Pension Committee of the University of Montreal Pension Plan v. Banc of America Securities, LLC

691 F. Supp. 2d 448, 2010 U.S. Dist. LEXIS 15489, 2010 WL 648369

Opinion

OPINION AND ORDER

SHIRA A. SCHEINDLIN, District Judge:

Table of Contents

Page

I. INTRODUCTION ..453

II. BACKGROUND..........................................................454

A. Investor Due Diligence Experts........................................454

1. Tsvetan Beloreshki...............................................454

a. Scope of Proposed Testimony..................................454

b. Relevant Qualifications.......................................454

2. Samuel Weiser...................................................454

a. Scope of Proposed Testimony..................................454

b. Relevant Qualifications.......................................454

B. Hedge Fund Administration Experts...................................455

1. Raymond O’Neill.................................................455

a. Scope of Proposed Testimony..................................455

b. Relevant Qualifications.......................................455

2. James Collins....................................................455

a. Scope of Proposed Testimony..................................455

b. Relevant Qualifications.......................................455

C. Hedge Fund Auditing Experts.........................................456

1. Paul Regan......................................................456

a. Scope of Proposed Testimony..................................456

b. Relevant Qualifications.......................................456

2. Collins...........................................................457

III. APPLICABLE LAW......................................................457

IV. INVESTOR DUE DILIGENCE EXPERTS .................................459

A. Beloreshki...........................................................459

1. Beloreshki Is Qualified to Testify as an Expert......................459

2. Summary of Lancer Funds Documents.............................461

3. Paragraphs Twenty-Four and Thirty-Four.........................462

B. Weiser..............................................................463

1. Testimony on Industry Standards..................................463

a. Weiser’s Testimony Is Reliable ................................463

b. Objective Standards...........................................465

2. Analysis of Each Plaintifrs Due Diligence Conduct..................466

a. Weiser’s Testimony Is Reliable and Not Impermissible Factual Narrative ..........................................466

b. State of Mind ................................................467

3. Testimony About Hedge Fund Administrators and Directors .........467

4. Testimony About Alleged Fraud ...................................468

V. HEDGE FUND ADMINISTRATION EXPERTS.............................469

A. O’Neill..............................................................469

1. Testimony on Standards of Investor Due Diligence and Auditing.....469

2. Legal Conclusions................................................470

3. Opinion on Credibility of Witness Testimony........................471

4. Speculative Testimony............................................471

B. Collins..............................................................472

1. Industry Standards of Hedge Fund Administrators..................473

a. Collins’s Testimony Is Reliable................................473

b. Speculative Opinions..........................................474

c. Legal Conclusions............................................476

2. NAV Calculations ................................................476

VI. HEDGE FUND AUDITING EXPERTS.....................................478

A. Regan......................................■.........................478

1. Regan is Qualified to Testify......................................478

2. Opinions About Roles of Hedge Fund Administrators, Directors and Investment Managers.......................................479

3. The Orbiter Fund Ltd. and The Viator Fund Ltd....................481

4. Pricewaterhouse Coopers LLP and PricewaterhouseCoopers International Ltd...............................................481

B. Collins Rebuttal Report ..............................................482

VII. CONCLUSION.................... .....................................483

I. INTRODUCTION

A group of investors brings this action to recover losses stemming from the liquidation of two British Virgin Islands based hedge funds in which they held shares: Lancer Offshore, Inc. (“Lancer Offshore”) and OmniFund Ltd. (“OmniFund”) (collectively, the “Lancer Funds”). Although the action involves the claims of ninety-six plaintiff investors, on February 1, 2008, I ordered that the case would proceed initially on the claims of twenty plaintiffs (“Plaintiffs”). The only remaining defendants are the Lancer Funds’ former administrator, Citco Fund Services (Curacao), N.V. (“CFS-Curacao”), its parent company, The Citco Group Limited, and former Lancer Offshore directors who were officers of CFS-Curacao (collectively, the “Citco Defendants”).

In preparation for trial, both Plaintiffs and the Citco Defendants have retained experts to opine on three distinct, but related, issues-investor due diligence, hedge fund administration, and hedge fund auditing. The parties have made motions in limine to exclude or limit the proposed testimony of all these experts. For the reasons that follow, these motions are granted in part and denied in part.

II. BACKGROUND

A. Investor Due Diligence Experts

1. Tsvetan Beloreshki

a. Scope of Proposed Testimony

The Citco Defendants have retained Tsvetan Beloreshki as an expert on investor due diligence. 1 Beloreshki intends to opine at trial on three issues: (1) the minimum steps that an investor should take before investing in a hedge fund; (2) whether Plaintiffs’ due diligence was adequate in light of these minimum steps; and (8) whether adequate due diligence would have caused a reasonable, sophisticated investor to discover problems with the Lancer Funds that would have dissuaded it from investing in them. 2

b. Relevant Qualifications

Beloreshki received a Bachelor of Arts in Economics in 1993 and an Masters of Business Administration in Econometrics in 1996 — both from the University of Chicago. 3 He has also held several positions in the financial sector — including as a trader at Banque Paribas and a senior consultant at National Economic Research Associates (“NERA”). 4 Presently, he is a managing director at Forensic and Litigation Consulting where he “specializes in securities and financial economics, focusing on credit products, foreign exchange and commodities, derivative instruments, and structured finance.” 5

2. Samuel Weiser

Plaintiffs have retained Samuel Weiser to rebut the expert report submitted by Beloreshki. 6 Weiser intends to opine at trial on three issues:

(i) the characteristics of hedge funds generally and the appropriate standards of due diligence for investments in hedge funds during the period 1997 through 2002; (ii) whether the Twenty Plaintiffs who were investors in the Lancer Funds conducted due diligence that was consistent with industry custom and practice at the relevant time; and (iii) whether any form of due diligence could have detected the wrongdoing that caused the Twenty Plaintiffs’ losses and for which they seek to recover in this action. 7

Weiser received a Bachelor of Arts in Economics from Colby College in 1981 and a Masters of Science and Accounting from George Washington University in 1984. 8 He has held high-level positions at a number of financial institutions — including Managing Director at Citigroup, Director and Chairman of the Board at Managed Funds Association, and Partner at Ernst & Young, LLP. 9 During his career at these firms he “performed audit, accounting and marketing functions for hedge funds while also performing numerous due diligence reviews.” 10 Weiser is currently President and Chief Executive Officer of Foxdale Management, “a consulting firm specializing in hedge funds and hedge-fund related services,” 11 and Chief Operating Officer of Sellers Capital LLC, “a Chicago-based asset management firm that manages hedge funds with approximately $50 million under management.” 12

B. Hedge Fund Administration Experts

1. Raymond O’Neill

CFS-Curacao was responsible for performing certain administrative duties for the Lancer Funds as detailed in the Administrative Services Agreements (“ASAs”) — including calculating the monthly net asset values (“NAVs”) of the funds. The Citco Defendants have retained Raymond O’Neill to opine on the standards of care applicable to administrators and to rebut the report of Plaintiffs’ expert, James Collins, on the same issue. 13 In particular, O’Neill’s proposed testimony will examine “the preparation of monthly, unaudited ... NAV ... statements, and whether the procedures employed by CFS-Curacao when calculating NAV statements for the Lancer Funds ... were in line with those standards of care.” 14

O’Neill is a founding member of Kinetic Partners, “a boutique professional services firm focused primarily on the Investment Management section.” 15 Because Plaintiffs do not contest O’Neill’s qualifications to testify on the standards of care applicable to administrators of hedge funds, I need not recite his qualifications.

2. James Collins

Collins has been retained by Plaintiffs to address the standards applicable to administrators of hedge funds and whether CFS-Curacao, as administrator of the Lancer Funds, met those standards. 16 More specifically, he intends to opine “on whether CFS-Curacao followed accepted industry standards and practices, used due care and otherwise acted properly in determining monthly [NAVs] for each of the Lancer Funds and disseminating those NAVs to the Funds’ investors and others.” 17

Collins received a Bachelor of Business Administration in Accounting in 1972 from the University of Oklahoma and became a certified public accountant 1974. 18 From 1972 until 1988, he worked at several accounting firms including KPMG Peat Mar-wick where he “audited financial statements of savings and loans, thrifts, unit investment trusts, mutual funds, and hedge funds.” 19 After leaving KPMG, Collins joined DiFranco & Company (“Di-Franco”), which ultimately merged with Rothstein, Kass, & Company (“RK”). 20 As a partner at RK, he helped develop and run their hedge fund administration business. 21 In 2001, RK moved all of its administrative work to RK Consulting, LLC (“RK-Consulting”), a licensed hedge fund administrator in the Cayman Islands, which after being involved in a series of acquisitions became Citi Hedge Fund Services North America, Inc. 22 Throughout this period, until he retired in 2008, Collins remained involved in the hedge fund administration businesses of these various entities. 23

C. Hedge Fund Auditing Experts

1. Paul Regan

PricewaterhouseCoopers (N etherland Antilles) (“PwC NA” or “PwC”) was responsible for conducting audits of the Lancer Funds for several years starting in the late 1990s. 24 Paul Regan has been retained by the Citco Defendants to opine on whether those audits were conducted in accordance with International Standards on Auditing (“ISA”) — a set of professional standards issued by the International Federation of Accountants. 25 Regan proposes to testify about: (1) PwC NA’s duties as the auditor of the Lancer Funds; 26 (2) whether PwC NA failed to fulfill those duties; 27 and (3) whether a departure from those standards resulted in PwC NA “improperly render[ing] unqualified audit reports on financial statements of the Lancer Funds that were materially misstated.” 28

Regan received a Bachelor of Science in Accounting from the University of San Francisco in 1968, a Master of Science in Accounting from the Golden Gate University in 1979, and has been a certified public accountant since 1970. 29 He has held several positions at various accounting firms — including being a supervising senior accountant at Peat, Marwick, Mitchell, CPAs and forming Regan & Skelton, CPAs. 30 He is currently President and Chairman of the Board of Hemming Morse, Inc. where his duties include servicing clients as a litigation consultant on accounting issues. 31

D. Collins

Collins submitted a rebuttal report responding to Regan’s proposed testimony on PwC NA’s role as auditor of the Lancer Funds. 32 Collins proposes to address:

(i) Mr. Regan’s statements concerning the duties of CFS-Curacao and the directors of the Lancer Funds; (ii) Mr. Regan’s conclusion that PwC-NA looked only to the investment manager in connection with the valuation of the securities in the Funds’ portfolios; (iii) the Regan Report’s discussion of representation letters that CFS-Curacao and the directors of the Lancer Funds provided to PwC-NA. 33

III. APPLICABLE LAW

The standard for the admissibility of expert testimony is established by Rule 702 of the Federal Rules of Evidence, which states:

If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise, if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case.

For expert testimony to be admissible under Rule 702, three requirements must be met. First, the witness must be “qualified as an expert by knowledge, skill, experience, training, or education[.]” 34 Courts within the Second Circuit have “liberally construed expert qualification requirements.” 35 In McCullock v. H.B. Fuller Co., for example, the Second Circuit allowed an expert to testify as to matters within his general expertise even though he lacked qualifications as to certain technical matters within that field. 36

Second, the expert’s knowledge must be of the type that will “assist the trier of fact to understand the evidence or to determine a fact in issue[.]” 37 Thus, expert witnesses are generally not permitted to address issues of fact that a jury is capable of understanding without the aid of expert testimony. 38 It is also well-established that expert witnesses are not permitted to testify about issues of law— which are properly the domain of the trial judge and jury. 39

Third, the proposed expert testimony must be based “on a reliable foundation.” 40

In this inquiry, the district court should consider the indicia of reliability identified in Rule 702, namely, (1) that the testimony is grounded on “sufficient facts or data”; (2) that the testimony “is the product of reliable principles and methods”; and (3) that “the witness has applied the principles and methods reliably to the facts of the case.” 41

Although the Supreme Court has instructed district courts to focus “on the principles and methodology” employed by the expert, and “not on the conclusions that they generate,” 42 it has recognized that “conclusions and methodology are not entirely distinct from one another.” 43 Accordingly, “nothing in either Daubert or the Federal Rules of Evidence requires a district court to admit opinion evidence that is connected to existing data only by the ipse dixit of the expert.” 44

“[A] judge assessing the proffer of expert ... testimony under Rule 702 should also be mindful of other applicable rules.” 45 Importantly, Rule 403 of the Federal Rules of Evidence states that relevant evidence “may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury.” “Expert evidence can be both powerful and quite misleading because of the difficulty in evaluating it. Because of this risk, the judge in weighing possible prejudice against probative force under Rule 403 ... exercises more control over experts than over lay witnesses.” 46

In sum, district courts are charged with acting as “gatekeeper[s] to exclude invalid and unreliable expert testimony.” 47 How ever, trial judges, whom are given “broad discretion” in making these determinations, 48 should remember that they are ruling on the admissibility of evidence and not its weight or credibility. “As the Supreme Court has explained, ‘[vigorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence.’ ” 49

IV. INVESTOR DUE DILIGENCE EXPERTS

A. Beloreshki

Plaintiffs request the exclusion of Beloreshki’s entire testimony on the ground that “he is not qualified to testify as an expert on hedge fund due diligence,” 50 or, in the alternative, the exclusion of portions of that proposed testimony on narrower grounds discussed below.

1. Beloreshki Is Qualified to Testify as an Expert

Beloreshki is an experienced economist with undergraduate and graduate degrees in economics from the University of Chicago. 51 Nevertheless, Plaintiffs raise three concerns with Beloreshki’s qualifications 52 — none of which are sufficient to exclude his testimony.

First, Plaintiffs argue that Beloreshki lacks training and experience in some necessary aspects of hedge fund due diligence. According to Plaintiffs, hedge fund due diligence can be divided into two categories — quantitative analysis {e.g., valuing a hedge fund’s financial portfolio) and qualitative analysis {e.g., evaluating a hedge fund’s key personnel). 53 While Plaintiffs agree that Beloreshki has significant experience with the quantitative analysis of financial instruments and portfolios, 54 they argue that he lacks sufficient experience with relevant aspects of qualitative analysis. 55 Plaintiffs are correct that Beloreshki has less experience with the qualitative aspects of hedge fund analysis than he has with the quantitative aspects. 56 However, during his more than a decade-long career in the financial sector, Beloreshki has worked on multiple projects that incorporated the qualitative analysis of hedge funds. 57 Given Beloreshki’s in-depth knowledge of quantitative portfolio analysis, this general experience with qualitative analysis is sufficient to qualify him to educate the jury about the steps that an investor should take before investing in a hedge fund. 58

Second, Plaintiffs argue that any experience Beloreshki does have with conducting hedge fund due diligence was gained as an expert witness. 59 While it would be troubling if Beloreshki’s only relevant experience arose from his duties as a litigation consultant, 60 this is plainly not the case. He has significant experience in hedge fund analysis outside of the litigation context, 61 and “it would be incorrect to conclude that [being employed] as a professional expert” is a basis for excluding an expert’s testimony. 62

Third, Plaintiffs suggest that Beloreshki’s testimony is primarily based upon his analysis of two articles, and that “[h]is ability to read those documents and craft a list of standards from them does not transform him into an expert on the subject of hedge fund due diligence.” 63 Plaintiffs are correct that reading two relevant articles does not qualify someone as an expert. However, as discussed, Beloreshki’s experience in hedge fund due diligence is not limited to his knowledge of these articles, and there is nothing impermissible about Beloreshki reviewing scholarly articles in forming his testimony. 64

Beloreshki may not be the world’s leading expert on hedge fund due diligence, and Plaintiffs are entitled to make their arguments about Beloreshki’s qualifications to the jury. However, these are matters “properly explored on cross-examination” and go to “his testimony’s weight and credibility — not its admissibility.” 65

2. Summary of Lancer Funds Documents

In paragraphs fifteen through thirty-four of his expert report, Beloreshki summarizes the contents of various Lancer Funds documents including the contents of private placement memoranda (“PPM”) that were distributed to investors. The referenced portions of the documents outline the Lancer Funds’ investment strategy, 66 the role of the investment manager in selecting and valuing the funds’ holdings, 67 and the role of CFS-Curacao as administrator of the funds. 68 Plaintiffs argue that Beloreshki should not be allowed to summarize the content of these documents on the ground that the jury is capable of understanding them on its own and that the summary would therefore “amount to nothing more than an unnecessary and improper one-sided narrativef.]” 69 The Citco Defendants respond that this proposed testimony is not an unnecessary factual narrative, but instead, provides “the essential foundation” for Beloreshki’s analysis of Plaintiffs’ due diligence efforts. 70 More specifically, they argue that “[b]e-cause not every hedge fund is the same— they differ in investment strategy, objectives, risk factors, etc.- — an understanding of the characteristics of the particular fund is an essential first step to identifying the nature and extent of the due diligence an investor in that fund should conduct.” 71

It is apparent from Beloreshki’s expert report that the information disclosed by the Lancer Funds documents is relevant to his opinion regarding the adequacy of Plaintiffs’ due diligence as investors in the Lancer Funds. 72 Moreover, contrary to Plaintiffs’ assertion, these documents are studded with complex terminology, and a lay juror may well have difficulty understanding their meaning without the aid of expert testimony. 73 Accordingly, because the content of the documents is both relevant 74 to his testimony and is not unduly prejudicial, 75 Beloreshki is entitled to summarize these documents for the jury.

3. Paragraphs Twenty-Four and Thirty-Four

Plaintiffs request that Beloreshki be prohibited from testifying about the subject matter set forth in paragraph twenty-four of his report because the opinion therein is speculative. Paragraph twenty-four states:

In reality information on a significant number of the Lancer Funds’ holdings was not proprietary-indeed as discussed below, it was publicly disclosed and available (an avenue of due diligence the Twenty Plaintiffs failed to pursue in a timely fashion if at all). Furthermore, an argument could be made that, at least in certain cases, the investors in the Lancer Funds stood to benefit from disclosure of the funds’ holdings. Such a disclosure might have invited the participation of other market participants who would have been interested in sharing the “upside potential [of] at least 100% within 12 months,” thus enhancing the performance of the Lancer funds. 76

The Citco Defendants argue that Beloreshki should be able to provide this expert testimony because “it is clear from paragraph 24 and the surrounding paragraphs that the purpose of paragraph 24 was to provide a context for the Twenty Plaintiffs’ inexcusable failure to conduct any meaningful investigation to identify the positions held in the Lancer Funds’ portfolios, in the face of Lauer’s refusal to disclose such information.” 77 The Citco Defendants may be correct as to the general content of Beloreshki’s opinion. However, this does not change the fact that the particular point contained within paragraph twenty-four — that “an argument could be made that ... the investors in the Lancer Funds stood to benefit from disclosure of the funds’ holdings” — is speculative and hence inadmissible. 78

Plaintiffs also request that Beloreshki be prohibited from testifying as to the subject matter contained in paragraph thirty-four because “the sole source of his knowledge of CFS-Curacao’s role is what [certain Lancer Fund documents] say[ ] on the subject.” 79 Paragraph thirty-four states:

In other words, the disclosures contained in the Lancer Funds’ offering materials alerted investors as to the limited role played by [CFS-Curacao as administrator of the Lancer funds]. Among other things, it informed investors that the Investment Manager, rather than the Lancer Funds’ administrator was tasked with valuing the securities held by Lancer funds, and that investors could not rely on the administrator as a substitute for conducting their own due diligence.

Because Beloreshki is not an expert on the duties and obligations of hedge fund administrators, he may not provide his opinion on whether CFS-Curacao fulfilled such obligations. Nonetheless, Beloreshki may testify as to what the Lancer Funds’ documents disclosed about CFS-Curacao’s role to the extent it should have affected Plaintiffs’ due diligence efforts. 80

B. Weiser

The Citco Defendants have divided Weiser’s proposed rebuttal testimony into four categories: his opinions describing industry standards for conducting hedge fund due diligence; his opinions regarding whether Plaintiffs met those standards; his opinions about the duties of hedge fund administrators and directors; and his opinions on the alleged fraud that is the basis for this case. The Citco Defendants request that Weiser’s proposed testimony about each of these categories be entirely excluded or limited for a variety of reasons discussed below.

1. Testimony on Industry Standards

a. Weiser’s Testimony Is Reliable

Weiser’s testimony is based upon his experience in the hedge fund industry rather than on published scholarship or existing data. While an expert’s testimony may be based upon his or her experience, 81 the expert must show why “that experience is a sufficient basis for [his or her] opinion.” 82 Weiser’s experience in the hedge fund industry is sufficiently broad-based to satisfy that requirement. He has worked for several different financial institutions, 83 conducted more than fifty due diligence reviews of hedge funds, 84 and has gained further knowledge about common practices in the industry through personal relationships and industry conferences. 85

The Citco Defendants object that Plaintiffs are conflating the reliability and qualifications analyses by focusing on the source of Weiser’s qualifications, and argue that Weiser’s experience does not provide a reliable basis for his testimony because he has not “specifically link[ed][his] experience to his opinions.” 86 While courts do consider whether an expert has articulated how “the specifics of [his] experience led to his conclusions,” 87 every case is fact-specific, 88 and every expert is not required to provide the same degree of detail in linking his experience to his conclusions. 89 In this case, both parties plan to call due diligence experts who will opine on the custom and practice of conducting hedge fund due diligence during the relevant time period. Industry practices are not like scientific hypotheses, which can be tested through trial and error, or logical arguments, which can be analyzed through probing their underlying premises. 90 For example, it would not be helpful for Weiser to opine that he had X experience, which taught him that Y custom was advisable. The issue is not the adequacy of the customs and practices, but their general acceptance. Thus, the reliability of Weiser’s testimony largely depends on whether he has drawn the proffered industry standards from an adequate source — in this case, his experience.

The Citco Defendants are entitled to test through cross-examination whether Weiser’s experience in the hedge fund industry is sufficient to provide an adequate basis for his testimony. 91 However, Weiser’s description of his experience — which includes performing due diligence on a multitude of hedge funds and communicating with others in the industry — provides a sufficient link between his experience and his opinions to satisfy the reliability requirement of Rule 702. 92

b. Objective Standards

In his expert report, Weiser provides guidelines for analyzing the adequacy of investor due diligence. Specifically, he asserts that the process of conducting due diligence includes four steps: (1) “Oral communications with the manager to assess the manager’s background, investment acumen and strategy, and the fund’s performance”; (2) “Review of relevant documents including [PPMs], investment newsletters, and marketing materials produced by the manager describing the manager’s investment program as well as information produced by third parties, such as audited financial statements and performance reports”; (3) “Discussions with other investors, service providers and others with the ability to provide a reference on the integrity and capabilities of the investment manager and confirm the reported performance of the fund”; and (4) “The presence of quality service providers upon whom the investor could rely.” 93

The Citco Defendants request the exclusion of Weiser’s proposed testimony on the ground that these standards are so vague as to be unhelpful to the jury. 94 Their argument is primarily based upon two admissions made by Weiser at deposition. First, Weiser stated that the four steps he articulated in his expert report do not constitute a minimum level of adequate due diligence but instead fall somewhere along a continuum of acceptable due diligence. 95 Certainly, providing the jury with a checklist of minimum steps that must be taken by an investor to conduct adequate due diligence simplifies the jury’s analysis. However, unlike the eases cited by the Citco Defendants where proposed expert testimony was excluded for vagueness, 96 Weiser has not simply provided a tautological or overly general standard, but has articulated a set of guidelines that will aid the jury in analyzing Plaintiffs’ conduct. The requirement that a custom and practice expert witness provide objective standards is not a requirement that the witness provide minimum standards.

Second, Weiser asserted at deposition that investor due diligence is more of an art than a science and that due diligence is adequate when it provides the investor with a sufficient level of comfort. 97 Admittedly, this deposition testimony is troubling. If Weiser is suggesting that the adequacy of due diligence is based on what the investor subjectively needs to be comfortable from his or her perspective, his opinion testimony cannot logically provide a basis for objectively analyzing the adequacy of investor due diligence. However, reviewing Weiser’s deposition testimony and expert report as a whole, it does not appear that Weiser is suggesting that the adequacy of due diligence is entirely dependent on the perspective of the investor. Rather, he opines that an appropriate objective analysis of investor due diligence must take into account the specific characteristics of the investors conducting the due diligence. 98 While an analysis of investor due diligence that incorporates investor characteristics is significantly more complex, it is not subjective or overly vague.

Accordingly, to the extent that Weiser is able to articulate objective standards that the jury can employ to analyze Plaintiffs’ due diligence, his testimony is admissible.

2. Analysis of Each Plaintiffs Due Diligence Conduct

a. Weiser’s Testimony Is Reliable and Not Impermissible Factual Narrative

The Citco Defendants also argue that Weiser’s analysis of each plaintiffs due diligence is unreliable and constitutes impermissible factual narrative. First, the Citco Defendants argue that Weiser’s failure to articulate objective standards that can be applied to each plaintiffs conduct renders his testimony inadmissible. 99 Because I have already held that Weiser has provided objective standards, I also reject this argument. Second, the Citco Defendants argue that Weiser’s recitation of each plaintiffs due diligence efforts constitutes an impermissible factual narrative because Weiser does not “compare the conduct to any objective standards or benchmarks.” 100 However, Weiser does in fact apply his four proposed steps of investor due diligence to his factual recitation. 101 Although this analysis is brief, it shows that Weiser intends to intertwine his factual narrative with his opinion testimony- — • which he must do to justify his description of Plaintiffs’ conduct. 102

b. State of Mind

The Citco Defendants request the exclusion of portions of Weiser’s testimony on the ground that he improperly opines on Plaintiffs’ state of mind. 103 Plaintiffs do not dispute that Weiser may not opine on Plaintiffs’ state of mind, but instead argue that Weiser only intends to opine “on what would have been customary for the plaintiffs to expect or assume, not what they actually did expect or assume.” 104 Although some of Weiser’s deposition testimony walks a fine line between opining on what investors would customarily assume and what Plaintiffs actually did assume, 105 so long as Weiser refrains from opining on the actual state of mind of the Plaintiffs, his opinions on these matters are admissible.

3. Testimony About Hedge Fund Administrators and Directors

The Citco Defendants argue that Weiser should be precluded from testifying about the duties of hedge fund administrators and directors because he is not qualified to testify about these matters, his opinions are speculative, and they do not rebut any of the opinions set forth in Beloreshki’s expert report. 106 Plaintiffs respond that Weiser does not intend to opine on the actual duties and responsibilities of administrators and hedge fund directors, but only “on how investors typically viewed third party administrators and hedge fund directors during the relevant time.” 107

As discussed earlier, Beloreshki is permitted to testify as to what the Lancer Funds’ documents disclosed about CFS-Curacao’s role to the extent this should have affected Plaintiffs’ due diligence efforts. 108 Similarly, Weiser is permitted to rebut Beloreshki’s opinions regarding the disclosure of CFS-Curacao’s role and how this information should have affected their due diligence. 109 However, there are other portions of Weiser’s expert report where he goes beyond rebutting Beloreshki’s tes timony and opines both on the duties of hedge fund administrators and on whether CFS-Curacao properly fulfilled those duties. 110 Because this proposed testimony is outside Weiser’s established expertise 111 and beyond the proper scope of Weiser’s testimony as a rebuttal witness, 112 Weiser is precluded from opining on these matters. 113

4. Testimony About Alleged Fraud

Weiser spends several pages of his expert report describing the nature of the alleged fraud at issue in this ease and opining on whether investors in the Lancer Funds should have discovered it. 114 The Citco Defendants request the exclusion of both aspects of this proposed testimony.

First, the Citco Defendants argue that Weiser’s testimony about the nature of the alleged fraud should be excluded on the ground that it “constitute^] nothing more than an impermissible factual narra tive.” 115 The Plaintiffs’ fact witnesses and counsel will undoubtedly describe the alleged fraud at trial, and allowing Weiser to testify as an expert on that subject is likely to improperly bolster those descriptions. 116 Accordingly, because it would be unduly prejudicial to allow Weiser to testify about the nature of that fraud, he is precluded from doing so. 117

Second, the Citco Defendants argue that Weiser should also be prohibited from opining on whether Plaintiffs should have uncovered the alleged fraud on the ground that Beloreshki does not intend to opine on this issue and thus it would not be within the proper scope of Weiser’s testimony as a rebuttal witness. 118 Plaintiffs respond that Beloreshki does intend to opine that a reasonable, sophisticated investor would have uncovered significant problems and that this opinion implies that Plaintiffs should have “uncovered various red flags that supposedly should have alerted investors to misconduct.” 119 If Beloreshki does provide such testimony at trial, Weiser will be entitled to rebut it. However, in his expert report, Beloreshki only opines on whether investors should have “uncovered problems” with the Lancer Funds. 120 Accordingly, on the basis of the expert reports, Weiser may only discuss whether a reasonable, sophisticated investor would have uncovered problems with the Lancer Funds; he is not entitled to discuss whether the investors should have uncovered the alleged fraud.

Y. HEDGE FUND ADMINISTRATION EXPERTS

A. O’Neill

Plaintiffs do not seek the exclusion of O’Neill’s testimony in its entirety. Instead, they request that O’Neill’s testimony be limited in several respects for reasons discussed below.

1. Testimony on Standards of Investor Due Diligence and Auditing

Plaintiffs argue the O’Neill’s “sole area of expertise” is the standard of care applicable to third party administrators of hedge funds and that O’Neill should therefore be precluded from testifying “about the standards applicable to investor due diligence and auditing.” 121 While the Cit-co Defendants object to this characterization of O’Neill’s expertise, 122 they do not attempt to establish O’Neill’s expertise in these areas. Accordingly, I am assuming that O’Neill’s expertise is limited to the administration of hedge funds. 123

Plaintiffs request the exclusion of material in three paragraphs of O’Neill’s report. First, paragraph 4.5 states that “[t]he NAV was not ordinarily sent to prospective investors, and would only be sent on the instruction of the Investment Manager[.]” While Plaintiffs attempt to characterize this as an opinion about investor due diligence, according to the Citco Defendants, the proposed testimony is actually aimed at rebutting Collins’s proposed opinion that CFS-Curacao regularly distributed the NAV to investors. 124 Accordingly, to the extent that O’Neill intends to testify about CFS-Curacao’s role, as administrator of the Lancer Funds, in distributing the NAV to investors, this testimony is within his area of expertise and does not warrant exclusion. 125

Second, in paragraphs 4.74 126 and 4.87, 127 O’Neill opines that Collins 128 applied a standard of care to CFS-Curacao that would more appropriately be used to analyze an auditor’s conduct. As stated, auditing standards are beyond O’Neill’s expertise. Accordingly, while O’Neill is entitled to opine that Collins applied too high a standard of care to the actions of fund administrators, he may not opine that these standards of care are more appropriately applied to auditors. 129

2. Legal Conclusions

Plaintiffs argue that O’Neill impermissibly offers legal conclusions by providing “his own interpretation of the phrase ‘computing the monthly Net Asset Value,’ which appears both in the ASAs between CFS-Curacao and Lancer Management, and in the PPMs that investors received before investing in the Lancer Funds.” 130 The Citco Defendants respond that O’Neill does not offer a legal interpretation of that term, but instead “identifies the provision in the ASAs calling for ‘computing the NAV as typical in the industry, and then opines on the standard practices employed by industry participants to carry out this function.’ ” 131 Because it is not clear from the expert report whether Plaintiffs or the Citco Defendants have more accurately characterized O’Neill’s proposed testimony, I simply instruct the Citco Defendants that O’Neill may testify about the standard practices employed by industry participants in calculating the NAV, but he may not provide a legal interpretation of the term as found in the Lancer Funds documents. 132 In addition, Plaintiffs are entitled to a limiting instruction to this effect. 133

3. Opinion on Credibility of Witness Testimony

In his expert report, O’Neill states that another witness, Gerhan Meijer, admitted “in his deposition that he made a typographical error” and opines that “[t]here is nothing to suggest that [Meijer’s] explanation should not be accepted!.]” 134 Plaintiffs request O’Neill be “barred from testifying at trial about whether he believes Mr. Meijer’s testimony.” 135 Because it is improper for O’Neill to opine on the credibility of another witness, O’Neill may not testify about whether Meijer’s explanation should be accepted. 136

Defendants object to this ruling on the ground that “O’Neill does not make a credibility assessment, but rather sets forth one of many legitimate rebuttal points in response to Collins’s opinion that CFS-Curacao was responsible for valuing restricted shares.” 137 However, the fact that O’Neill’s credibility assessment came in the course of rebutting another expert’s report does not make it permissible. O’Neill is entitled to rebut Collins’s opinion that CFS-Curacao was responsible for valuing restricted shares, and he may base that opinion on Meijer’s deposition testimony. What he is not entitled to do is assess whether that testimony is credible.

4. Speculative Testimony

Plaintiffs also request the exclusion of certain portions of O’Neill’s proposed testimony on the ground that such testimony would be speculative. 138 First, Plaintiffs argue that O’Neill’s statement that “[t]he Client Position Summary Report ... appears to have been used to reconcile the portfolio to CFS-Curacao’s records” is speculative because O’Neill states that “[i]t has not been possible to access the www. primebroker.com website for the Lancer Funds and thus to determine the entirety of the reports or functionality that would have been available to CFS-Curacao between 1995 and 2002.” 139 However, while O’Neill was unable to determine the entirety of the reports available to CFS-Curacao, he was in possession of the summary report and has cited that report in support of his conclusion. 140 O’Neill’s statement, therefore, has sufficient grounding to avoid exclusion as a speculative opinion. To the extent Plaintiffs believe this opinion should not be given significant weight by the jury, they are of course entitled to cross-examine O’Neill as to the basis of his opinion.

Second, Plaintiffs request the exclusion of O’Neill’s statement that “[f]rom a review of the Bloomberg price reports it would be highly unlikely that CFS-Curacao staff would determine that transactions shown thereon had been carried out for, or on behalf of, the Lancer Funds or any other client.” 141 As with the previous statement, O’Neill’s proposed testimony is not unsupported, but rather, is based upon his review of the Bloomberg price reports and his understanding, as an expert in the field, of what information an administrator would likely obtain from reviewing them. The fact that an expert witness speaks in probabilities (e.g., it would be unlikely), rather than certainties, does not by itself make his testimony unreliable.

Third, Plaintiffs request the exclusion of O’Neill’s statement that “it was possible the new directors had been provided with additional documentation and analysis from the [investment manager] not yet supplied to CFS-Curacao or PwC.” 142 The Citco Defendants respond that this statement is taken out of context, and that O’Neill, in his expert report, “merely observes that CFS-Curacao staff had [come to this conclusion].” 143 While the Citco Defendants are apparently correct that O’Neill intends to testify that this was CFS-Curacao’s conclusion, 144 there is little reason that an expert witness — as opposed to a lay witness with first-hand knowledge- — -should be used to support this assertion. 145 Accordingly, because expert testimony might unnecessarily bolster the validity of CFS-Curacao’s opinion, 146 O’Neill is precluded from testifying that CFS-Curacao staff concluded that “it was possible the new directors had been provided with additional documentation and analysis from the [investment manager] not yet supplied to CFS-Curacao or PwC.” 147

B. Collins

The Citco Defendants divide Collins’s expert report into two categories: his opinions regarding the accepted industry standards applicable to hedge fund administrators and his opinions based on his revaluation of the Lancer Funds’ monthly NAVs. They request the exclusion of the first category of testimony in its entirety on the ground that Collins’s experience does not provide a reliable basis for his opinions, or, in the alternative, the exclusion of portions of that testimony on narrower grounds discussed below. They request the exclusion of the second category of testimony on the grounds that it is unreliable and beyond the scope of Collins’s proffered expertise.

1. Industry Standards of Hedge Fund Administrators

a. Collins’s Testimony Is Reliable

Collins’s testimony is primarily based on his experience as a hedge fund administrator. As discussed earlier, while Rule 702 specifically contemplates that expert testimony may be based upon experience, the witness must show why that experience provides a reliable foundation for his or her testimony. 148 The Citco Defendants claim that Collins has failed to demonstrate this reliability because he has not explained “why the procedures followed by RK during the relevant time period (1995 to 2002) were reflective of the standard practices of other industry participants in the hedge fund administration industry at the time.” 149

Although an expert will generally have more in-depth knowledge of industry standards if he or she has worked at more than one firm, Collins’s years of experience at RK and RK-Consulting provide a reliable basis for Collins to aid the jury in determining whether CFS-Curacao acted in accordance with industry practice. Collins’s experience with hedge fund administration was neither tangential nor short-lived. To the contrary, for a substantial portion of his career, he played a primary role in forming, developing and running RK and RK-Consulting’s administration business. 150

In addition, Collins’s experience is not as insular as the Citco Defendants suggest. First, Collins worked for several accounting firms before joining RK. Although these firms primarily provided auditing services, Collins did provide administrative services for one hedge fund during this period. 151 Moreover, Collins gained general experience in the hedge fund industry working at these firms. 152 Second, Collins has testified that while he was partner at RK and RX-Consulting he became familiar with the practices of other administration firms through personal relationships and industry conferences. 153 The Citco Defendants object that this source of experience cannot provide a reliable basis for his testimony because “Collins was unable to provide any details regarding ... purported conversations [with other people in the industry], including who he supposedly spoke with or what was allegedly discussed.” 154 However, these sorts of memory gaps are more appropriately addressed through cross-examination and do not warrant the exclusion of Collins’s proposed testimony. 155

Accordingly, Collins’s experience as a hedge fund administrator provides a sufficient basis for him to testify about the customs and practices of hedge fund administrators.

b. Speculative Opinions

The Citco Defendants argue that some of Collins’s proposed opinions should be excluded as speculative because he has admitted that he is unsure of whether they are reflective of industry standards. 156 While Plaintiffs agree that the reliability of Collins’s testimony depends on his articulating “the custom and practice that [he] observed through [his] experience in the industry,” 157 they argue the Citco Defendants have “mischaracterize[d] Collins’s testimony.” 158

Plaintiffs are correct that the Citco Defendants have, in some instances, overstated Collins’s admissions. For example, the Citco Defendants claim that Collins admitted that his “opinions regarding alleged practices for questioning valuations provided by an investment manager are not based on his knowledge of industry standards[.]” 159 However, after examining the deposition testimony, I am doubtful that Collins was referring to his general opinion that CFS-Curaeao should have questioned the investment manager’s valuations when he stated that there was no relevant industry standard. More likely, Collins was referring only to his assertion that under the circumstances he would have had “a conversation with the investment manager.” 160 Similarly, while the Citco Defendants argue that Collins admitted that his opinion regarding whether an administrator should restate a previously issued NAY when it finds a material mistake is not based on industry standards, 161 in fact, Collins stated only that there were no industry standards defining what amounted to a material mistake. 162 It is neither inconsistent nor unhelpful to opine that industry standards require that X be done when a material mistake occurs, but that the industry has not settled on what constitutes such a material mistake. Indeed, standards of materiality are not normally susceptible to bright line rules, and it is no surprise that different participants in an industry would have different views on when a mistake is material. Accordingly, while these sorts of admissions may be used for impeachment at trial, they do no warrant the exclusion of Collins’s proposed opinion testimony on these issues.

In contrast, some of Collins’s other admissions — specifically those relating to CFS-Curacao’s resignation as administrator of Lancer Offshore — are sufficient to warrant the exclusion of portions of his proposed testimony. First, Collins opines in his expert report that CFS-Curacao should have resigned as administrator earlier than it did. 163 However, during his deposition, Collins admitted that there was no industry standard requiring CFS-Curacao to resign and that the decision would be “up to each administrator[.]” 164 Second, Collins opines that CFS-Curacao should have disclosed the reasons for its resignation to investors. 165 During his deposition, however, Collins testified that he did not believe there were “industry standards on this” and that he “was asked to give [his] opinion based on [his] experience in this field.” 166 Third, Collins opines in his expert report that CFS-Curacao should also have resigned as administrator of OmniFund. 167 However, Collins again testified that there were no industry standards supporting this opinion and that he “has always been one that tries to do the right thing.” 168 Plaintiffs agree that the reliability of Collins’s opinions is based on their grounding in his knowledge of the custom and practice of the industry. 169 Without that grounding, Collins’s general references to his experience, or alternatively, to his belief about the “right thing” to do, do not provide a reliable basis for his proposed testimony. Accordingly, Collins may not testify as to these opinions about CFS-Curacao’s resignation. 170

c. Legal Conclusions

The Citco Defendants request the exclusion of portions of Collins’s proposed testimony relating to various Lancer Funds documents on the ground that Collins is seeking to provide legal interpretations of CFS-Curacao’s contractual obligations. 171 While Plaintiffs assert that Collins will not opine on these obligations, 172 several portions of Collins’s expert report do in fact suggest that he intends to opine on CFS-Curacao’s contractual duties. 173 As stated earlier, this type of expert opinion is inadmissible because it improperly usurps the role of the trial judge in instructing the jury as to the applicable law and the role of the jury in applying the law to the facts before it. 174 Accordingly, while Collins is permitted to the use the Lancer Funds documents for some purposes, 175 he may not opine on the legal obligations created by those documents to the extent that such legal questions are to be submitted to the jury. In addition, if Collins’s testimony is confusing in this respect, the Citco Defendants will be entitled to a limiting instruction. 176

2. NAV Calculations

Collins’s expert report includes a month-by-month recalculation of the values of restricted securities and warrants in the Lancer Funds’ portfolios. 177 According to

custom and practice.” (citing Collins Report at 9-17)). Collins, “[tjhese positions were overvalued because they were valued using the price for free-trading shares. They should have been valued using at least a 20% discount, or preferably, at the lower of cost or market.” 178 His report includes tables quantifying the overvaluation of the funds portfolios that resulted from these purported errors in the valuation process. 179 The Citco Defendants request the exclusion of Collins’s proposed “opinions regarding the ‘quantification’ of the overstatements in the monthly NAVs” 180 on the grounds that “the methodology employed in revaluing each individual security is unreliable, in that it is arbitrary, subjective, and unsupported by any generally accepted peer-reviewed methodology for valuing the various securities at issue.” 181

As with other portions of Collins’s proposed testimony, Plaintiffs do not argue that his testimony is corroborated by external sources, but instead, that its reliability is grounded in the fact that it reflects the custom and practice of the industry. 182 The Citco Defendants suggest that Collins’s admission during deposition that he could not “say for certain” whether his use of the twenty percent discount rate reflected “overall industry practice” makes his use of that discount rate unreliable. 183 However, other portions of Collins’s deposition show that RK used this same methodology and that Collins is confident that RK was not alone in doing so. 184 Moreover, according to Collins, CFS-Curcao’s own procedural manuals confirm that using a twenty percent discount is appropri ate. 185 While I have reserved judgment on whether Collins may refer to these manuals when he testifies, 186 their usefulness in corroborating the reliability of Collins’s approach does not depend on their admissibility. 187

In light of this evidence, Collins’s uncertainty as to whether the twenty percent discount was “overall industry practice,” does not render his methodology unreliable. Industry standards do not have to be uniform for them to be helpful in educating the jury. Accordingly, Collins is entitled to testify as to his recalculation of the monthly NAVs. 188

VI. HEDGE FUND AUDITING EXPERTS

A. Regan

Plaintiffs request the exclusion of Regan’s testimony in its entirety on the ground that he is unqualified to testify as an expert about PwC NA’s audits of the Lancer Funds. Alternatively, they request the exclusion of portions of his proposed testimony on grounds discussed below.

1. Regan Is Qualified to Testify

Plaintiffs argue that “Regan should be precluded from testifying about PwC NA’s audit of the Lancer Funds because he lacks sufficient experience with hedge funds to be able to offer a helpful or reliable opinion on how they should be audited.” 189 However, the lack of specific experience with hedge fund audits is not necessarily determinative. To exclude Regan’s testimony, I must find that Regan’s general auditing expertise is insufficient to qualify him to testify about auditing standards as they apply to hedge funds. 190

Regan has been a certified public accountant since 1970 191 and has performed approximately a hundred audits during his forty year career 192 — including more than twenty audits under ISA. 193 Given this substantial auditing experience, the fact that Regan has performed only one audit of a hedge fund 194 does not render him unqualified to testify as to the adequacy of PwC NA’s audits of the Lancer Funds. Regan’s report primarily discusses whether PwC NA met ISA requirements, and there is no indication that these requirements substantially differ when the audited entity is a hedge fund. 195

In addition, Plaintiffs’ complaint that Regan’s auditing experience is “stale” because “[h]e has not signed an audit report since 1995, and he has not performed an audit since 1996,” 196 is unavailing. The fact that Regan’s primary occupation is now as a professional expert does not render him unqualified to testify about auditing standards. 197 Regan has remained familiar with the practice of auditing and auditing standards through his role as a litigation consultant and there is no reason to believe that his understanding of auditing is too “stale” to be helpful to a jury. 198

2. Opinions About Roles of Hedge Fund Administrators, Directors and Investment Managers

Plaintiffs request that Regan be precluded from testifying “about the roles, duties, and responsibilities of hedge fund administrators, directors and investment managers in this case” because he lacks expertise about these matters. 199 The Cit-co Defendants respond by arguing that PwC NA had an obligation “to gain ... an understanding of the respective roles” of these entities and that Regan will be testifying “as to the roles of the administrator and investment manager only as they relate to the planning and performance of the audits by PwC.” 200

With respect to Regan’s proposed testimony about the investment manager, it is apparent from his expert report and deposition testimony that the role of the investment manager in providing valuations to the auditor is both an important part of his analysis and an issue that is normally relevant to auditing a hedge fund. 201 For example, Regan’s report asserts that “ISA 540 required PwC to appropriately test the Investment Manager’s significant accounting estimates” and opines that “PwC failed to comply with ISA 540 in several respects.” 202 Accordingly, Regan may testify about the role of the investment manager to the extent that the investment manager’s performance affected, or should have affected, PwC NA’s auditing process.

Regan claims this his testimony about the role of CFS-Curacao as administrator of the Lancer Funds is relevant because CFS-Curacao “participated in gathering information that was used by PwC” and therefore played “a role which PwC considered in its planning and execution of its audit procedures.” 203 However, the expert report provides little meaningful analysis about how the role of CFS-Curacao affected PwC NA’s performance as auditor of the Lancer Funds. In addition, Regan expressly disclaimed any expertise about the duties of hedge fund administrators. 204 Accordingly, because such testimony would be largely irrelevant 205 and would be on a subject about which Regan has expressly disavowed any expertise, 206 Regan may not testify about the roles and duties of CFS-Curacao as administrator of the Lancer Funds.

As for any proposed testimony about the hedge funds’ directors, the Citco Defendants have not suggested why such testimony would be relevant, 207 and Regan asserted during a deposition that he has not been retained to opine on the duties of hedge fund directors. 208 Because neither Regan nor the Citco Defendants have suggested why such testimony would be relevant to his analysis of PwC NA’s auditing process, Regan may not testify about the roles and duties of the hedge funds’ directors. 209

3. The Orbiter Fund Ltd. and The Viator Fund Ltd.

Regan’s expert report examines PwC NA’s audits of the original and primary Lancer Fund — Lancer Offshore. However, the report asserts that its conclusions pertain not only to the audits of Lancer Offshore, but also to the audits of two other Lancer Funds — The Orbiter Fund, Ltd. (“Orbiter”) and The Viator Fund, Ltd. (“Viator”) — that were later merged into OmniFund. 210 Plaintiffs object to Regan testifying about these latter two funds on the ground that Regan “has not disclosed any adequate basis for opining on those audits.” 211

The only rationale Regan has provided for attributing his conclusions about Lancer Offshore to the Orbiter and Viator funds is his claim that “many of the investments [Lancer Offshore] held were also held by the other Funds in the relative percentage that each investment eomprise of the total NAV of each of the funds.” 212 However, the chart that Regan points to in support of that assertion shows that these investment portfolios— while similar in some respects — had substantial differences. 213 Moreover, as Regan’s report itself demonstrates, analyzing the sufficiency of PwC NA’s audits is not solely dependent on the makeup of the Lancer Funds’ financial portfolios. 214 Given the complexity of Regan’s analysis, this bare-bones chart is insufficient to demonstrate that Regan’s conclusions about PwC NA’s audits of Lancer Offshore can reliably be applied to the Orbiter and Viator funds. 215 Accordingly, Regan may not testify that his conclusions are applicable to these funds.

4. PricewaterhouseCoopers LLP and PricewaterhouseCoopers International Ltd.

The bulk of Regan’s expert report analyzes the activities of PwC NA — which was the PwC entity contracted to audit the Lancer Funds. However, Regan’s expert report also mentions Pricewaterhouse Coopers LLP (“PwC US”) and PricewaterhouseCoopers International Ltd. (“PwC IL”). Plaintiffs request that Regan be precluded from testifying about PwC U.S. and PwC IL on the grounds that such testimony “would be purely speculative and conclusory.” 216 Regan briefly discusses these entities at the outset of his report, and notes his understanding that they played a role in auditing the Lancer Funds. 217 However, the rest of his report solely analyzes the conduct of PwC (NA). 218 Because this lack of analysis regarding the conduct of PwC U.S. and PwC IL would make any opinions regarding their conduct conclusory, Regan may not offer his opinion about the roles of these entities. 219

B. Collins Rebuttal Report

Collins has also submitted a rebuttal report responding to Regan’s expert report. The report essentially addresses two subjects. The vast majority of the Collins rebuttal report is devoted to rebutting Regan’s asserted opinions on the duties of hedge fund administrators and directors. 220 Because I have already excluded Regan’s testimony regarding these duties, 221 Collins’s rebuttal testimony on these matters is also excluded. The remaining section of the report addresses “Regan’s conclusion that PwC-NA did not place substantial reliance on the representation letters it received from the Citco Directors and from CFS-Curacao as administrator.” 222 The Citco Defendants argue that Collins’s testimony on this matter should be excluded because Collins testified at deposition that he found no direct evidence in the record to support his assertion that PwC NA placed substantial reliance on these representation letters. 223 However, while Collins may not have found any direct evidence in the record, his opinion is not unsupported. For example, Collins makes permissible inferences regarding whether, based on Collins’s understanding of industry standards, Regan’s testimony is likely to be accurate. 224 Ac cordingly, while the Citco Defendants are entitled to cross examine Collins on his admissions, his conclusions regarding whether PwC-NA would have substantially relied on the representation letters are not so unreliable as to warrant exclusion. The Clerk of Court is directed to close these motions.

VII. CONCLUSION

For the aforementioned reasons, the parties motions in limine to exclude and/or limit the proposed testimony of expert witnesses is granted in part and denied in part.

SO ORDERED:

1 . See Expert Report of Tsvetan Beloreshki ("Beloreshki Report”), Exs. 1 and 2 to Declaration of Dyanne E. Feinberg ("Feinberg Deck”), counsel for the Citco Defendants.

2 . See id. ¶¶ 4-5.

3 . See Excerpts from Deposition of Tsvetan Beloreshki ("Beloreshki Dep.”), Exs. 7 and 8 to Feinberg Deck and Exs. 4 and 5 to Amy C. Brown ("Brown Deck”), counsel for Plaintiffs, at 14:20-15:6.

4 . See id. at 25:15-24, 32:5-33:23.

5 . Curriculum Vitae of Tsvetan Beloreshki, Ex. 3 to Feinberg Deck

6 . See Rebuttal Expert Report of Samuel Weiser ("Weiser Rebuttal Report”), Exs. 1, 2, 3, and 4 to Declaration of Elizabeth A. Izquierdo ("Izquierdo Deck”), counsel for the Citco Defendants, at 1.

7 . Id.

8 . See Excerpts of Deposition of Samuel Weiser ("Weiser Dep.”), Exs. 6 and 7 to Izquierdo Deck and Exs. 1, 2, 3 and 4 to Declaration of Lili Zandpour ("Zandpour Deck”), counsel for Plaintiffs, at 12:21-13:5.

9 . See Curriculum Vitae of Samuel Weiser (“Weiser CV”), Ex. 4 to Izquierdo Decl.

10 . Weiser Rebuttal Report at 2.

11 . Id. at 1.

12 . Id. at 2.

13 . See Expert Report of Raymond O'Neill ("O’Neill Report”), Exs. 12 and 13 to Feinberg Decl., ¶ 1.2.

14

15 . Id. ¶ l.ll.

16 . See Expert Report of James Collins ("Collins Report”), Exs. 1, 2, 3, 4, and 5 to Declaration of Terence M. Mullen ("Mullen Decl.”), counsel for the Citco Defendants, at 1.

17 . Id

18 . See id. at 2.

19

20 . See id. at 2-3.

21 . See id. at 3.

22 . See id. at 3-4.

23 . See Excerpts of Deposition of James Collins (“Collins Dep.”), Exs. 8, 9, 10, 11, and 12 to Mullen Decl. and Ex. 7 to Zandpour Decl., at 39:21-40:20 (stating that he performed administrative work for a hedge fund while he was at DiFranco); id. at 70:6-73:25 (describing the formation of RK-Consulting and its role in providing administrative services for clients); id. at 85:18-86:18 (estimating that between 2003 and 2004 he provided administrative services for thirty to forty hedge funds and that between a third and a half of them were offshore funds).

24 . PwC NA was originally a defendant in this action.

25 . See Expert Report of D. Paul Regan ("Regan Report”), Exs. 9, 10 and 11 to Feinberg Deck, at 1.

26 . See id.

27

28

29 . See Curriculum Vitae of Paul Regan ("Regan CV”), Ex. 11 to Feinberg Decl.

30 . See Excerpts from Deposition of Paul Regan ("Regan Dep.”), Ex. 12 to Feinberg Decl. and Ex. 10 to Brown Deck, at 64:7-65:4.

31 . See id. at 11:2-10 ("I spend generally about 2,000 hours a year working with clients, which are typically either governmental agencies or law firms that are representing entities which are either in a dispute or might be in a dispute, and our work tends to focus on financial and accounting issues or other issues that are data related which might relate to liability issues involved in the potential dispute or actual dispute.”).

32 . See Rebuttal Expert Report of James Collins ("Collins Rebuttal Report”), Ex. 7 to Mullen Deck, at 1.

33

34 . Fed.R.Evid. 702.

35 . TC Sys., Inc. v. Town of Colonie, N.Y., 213 F.Supp.2d 171, 174 (N.D.N.Y.2002). Accord United States v. Brown, 776 F.2d 397, 400 (2d Cir.1985) ("The words 'qualified as an expert by knowledge, skill, experience, training or education’ must be read in light of the liberalizing purpose of the Rule[.]” (quoting Fed. R.Evid. 702)).

36 . See 61 F.3d 1038, 1042-43 (2d Cir.1995) (holding that an industrial engineer's testimony that a plaintiff was within the "breathing zone” of hot-glue fumes "easily qualifie[d] for admission under Daubert" — despite the engineer’s lack of education on fume dispersal patterns, knowledge regarding the fumes’ chemical constituents or the glue vapor’s concentration level, or experience performing or interpreting air quality studies).

37

38 . See Andrews v. Metro N. Commuter R.R. Co., 882 F.2d 705, 708 (2d Cir. 1989) (stating that expert testimony is inadmissible when it addresses “lay matters which [the trier of fact] is capable of understanding and deciding without the expert's help”).

39 . See In re Rezulin Prods. Liab. Litig., 309 F.Supp.2d 531, 548-49 (S.D.N.Y.2004) ("[I]n deciding whether the proposed testimony will be helpful to the fact-finder, courts in this Circuit analyze the testimony to determine whether it usurp[s] either the role of the trial judge in instructing the jury as to the applicable law or the role of the jury in applying that law to the facts before it.’ ") (quoting United States v. Lumpkin, 192 F.3d 280, 290 (2d Cir.1999)); In re Initial Pub. Offering Secs. Litig., 174 F.Supp.2d 61, 64 (S.D.N.Y.2001) (Scheindlin, J.) (“In fact, every circuit has explicitly held that experts may not invade the court's province by testifying on issues of law.” (collecting cases)).

40 . Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 597, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993).

41 . Amorgianos v. National R.R. Passenger Corp., 303 F.3d 256, 265 (2d Cir.2002) (quoting Fed.R.Evid. 702).

42 . Daubert, 509 U.S. at 595, 113 S.Ct. 2786.

43 . General Elec. Co. v. Joiner, 522 U.S. 136, 146, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997).

44

45 . Daubert, 509 U.S. at 595, 113 S.Ct. 2786 (quotation marks omitted).

46

47 . Bickerstaff v. Vassar Coll., 196 F.3d 435, 449 (2d Cir.1999) (quotation marks omitted). Accord Louis Vuitton Malletier v. Dooney & Bourke, Inc., 525 F.Supp.2d 558, 561, 565 (S.D.N.Y.2007) (Scheindlin, J.) (discussing district court's "special obligation” to gatekeep with respect to expert evidence).

48 . McCullock v. H.B. Fuller Co., 61 F.3d 1038, 1042 (1995).

49 . Amorgianos, 303 F.3d at 267 (quoting Daubert, 509 U.S. at 596, 113 S.Ct. 2786) (citation omitted).

50 . Plaintiffs' Memorandum of Law in Support of the Motion to Exclude and/or Limit the Testimony of the Citco Defendants’ Experts ("Pl. Mem.”) at 4.

51 . See Beloreshki Dep. at 14:20-15:6.

52 . See Pl. Mem. at 4-10.

53 . See Pl.. Mem. at 6 (“Beloreshki is an economist, and the bulk of his work over the course of his career has concerned finance and the quantitative analysis of securities and portfolios of securities. Beloreshki has never taken any classes that taught him how to perform qualitative, as opposed to quantitative, due diligence on investments.” (citations omitted) (emphasis added)). In his deposition, Beloreshki agreed that there is more to due diligence than valuing a hedge fund's portfolio. See Beloreshki Dep. at 21:8-11. However, he stressed his belief that it is difficult to separate the quantitative and qualitative facets of economic analysis. See id. at 108:14-109:4.

54 . See Plaintiffs’ Reply Memorandum of Law in Further Support of Motion to Exclude and/or Limit the Testimony of the Cit-co Defendants’ Experts (“PL Reply”) at 5 ("Valuation — not due diligence — is where [Beloreshki's] expertise lies.”). Plaintiffs nonetheless suggest that because Beloreshki's quantitative skills were not developed in the context of performing hedge fund due diligence, but through analyzing financial instruments and portfolios in other contexts, he is not qualified to opine on even the quantitative aspects of hedge fund due diligence. See id. at 6. However, Beloreshki has had experience analyzing hedge fund portfolios. See, e.g., Beloreshki Dep. at 42:5-45:22 (describing a project wherein Beloreshki analyzed an "[observed] discrepancy between [a hedge fund’s] stated objective performance and how the fund was actually performing”). Furthermore, even if Beloreshki’s skills were not primarily developed in the context of hedge fund due diligence, this does not mean that he is unqualified to testify about such matters. See, e.g., Valentin v. New York City, No. 94 Civ. 3911, 1997 WL 33323099, at *15 (E.D.N.Y. Sept. 9, 1997) ("[L]ack of extensive practical experience directly on point does not necessarily preclude [an] expert from testifying.”). Like all investment funds, one of the primary assets of a hedge fund is its financial portfolio. Plaintiffs have not explained why Beloreshki’s substantial training and experience in performing quantitative analysis of financial portfolios does not extend to analyzing hedge fund portfolios.

55 . See PL Mem. at 6.

56 . See Beloreshki Dep. at 108:21-23 ("Q. Is it fair to say the bulk of your work over your career has been quantitative analysis of securities, portfolios of securities? ... A. I would agree with your statement to the extent that I have particular skills and expertise in various quantitative techniques, modeling and so forth.”).

57 . See, e.g., id. at 49:14-22 (describing a project wherein Beloreshki investigated "the degree to which [a hedge fund manager’s] sophistication in the area was consistent or not consistent with what was represented to investors”); id. at 52:5-53:12 (discussing Beloreshki’s participation in discussions among a subset of NERA consultants that were designated to "develop expertise in the area of due diligence with respect to hedge funds” — including "assessing and advising hedge funds with respect to their risk management policies”).

58 . See Johnson & Johnson Vision Care, Inc. v. CIBA Vision Corp., No. 04 Civ. 7396, 2006 WL 2128785, at *5 (S.D.N.Y. July 28, 2006) ("[TJhe only matter the court should be concerned with is whether the expert’s knowledge of the subject is such that his opinion will likely assist the trier of fact in arriving at the truth.”); McCullock, 61 F.3d at 1042-43 (permitting an expert to testify as to matters within his general expertise even though he lacked qualifications as to certain technical matters within that field).

59 . See Pl. Mem. at 8.

60 . See Kline v. Lorillard, Inc., 878 F.2d 791, 800 (4th Cir.1989) ("[I]t would be absurd to conclude that one can become an expert simply by accumulating experience in testifying.”).

61 . See supra note 57; see also Beloreshki Dep. 27:7-30:25 (discussing Beloreshki's experience at Banque Paribas, where many of the bank's clients were hedge funds).

62 . Kline, 878 F.2d at 800.

63 . Pl. Mem. at 9-10.

64 . See Daubert, 509 U.S. at 593-94, 113 S.Ct. 2786 (stating that publication of a theory, while not required for admissibility under Rule 702, supports its reliability).

65 . McCullock, 61 F.3d at 1043. Plaintiffs also argue that "the Court ... should preclude Beloreshki from offering an opinion on the duties and responsibilities of directors of offshore hedge funds.” Pl. Mem. at 10 n. 10. The Citco Defendants respond that they "do not intend to offer Beloreshki as an expert on the duties and responsibilities of offshore hedge fund directors!!.]” Def. Mem. at 13 n. 12. In accordance with this representation, and because the Citco Defendants have not attempted to establish that Beloreshki is an expert on the duties and obligations of offshore hedge fund directors, Beloreshki may not opine on these matters.

66 . See Beloreshki Report ¶¶ 17-25.

67 . See id. ¶¶ 26-31.

68 . See id. ¶¶ 32-34.

69 . Pl. Reply at 6.

70 . Memorandum of Law of the Citco Defendants in Opposition to Plaintiffs' Motion to Exclude and/or Limit the Testimony of the Citco Defendants' Experts ("Def. Mem.”) at 11-12.

71 . Id. at 12.

72 . See, e.g., Beloreshki Report ¶¶ 28-29 (stating that the Lancer Funds’ documents dis closed that the investment manager “was granted substantial latitude with respect to the valuation of the Lancer Funds' portfolio securities'' and that, as a result of this latitude, “the Lancer Funds investors were exposed to additional risks, which emanated from the lack of transparency and the uncertainties related to the nature, robustness and reliability of the Investment Manager’s valuation models as well as the reasonableness of the assumptions and inputs used by the investment manager in the valuation process”); id. ¶ 31 (stating that the “weight of the obligation” to ensure the integrity of the valuation process with respect to the hedge fund's investments “was even greater considering the nature of the Lancer Funds’ investment strategy and key investment risks” that were disclosed by the Lancer Funds documents).

73 . See Beloreshki Dep. at 114:20-116:5 (testifying that he has the relevant experience — - including assisting in the "preparation of PPMs” — to analyze the Lancer Funds documents and to "provide the jury with what the document[s] say[]”).

74 . See Fed.R.Evid. 401,402.

75 . See Fed.R.Evid. 403.

76 . Beloreshki Report ¶ 24 (emphasis added) (quoting defendants' exhibit 584).

77 . Def. Mem. at 12.

78 . See Major League Baseball Props., Inc. v. Salvino, Inc., 542 F.3d 290, 311 (2d Cir.2008) (“At trial, proffered 'expert testimony should be excluded if it is speculative or conjectural[.]' " (citation omitted)).

79 . Pl. Mem. at 12 (citing Beloreshki Dep. at 264:16-259:15) (quotation marks omitted).

80 . See Beloreshki Report ¶ 34 (opining that, on the basis of what was disclosed by the Lancer Funds documents, the “investors could not rely on the administrator as a substitute for conducting their own due diligence”). Plaintiffs are entitled to a limiting instruction on the scope of this testimony. See Fed.R.Evid. 105.

81 . See Fed.R.Evid. 702.

82 . Fed.R.Evid. 702 Advisory Committee Note.

83 . See Weiser CV.

84 . See Weiser Rebuttal Report at 2.

85 . See, e.g., Weiser Dep. at 246:24-247:15. The Citco Defendants claim that this experience is insufficient because he cannot remember the specifics of any conversations he had with other industry participants about the appropriate steps to take in performing hedge fund due diligence. See Reply Memorandum of Law of the Citco Defendants in Support of Their Daubert Motion to Exclude Testimony of Samuel Weiser ("Def. Weiser Reply”) at 5. However, this criticism is more appropriately dealt with through cross-examination than through exclusion of an expert's proposed testimony. See Amorgianos, 303 F.3d at 267.

86 . Def. Weiser Reply at 5.

87 . LinkCo, Inc. v. Fujitsu Ltd., No. 00 Civ. 7242, 2002 WL 1585551, at *4 (S.D.N.Y. July 16, 2002) (Scheindlin, J.). Accord Primavera Familienstifung v. Askin, 130 F.Supp.2d 450, 530 (S.D.N.Y.2001), modified in part on reh'g, 137 F.Supp.2d 438 (S.D.N.Y.2001) ("While it is permissible for [an expert] to base his opinion on his own experience, he must do more than aver conclusorily that his experience led to his opinion.”).

88 . See Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 150, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999) ("The conclusion, in our view, is that we can neither rule out, nor rule in, for all cases and for all time the applicability of the factors mentioned in Daubert, nor can we now do so for subsets of cases categorized by category of expert or by kind of evidence. Too much depends upon the particular circumstances of the particular case at issue.”).

89 . See Emig v. Electrolux Home Prods. Inc., No. 06 Civ. 4791, 2008 WL 4200988, at *8 (S.D.N.Y. Sept. 11, 2008) (holding that an expert witness had sufficiently demonstrated "a connection between his experience and the process he used and the conclusions he reached” by asserting that the methodology he employed "was the same one he utilized in the real world of American Industry when [he] evaluated the authored assembly instructions .... ” (quotation marks and citations omitted)).

90 . See Liriano v. Hobart Corp., 949 F.Supp. 171, 177 (S.D.N.Y.1996) (Scheindlin, J.) ("Properly understood, the Daubert analysis applies to cases involving unique, untested, or controversial methodologies or techniques. It is not appropriate to invoke the Daubert test in cases where expert testimony is based solely on experience or training, as opposed to a methodology or technique.” (citation omitted)).

91 . In addition, the Citco Defendants will have the opportunity to test Weiser’s conclusions through the custom and practice testimony of their own due diligence expert. See Seneca Ins. Co. v. Wilcock, No. 01 Civ. 7620, 2007 WL 415141, at *9 (S.D.N.Y. Feb. 5, 2007) ("Moreover, although plaintiff asserts that [the expert’s] method is not testable, all that he is doing is to recount his experience concerning the use of certain terms in the industry. Such testimony is of course testable, in the sense that industry practice is provable (or disprovable) by equivalent testimony by experienced participants in the industry.”).

92 . Of course, an expert must also show that he has reliably applied his knowledge of these customs and practices to the specific facts of the case. It would not be acceptable for Weiser to opine, "I am an expert and therefore Plaintiffs' due diligence was inadequate according to custom and practice.” He must show how Plaintiffs' due diligence failed to meet the standards he has articulated. However, that is an issue separate from whether an expert’s opinion is reliably based upon his experience and one that I deal with in the subsequent subsections.

93 . Weiser Rebuttal Report at 6.

94 . See Def. Weiser Mem. at 4-7.

95 . See Weiser Dep. at 187:25-188:7 (“Again, there is a continuum of acceptable due diligence and there is along that spectrum, various steps that one can take and you can underemphasize certain things and overemphasize other things in order to gain comfort because it's an overall process and it’s an art, it's not a science.’’); id. at 189:3-13 (“Q. Do [the four steps you have set forth in your report] constitute the low end of that spectrum that you’re talking about, the bear [sic] minimum of what an investor is to do? ... A. No. I think they constitute — across that spectrum, I’d say that's average because its pretty much standard operating kind of basic procedures. Not at the low end, not at the high-end of that acceptable range but kind of, you know, down the middle.”).

96 . See In re Rezulin Prods. Liab. Litig., 309 F.Supp.2d at 543 (excluding "opinions regarding ethical standards for reporting or analyzing clinical trial data or conducting clinical trials” because they “articulated nothing save for the principle that research sponsors should be honest”); Askin, 130 F.Supp.2d at 529 (excluding expert’s testimony that " ‘[b]rokers and dealers are expected to act with the highest integrity' ” because this standard was too vague to be helpful to a jury (citation omitted)).

97 . See Weiser Dep. at 188:6-7 (stating of due diligence, "it's an art; it's not a science”); id. at 190:15-20 ("Q. And what steps or procedures would constitute the minimum for due diligence during that time period? ... A. In my opinion, right, the minimum would be the least amount that an investor [sic] would need to do in order to give themselves comfort that they had sufficiently answered their questions with regard to whether or not this was an appropriate investment for them.”).

98 . See id. at 188:11-22 ("It’s evaluating the overall, overall entity and making a determination of whether you trust the manager, whether you believe in the process, whether you believe that the returns and the investment strategy are aligned or you think the risk-reward is in alignment, and how each individual investor comes to that conclusion is really, is contextual for them based upon their own individual level of knowledge, their own individual appetite for risk and their own individual portfolio and how they choose to allocate their assets." (emphasis added)).

99 . See Def. Weiser Mem. at 10-12.

100 . Id. at 13-14.

101 . See Weiser Rebuttal Report at 3 6-3 8.

102 . As an additional note, although I am permitting expert witnesses for both parties to recite some relevant factual details, both parties are warned that expert testimony should focus on the expert’s opinions and factual analysis rather than on a recitation of facts. I will not permit any of the expert witnesses to spend an inordinate amount of time detailing the facts of the case.

103 . See Def. Weiser Mem. at 14-15. See also In re Rezulin Prod. Liab. Litig., 309 F.Supp.2d. at 547 ("Inferences about the intent or motive of parties or others lie outside the bounds of expert testimony.”).

104 . Plaintiffs' Memorandum of Law in Opposition to the Citco Defendants' Daubert Motion to Exclude Testimony of Samuel Weiser ("Pl. Weiser Mem.”) at 16.

105 . See Weiser Dep. at 227:18-228:9 ("Q. On the next page, on page 17 of your report, at the bottom of the first full paragraph you say, the 20 plaintiffs understood that CFS (Curacao) would be providing them with monthly NAV statements which they reasonably expected would be independent and accurate.... What’s your basis for saying that they reasonably expected that? ... A. That was based upon — I think I've already stated that they had a basis for reliance and an understanding that there would be an independent valuation being performed by the administrator, in this particular case, Citco, in that they had a reason to believe that the NAV statements that they were receiving would be independent and accurate.” (emphasis added) (quotation marks omitted)).

106 . See Def. Weiser Mem. at 15-19.

107 . Pi Weiser Mem. at 17.

108 . See supra Part IV.A.2.

109 . See Weiser Rebuttal Report at 7 ("With respect to offshore hedge funds, the role of the administrator was especially important to investors as the administrator was perceived to be an independent check on the investment manager and a valuable counterweight to a lack of transparency. In addition, by accepting and retaining hedge fund clients, service providers gave investors comfort that the manager was in compliance with the terms of the relevant agreements and offering documents.”).

110 . See, e.g., id. at 5 ("In my opinion, it was industry standard for third-party administrators like CFS-Curacao to understand the reliance that investors placed on their presence as a service provider when investors evaluated whether to invest in a hedge fund.”); id. at 45 ("CFS-Curacao ... did not prepare the Lancer Funds’ NAV in compliance with the Lancer Funds' PPM, memoranda and articles of association, Administrative Services Agreements with CFS-Curacao, CFS-Curacao's own manuals and marketing materials, or industry custom and practice.... As a result of these failures, the Lancer Funds' NAVs were materially inflated and misled investors on a monthly basis as to the value of the Lancer Funds' holdings and the value of each of the Twenty Plaintiffs' investment.”).

111 . Although Weiser claims that he has sufficient expertise to testify about the duties of hedge fund administrators, see Weiser Dep. at 212:10-15, both he and Plaintiffs agree that he has not been retained to opine on these duties, see Weiser Dep. at 210:20-25, Plaintiffs Weiser Mem. at 17, and Plaintiffs have not attempted to establish his expertise in hedge fund administration. Accordingly, because Plaintiffs have the burden of establishing the expertise of their witnesses, I assume that Weiser's sole area of expertise is investor due diligence. See United States v. Williams, 506 F.3d 151, 161 (2d Cir.2007) (stating that the "proponent of expert testimony has the burden of establishing by a preponderance of the evidence that the admissibility requirements of Rule 702 are satisfied” (citation omitted)).

112 . See Weiser Rebuttal Report at 1 ("I have been asked ... to respond to the Expert report of Tsvetan Beloreshki[.]”).

113 . The Citco Defendants also request the exclusion of two related portions of Weiser's proposed testimony. First, they argue that Weiser should not be permitted to testify about "CFS-Curacao’s alleged actions in this matter, where such testimony also constitutes an improper narrative!.]” Def. Weiser Mem. at 19 n. 9. To the extent that Weiser's testimony is intertwined with his opinions about the adequacy of Plaintiffs’ due diligence, such testimony will not constitute impermissible factual narrative. To the extent it is outside of this scope, I have already excluded such testimony as beyond Weiser's expertise and the scope of his testimony as a rebuttal witness. Second, the Citco Defendants argue that "Weiser’s opinions regarding hedge fund characteristics are improper narrative and should be excluded.” Def. Weiser Reply at 8 n. 8. However, this two page section of Weiser’s expert report — which describes relevant characteristics of hedge funds, such as their degree of transparency, during the relevant time period — is clearly relevant to Weiser's opinion testimony on investor due diligence and will provide the jury with important background information. See Fed.R.Evid. 702 Advisory Committee Note ("[I]t might also be important in some cases for an expert to educate the factfinder about general principles, without ever attempting to apply these principles to the specific facts of the case.... The amendment does not alter the venerable practice of using expert testimony to educate the factfinder on general principles.”).

114 . See Weiser Rebuttal Report at 43-45.

115 . Def. Weiser Reply at 9.

116 . See United States ex rel. Anti-Discrimination Ctr. of Metro N.Y., Inc. v. Westchester County, No. 06 Civ. 2860, 2009 WL 1110577, at *2 (S.D.N.Y. Apr. 22, 2009) (“It is appropriate, therefore, to exclude expert testimony offered to bolster the credibility of fact witnesses.” (citing United States v. Lombardozzi, 491 F.3d 61, 77-78 (2d Cir.2007) (citations omitted))).

117 . See Fed.R.Civ.P. 403.

118 . See Def. Weiser Mem. at 20-21.

119 . PL Weiser Mem. at 19.

120 . See Beloreshki Report ¶¶ 52-75 (opining that investors should have uncovered: discrepancies related to Lauer’s educational background; that the Lancer Funds invested in companies potentially associated with individuals and entities accused of fraudulent or criminal activity; discrepancies between the performance of Lancer Funds’ investments and the performance of the Lancer Funds; and inconsistencies between the Lancer Funds’ reported performance and stated investment objectives).

121 . Pl. Mem. at 18 (emphasis added).

122 . See Def. Mem. at 21 n. 15.

123 . See Williams, 506 F.3d at 161 (stating that the "proponent of expert testimony has the burden of establishing by a preponderance of the evidence that the admissibility requirements of Rule 702 are satisfied” (citation omitted)).

124 . Def. Mem. at 21.

125 . O'Neill also states in paragraph 4.5 that "according to the Beloreshki Report, it would appear that investors did not undertake adequate due diligence, review or rely upon this or any other detailed document pertaining to tire Lancer Funds in detail.” Because this statement is irrelevant to whether it is standard practice for administrators to distribute NAV statements to prospective investors, O’Neill may not testify as to this Beloreshki report conclusion.

126 . "The Collins Report, in its description of what it considers CFS-Curacao should have done, applies a standard higher than that of an auditor. This is not a reasonable assumption. In practice, an auditor has defined standards (International Auditing Standards) as well as the contractual agreement (engagement letter) whereas an administrator, at this time, only had the contractual obligation and industry practice, not defined standards.” (citation omitted).

127 . "The Collins Report, in its analysis, suggests that CFS-Curacao was responsible for pricing the warrants. In doing so, he incorrectify applies a standard more applicable to auditors.” (citation omitted).

128 . O’Neill has been retained by the Citco Defendants, in part, to rebut Collins’s testimony. See supra Part II.B.1.a.

129 . United States v. Roldan-Zapata, 916 F.2d 795, 805 (2d Cir.1990) ("A witness may be qualified as an expert on certain matters and not on others.”). The Citco Defendants argue that “O’Neill does not opine on audit standards but rather simply refers to the widely known role of an auditor to test for material misstatements,” Def. Mem. at 22 (emphasis in original), and that "[a]dministrators regularly interact with a fund's auditors, and thus an experienced administrator would necessarily have an understanding of the general role of the auditor,” id. at 22 n. 17. However, O’Neill clearly goes beyond discussing the general role of the auditor-opining that particular standards apply to auditors and that these standards are higher than those that apply to administrators. See O’Neill Report ¶ 4.74. Moreover, regularly interacting with an auditor alone does not qualify someone as an auditing expert.

130 . PL Mem. at 19 (citing O'Neill Report ¶¶ 3.20-3.21).

131 . Def. Mem. at 22.

132 . See Marx & Co., Inc. v. Diners’ Club Inc., 550 F.2d 505, 509 (2d Cir.1977) (holding that while an expert was permitted to give his opinion about the “ordinary practices of those engaged in the securities business,” he was not permitted to give "his opinion as to the legal standards” created by a relevant contract (citations omitted)).

133 . See Fed.R.Evid. 105.

134 . O’Neill Report ¶ 4.28(i) n. 76.

135 . Pl. Mem. at 20.

136 . See United States v. Scop, 846 F.2d 135, 142 (2d Cir.1988) (“The credibility of witnesses is exclusively for the determination of the jury[.]” (citation omitted)).

137 . Def. Mem. at 23.

138 . See Major League Baseball Props., 542 F.3d at 311.

139 . O’Neill Report ¶ 4.48 (emphasis added).

140 . In addition, O’Neill’s opinion is corroborated by the deposition testimony of one of Plaintiffs’ own expert witnesses. See Collins Dep. at 270 ("Q. And during the NAV preparation process ... is it your understanding that the CFS-Curacao personnel reconciled the data that was in their system to another report from the prime broker website? ... A. That’s correct.”).

141 . O’Neill Report ¶ 4.115 (emphasis added).

142 . Id. ¶ 5.6 (emphasis added).

143 . Def. Mem. at 25.

144 . See O’Neill Report ¶ 5.6 ("Contrary to Mr. Collins' assertion, CFS-Curacao had no basis for meaningfully questioning the Directors' sign-offs. Whilst Mr. Collins summarizes correspondence regarding the sign off, he has omitted the conclusion that CFS-Curacao reached: that it was possible the new directors had been provided with additional documentation and analysis from the IM not yet supplied to CFS-Curacao or PwC”).

145 . See Fed.R.Evid. 703.

146 . See Lombardozzi, 491 F.3d at 77 (“Expert testimony may not be used to bolster the credibility of fact witnesses.”).

147 . O’Neill Report ¶ 5.6.

148 . See Fed.R.Evid. 702 Advisory Committee Note ("If the witness is relying solely or primarily on experience, then the witness must explain how that experience leads to the conclusion reached, why that experience is a sufficient basis for the opinion, and how that experience is reliably applied to the facts.”). Accord LinkCo, 2002 WL 1585551, at *4 ("A court cannot permit experts to 'offer credentials rather than analysis.' ” (quoting Askin, 130 F.Supp.2d at 529)).

149 . Reply Memorandum of Law of the Citco Defendants in Support of Their Daubert Motion to Exclude Testimony of James C. Collins ("Def. Collins Reply”) at 3.

150 . See Collins Expert Report at 3 (“In 1993, I was responsible for RK being retained by a group of hedge funds that used RK for record-keeping, tax return preparation, and preparing financial statements, with - another firm performing the audit. This marked RK's entry into the pure administration business.”); Collins Dep. at 70:6-73:25 (describing the formation of RK-Consulting and its role in providing administrative services for clients); id. at 85:18-86:18 (estimating that between 2003 and 2004 he provided administrative services for thirty to forty hedge funds and that between a third and a half of them were offshore funds).

151 . See Collins Dep. at 39:21-40:20.

152 . See Collins Report at 2.

153 . See Collins Dep. at 90:17-23 (“Q. Are you aware whether or not the program that was prepared, the proprietary program used by RK, was that a standard in the industry? ... A. We had conversations with other people in the industry to know that we were doing exactly the same things they were.”).

154 . Memorandum of Law of the Citco Defendants in Support of Their Daubert Motion to Exclude Testimony of James C. Collins ("Def. Collins Mem.”) at 6.

155 . See Amorgianos, 303 F.3d at 267.

156 . See Def. Collins Mem. at 9; Def. Collins Reply at 5 (“Collins’s opinions regarding alleged practices for questioning valuations provided by an investment manager are not based on his knowledge of industry standards but on his subjective feelings.”); id. (arguing that Collins did not rely on industry practice "with respect to his opinion that CFS-Curacao should have disclosed to investors when an NAV was based in part on investment manager valuations”); id. at 6 ("Collins opined that an NAV should be restated if there was a material error, but he admitted that there was no 'industry standard’ that he could point to as to what would be deemed material.” (citing Collins Dep. at 338:17-343:22)); id. at 7 ("Collins opined that, after concerns arose regarding valuation issued in September 2001, CFS-Curacao should have stopped issuing the monthly NAVs, should have resigned earlier, and should have made certain disclosures prior to resigning. When cross-examined concerning these opinions, however, Collins repeatedly admitted that he could not state that his views reflected any particular industry wide standards.” (citing Collins Dep. at 407:22-412:18) (citations omitted)).

157 . Plaintiffs’ Memorandum of Law in Opposition to the Citco Defendants' Daubert Motion to Exclude Testimony of James C. Collins (“PL Collins Mem.”) at 11.

158 . Id. at 14.

159 . Def. Collins Reply at 5.

160 . Collins Dep. at 378:9-11.

161 . See Def. Collins Mem. at 10 ("Regarding Collins’s opinion as to the purported requirements to restate an NAV: 7 can’t point to anything that would say it was an industry standard. But typically it would be based on what the administrator would feel comfortable with.' ” (citations omitted) (emphasis in original)).

162 . See Collins Dep. at 338:17-342:14. The Citco Defendants abandon this assertion in their Reply Memorandum and agree that Collins was referring to whether there was an industry standard for determining materiality but nonetheless request the exclusion of Collins’s opinion. See Def. Collins Reply at 6.

163 . See Collins Expert Report at 57-58.

164 . Collins Dep. at 407:22-408:3 ("Was CFS-Curacao required, under industry standards, to resign earlier than they did? ... A. That's up to each administrator and if they were going to be put in that position. I can’t really answer any other way.”).

165 . See Collins Expert Report at 58.

166 . Collins Dep. at 411:12-15.

167

168 . Collins Dep. at 412:13-18 (“Q. Is there any industry standard that supports your statement here? ... A. I cannot reference to any kind of standard. I’ve always been one that tries to do the right thing.”).

169 . See Pl. Collins Mem. at 11.

170 . While I have not specifically addressed the other portions of Collins’s proposed testimony that the Citco Defendants assert contain speculative opinions, I have considered those arguments and find that Collins should only be precluded from testifying as to his opinions about CFS-Curacao’s resignation. Collins's other admissions, while a basis for cross-examination, are not sufficient to warrant exclusion.

171 . See Def. Collins Mem. at 11-13. The Citco Defendants have similarly requested the exclusion of Collins's references to CFS-Curacao's internal manuals. Because the Citco Defendants have also filed a motion in limine relating to the general admissibility of these manuals, and that admissibility may affect whether Collins is entitled to refer to the documents, I defer judgment on this issue until that motion in limine is decided.

172 . See Pi. Collins Mem. at 16 (“Collins does not purport to interpret these documents as contracts, but rather opines that in order to understand the duties of a hedge fund administrator, one must look at a number of documents — administrative services agreements, PPMs, procedure manuals — through the prism of industry custom and practice. Collins may properly discuss the content of these documents and how they relate to industry

173 . See Collins Report at 13 (opining that certain provisions in Lancer Funds documents "do not, of course, alter CFS-Curacao’s obligation to do its work carefully and properly and to obtain proper supporting documentation for the existence, custody and valuation of each of the Lancer Funds’ positions. Nor do they allow the Funds’ directors to blindly accept unsupportable or bad-faith valuations from the investment manager or prime broker.” (emphasis added)); id. at 24 ("In the ASAs, CFS-Curacao obligated itself to ‘independently’ price the Lancer Funds’ portfolio[J” (emphasis added)).

174 . See In re Rezulin, 309 F.Supp.2d at 541.

175 . For example, Collins may opine that, according to industry practice, a hedge fund administrator’s duties are dependent on the content of agreements between the administrator and the hedge fund’s managers.

176

177 . See Month-by-Month Analysis and Quantification of Errors in CFS-Curacao's Monthly NAV Determinations, Ex. 3 to Collins Report, Ex. 6 to Mullen Deck, at 168-71.

178 . Id. at 168.

179 . See id. at 168-71.

180 . Def. Collins Mem. at 19.

181 . Id. at 16. The Citco Defendants also assert that Collins's testimony should be excluded because Collins “admitted that the valuation of a particular security is not the job of an administrator." Id. However, even if this is outside the expertise of a hedge fund administrator, Collins also has significant experience as an auditor, and has established this expertise in his reports. See Collins Rebuttal Report at 1 (citing Collins Report at 1-4). Although the Citco Defendants argue that determining NAVs is the responsibility of the investment manager, portfolio valuation also clearly falls within the scope of an auditor’s expertise. Accordingly, I am satisfied that Collins — through either his experience as a hedge fund administrator or as a hedge fund auditor — is qualified to calculate the NAVs.

182 . See PI. Collins Mem. at 18 ("Collins’s calculation of the inflation of the Lancer Funds' NAV are simply the results of applying his opinions on industry custom and practice to the facts of the case and as such are well-grounded, well-reasoned and not speculative.”); id. at 19 (”[A]n expert in industry custom and practice can testify reliably based on knowledge acquired in the course of her or his professional experience without corroboration from external sources.” (citation omitted)).

183 . Collins Dep. at 380:22-5 (“Q. And and you’re not saying that what you would have done is necessarily industry practice? ... A. I can’t say for certain what the overall industry practice is. It's what I feel like that in doing a proper job as an administrator, that's what should be done.”).

184 . See id. at 357:13-358:8 ("Q.... Where do you come up with the 20 percent, at least 20 percent discount approach? ... A. My experience, what has been used in the past with other entities that I’ve seen commonly used.... Q. Other than your experience at RK, anything else as one of the basis of that 20 percent discount formula? ... A. When we adopted some of these methodologies at Rothstein Kass, it was based on the experience that we had, that we had seen with a number of funds. It was through our own technical advisors that we had within the firm. We had all had conversations with other people about the — about what we felt like was appropriate. So we felt very comfortable with these methodologies, and we felt like it was proper under the circumstances.”).

185 . See id. at 358:13-19.

186 . See supra note 171.

187 . See Fed.R.Evid. 104 ("Preliminary questions concerning the qualification of a person to be a witness, the existence of a privilege, or the admissibility of evidence shall be determined by the court, subject to the provisions of subdivision (b). In making its determination it is not bound by the mies of evidence except those with respect to privileges." (emphasis added)).

188 . The Citco Defendants also argue that Collins's opinion is unreliable because he opined in his expert report that a fund's track record should be taken into consideration when valuing restricted securities, but at deposition he conceded that he did not factor the Lancer Funds’ track record into his calculations. See Def. Collins Mem. at 18. However, Collins’s expert report is not rendered unreliable by his deposition testimony. In his expert report, Collins stated that the use of a discount rate, rather than cost, "to price restricted shares is only appropriate where a hedge fund has a proven track record of both getting restricted securities registered (so they are no longer restricted) and then actually selling them at the full market price. When there is no such track record, it is my opinion that it is appropriate to price restricted shares at cost[.]" Collins Report at 31. Collins has provided two calculations in Exhibit Three-one that reflects the lower of cost and market value of the securities and one that reflects a discount rate of twenty percent. Thus, even if Collins had found a proven track record of registering and selling securities at full market price, the use of the discount rate would still be consistent with the methodology he asserted in his expert report. To the extent that the juiy should rely on the discount rate calculation, rather than the cost calculation, or that this discount rate should have been different, the Citco Defendants should make this argument to the jury. Collins’s expert report and deposition testimony are not so inconsistent that he should be precluded from testifying on this issue at trial.

189 . PL Mem. at 12.

190 . See Santoro v. Donnelly, 340 F.Supp.2d 464, 473 (S.D.N.Y.2004) (Scheindlin, J.) (“The question is not whether the engineer is an expert on the exact issues presented in the case, but rather, whether his general engineering experience qualifies him to testify in an area in which he does not have extensive experience.” (citations omitted)); Valentin, 1997 WL 33323099, at *25 ("The fact that a proposed expert may not have the exact qualifications to fit the case does not mean the expert's testimony is automatically inadmissable. If the court finds that the witness’s qualifications are sufficiently similar to the issues in the case, the expert is qualified and opposing counsel can use cross-examination to attack any deficiencies in the expert's background.” (citing United States v. Ruffin, 575 F.2d 346, 357 (2d Cir.1978) and Knight v. Otis Elevator Co., 596 F.2d 84, 88 (3d Cir.1979))).

191 . See Regan CV.

192 . See Regan Dep. at 16:18-22.

193 . See id. at 17:20-25.

194 . See id. at 21:13-19.

195 . Plaintiffs argue that because Regan opines in his report that the PwC personnel performing the audit of Lancer Funds lacked the experience required by ISA 310 to audit a hedge fund, see Regan Report at 10, Regan (whose experience in the hedge fund industry is also limited) should likewise be precluded from testifying about PwC's audits of Lancer Funds, see PL Reply at 7-8. This argument incorrectly assumes, however, that Regan must meet ISA requirements to testify. To the contrary, the admissibility of Regan's testimony depends on the requirements of Rule 702-which the Second Circuit has "liberally construed,” TC Sys., 213 F.Supp.2d at 174, and which are presumably less stringent than ISA requirements.

196 . Pl. Mem. at 13.

197 . See Regan Dep. at 10:21-11:23.

198 . See id. at 12:5-12 (“Q. About how many of your auditing opinions have, sort of on a percentage basis, involved International Accounting Standards on auditing? ... A. It depends on the year. Some years it’s 100 percent, some years it’s zero percent. I recall a block of about three years where it was all International Auditing Standards.”).

199 . PL Mem. at 14.

200 . Def. Mem. at 18 (emphasis added).

201 . See, e.g., Regan Dep. at 96:20-24 (stating that the role of the investment manager would be relevant to his testimony "[t]o the extent that the investment manager has made valuations and those valuation are used as a starting point in the work of the auditor[.]”); Regan Report at 13 ("[T]he Investment Manager had poor internal controls related to its investment valuation process, a factor that was not appropriately considered or addressed by PwC."); id. at 14 ("[T]he Investment Manager appeared to employ a pattern of repeated delays in providing PwC with necessary evidential matter.'').

202 . Regan Report at 17.

203 . Regan Dep. at 84:21-85:4.

204 . See id. at 31:25-32:3 ("Q. You’re not an expert on the duties of hedge fun administrators? ... A. Correct.”).

205 . See Fed.R.Evid.401,402.

206 . See In re Rezulin Prods. Liab. Litig., 309 F.Supp.2d at 548-49 (stating that testimony by experts who "disavow any expertise” on subjects about which they later opine is "inherently unreliable” and should be excluded).

207 . See Def. Mem. at 18 (concluding their brief's section on this issue. “Thus, Regan properly opines as to the roles of the administrator and investment manager as they relate to the planning and performance of the audits by PwC” (emphasis added)).

208 . See Regan Dep. at 58:7-9 ("Q. And you haven’t been asked to opine on the duties of a hedge fun director, correct? ... A. Correct.”).

209 . See Fed.R.Evid. 401, 402.

210 . See Regan Report at 3.

211 . Pl. Mem. at 15. During a deposition, Regan asserted that he did, in fact, analyze the audits of funds other than Lancer Offshore. See Regan Dep. at 76:14-16. However, “the court does not fulfill its gatekeeper function if it simply accepts the ipse dixit of an expert.” Malletier, 525 F.Supp.2d at 643 (citing Joiner, 522 U.S. at 146, 118 S.Ct. 512). Accord Major League Baseball Props., 542 F.3d at 311; Rink v. Cheminova, Inc., 400 F.3d 1286, 1292 (11th Cir.2005) ("Transposition of data based on such conjecture and rough approximation lacks the ‘intellectual rigor' required by Daubert.” (quoting Kumho Tire, 526 U.S. at 152, 119 S.Ct. 1167)). An expert’s bare assertion that he has performed the necessary analysis is insufficient to show that his analysis is reliable.

212 . Regan Report at 3.

213 . For example, while the chart reflects that Lancer Offshore and Orbiter had twenty-seven and twenty-five percent of their funds respectively invested in a particular stock (SMX), Viator only had one percent of its fund in that stock. See id. at 4. In addition, the chart only reflects the funds' investments in three stocks (comprising between twenty-one percent and fifty-six percent of each fund's total portfolio) at one specific time (the first year that all three funds existed). See id. at 3-4.

214 . For example, Regan opines that “[i]n 2000, Lancer Offshore's unrealized gains on investment securities were driven substantially by the gains it reported from its warrant holdings [ (i.e., a security that entitles the holder to purchase stock at a specified price) ],” id. at 27, and that "[d]ue to PwC’s audit failures” the fact that Lancer Offshore had changed its valuation methodology with respect to the warrants “was not disclosed to shareholders,” id. at 28. The same alleged failures may have occurred with respect to the other funds, but it is impossible to determine this without Regan articulating his analysis as it applies to these funds.

215 . See Daubert, 509 U.S. at 595, 113 S.Ct. 2786 (holding that an expert's opinions must be based upon a "reliable foundation”).

216 . PL Mem. at 17.

217 . See Regan Report at 5-7.

218 . Regan uses the acronym "PwC” to refer to PricewaterhouseCoopers (Netherlands Antilles). See id. at 5 n. 8.

219 . See Major League Baseball Props., 542 F.3d at 311.

220 . See Collins Rebuttal Report at 2-9.

221 . See supra Part VI.A.2.

222 . Collins Rebuttal Report at 9 (citing Regan Report at 32-33).

223 . See Def. Collins Mem. at 22. See also Collins Dep. 447:23-448:9 ("Q. So you don't have any — you have not identified anything in the record that would suggest that in the 1997 audit, '98 audit, '99 audit or 2000 audit preformed by PwC, that they placed significant reliance on the management rep letter? ... A. I have no basis whatsoever. Nothing that I read that — this is the only evidence that I had available to me to respond to that particular sentence in Mr. Regan’s report.”),

224 . See, e.g., Collins Rebuttal Report at 9 ("Regan's conclusion that PwCNA did not place substantial reliance on the representation letters it received ... is baseless. He premises this conclusion on the fact that the representation letters were dated later than the date of the audit reports. But a hedge fund's audit report is dated on the date of completion, or substantial completion, of the auditor's fieldwork. Representation letters are solicited and signed at or after the conclusion of field work.” (citations omitted)); Collins Dep. at 444:25-445:13 ("Q. But with respect to the 1999 audit report, what information do you have or have you reviewed that suggest that PwC did, in fact, place significant reliance on the management representation letters prior to issuing its opinion? ... A. I am responding to the assertion that there was no significant reliance on those letters. And I am responding by rebutting that statement saying that they are important, they asked for it; that the auditor is — should not be issuing their opinion without it.... That's what the literature says.”).