that prevented the defendants from recreating the algorithms and understanding how the alleged spoofing episodes were identified. The court gave as an example the reports’ explanation of how overlapping episodes were handled when multiple purchases occurred within a short period.

Although the plaintiff argued that portions of the algorithms contained preliminary analysis, alternative scenarios, and other protected material, the court found that those portions had been included in the final algorithms the expert used to conduct the analysis and reach his opinions. The court compared this to including tracked changes in a final expert report. Because the material was incorporated into the final analysis, any protection that might otherwise have applied was waived.

Ruling

Magistrate Judge Valerie Figueredo granted the defendants’ letter motion to compel at ECF No. 400. The court directed the Clerk to temporarily file the opinion under seal, with viewing restricted to the court and the parties. It directed the parties to review the opinion and submit proposed redactions by December 6, 2025, after which the court would review the proposals and file a redacted version on the docket.