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Case Highlights

SEC v. Goldstone et al

In the recently decided case SEC v. Goldstone et al, Brattle Principal Chris Laursen submitted an expert report and testified in the jury trial held in the U.S. District Court for the District of New Mexico.



In SEC v. Goldstone et. al, the SEC claimed that Thornburg Mortgage Inc. (Thornburg) executives fraudulently overstated income by more than $400 million in the company’s 2007 10-K filing. Thornburg, once the second-largest independent mortgage company after Countrywide Financial Corp., faced more than $300 million in margin calls in the weeks before its annual report was filed in February 2008. After the filing, massive additional margin calls were made against repurchase agreements used by the company to finance highly rated mortgage backed securities. The case centered on Thornburg executives’ expectations regarding the company’s ability to hold impaired mortgage backed securities until expected recovery.

Brattle’s Role

Brattle Principal Christopher Laursen, engaged by counsel for the defendants, submitted an expert report and testified in the jury trial held in U.S. District Court for the District of New Mexico. In his report and testimony, Mr. Laursen addressed market custom and practice and accounting for security repurchase agreements (repos), including issues related to margin calls. He also discussed the financial crisis of 2007 and 2008 and how the Federal Reserve Board, where he was employed at the time, responded to various events. Finally, Laursen explained how he advised financial companies and examiners to determine whether securities should be designated as “other than temporarily impaired” (OTTI) for financial reporting purposes.


After a three-week trial, the jury unanimously returned five counts in favor of Thornburg executives and deadlocked on five others. Related to Mr. Laursen’s testimony, the jury found in favor of the executives on counts including aiding and abetting books and records violations and the filing of false materials with the SEC and making false certifications.