EXHIBIT 4 

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 IN THE CIRCUIT COURT OF THE STATE OF OREGON

 FOR THE COUNTY OF MULTNOMAH

KENNETH and ISABELLA POMMIER, )

 )

co-trustees of Kenneth W. Pommier )

 )

& Isabella B. Pommier Family )

 )

Revocable Trust Dated 3/18/1986; )

 )

et al., )No. 16CV36439

 )

 Plaintiffs, )

 )

 vs. )

 )

DELOITTE & TOUCHE LLP, et al., )

 )

 Defendants. )

__________________________________ )

 )

WALTER WURSTER, et al., )

 )

 Plaintiffs, )No. 16CV25920

 )

 vs. )

 )

DELOITTE & TOUCHE LLP, EISNERAMPER )

 )

LLP; SIDLEY AUSTIN LLP; TONKON )

 )

TORP LLP; DUFF & PHELPS, LLC; TD )

 )

AMERITRADE, INC., and INTEGRITY )

 )

BANK & TRUST, )

 )

 Defendants. )

 TRANSCRIPT OF PROCEEDINGS

 BEFORE THE HONORABLE KATHLEEN M. DAILEY

 April 6, 2018

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1 BE IT REMEMBERED that the proceedings were

2 taken before Aleshia K. Macom, RMR, RPR, CSR,

3 CRR, on April 6, 2018, commencing at the hour of

4 8:30 a.m., at the Multnomah County Courthouse,

5 1021 SW Fourth Avenue, Courtroom 716, Portland,

6 Oregon.

7 * * *

8 APPEARANCES

9 MILLER NASH GRAHAM & DUNN LLP

10 By Ian Christy

11 Bruce L. Campbell

12 ian.christy@millernash.com

13 bruce.campbell@millernash.com

14 111 SW Fifth Avenue, Suite 3400

15 Portland, Oregon 97204

16 Counsel for Wurster Plaintiffs

17

18 LATHAM & WATKINS

19 Peter A. Wald

20 Gavin Masuda

21 peter.wald@lw.com

22 gavin.masuda@lw.com

23 505 Montgomery Street, Suite 2000

24 San Francisco, California 94111

25 Counsel for Defendant Deloitte & Touche, LLP

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1 FRIDAY, APRIL 6, 2018; PORTLAND, OREGON;

2 8:30 A.M.

3 * * *

4 THE CLERK: All rise.

5 THE COURT: Good morning. All of you for a

6 motion to compel? Really? All right. Take a

7 seat.

8 All right. Here we are this morning in

9 Wurster versus Deloitte & Touche, 16CV25920.

10 Who's ever going to speak, if you want to put

11 yourself on the record.

12 MR. WALD: Good morning, Your Honor. Peter

13 Wald and Gavin Masuda of Latham & Watkins for

14 the Deloitte defendant.

15 MR. MASUDA: Good morning, Your Honor.

16 THE COURT: Can you put yourself on the

17 record. I know it was kind of him.

18 MR. MASUDA: Of course, Your Honor. Gavin

19 Masuda of Latham & Watkins for defendant

20 Deloitte & Touche, LLP. Thank you.

21 THE COURT: Thank you.

22 MR. CHRISTY: Your Honor, Ian Christy from

23 Miller Nash Graham & Dunn on behalf of the

24 Wurster plaintiffs.

25 THE COURT: Christy spelled?

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1 MR. CHRISTY: C H R I S T Y.

2 THE COURT: Thank you.

3 MR. CAMPBELL: And, Your Honor, Bruce

4 Campbell on behalf of the Wurster plaintiffs,

5 but I will not have a speaking role today.

6 THE COURT: All right. Well, thank you for

7 letting me know.

8 Okay. It was your motion to compel.

9 MR. WALD: Yes.

10 THE COURT: I've read everything.

11 MR. WALD: Thank you, Your Honor. I'm happy

12 to respond to any questions that you have out of

13 the box or I can --

14 THE COURT: Well, I can give you my -- I'm

15 curious -- How do I state this? The logic of

16 why you ought to get this documentation is a

17 little lost on me, just overall, because of the

18 nature of the statute that we're operating under

19 and the idea that really the only affirmative

20 defense that I see is the one that comes into

21 play under secondary liability that you did not

22 know or could not know of the fraud. And so I'm

23 a little lost about how plaintiffs' personal

24 financial records bear on that.

25 MR. WALD: Okay. Let me see if I can

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1 address that straightforwardly, Your Honor.

2 These were private placement transactions,

3 as The Court appreciates. In order to be

4 permitted to purchase, the plaintiffs needed to

5 warrant and represent that they were accredited

6 investors.

7 THE COURT: And they did.

8 MR. WALD: They did make that warrant and

9 representation. That is correct. That is a

10 defined term, as Your Honor appreciates, under

11 the securities laws. Regulation D requires them

12 to have -- to be able to demonstrate either that

13 they have a net worth of a million dollars or

14 more or that they have income of $200,000 or

15 more for each of the two years prior to their

16 purchase of the unregistered security.

17 So, at a very basic level, Your Honor,

18 Deloitte seeks these documents to test the

19 proposition of whether these plaintiffs told the

20 truth when they signed the subscription

21 agreements and were, in fact, accredited

22 investors under the law.

23 THE COURT: But why do you have to test the

24 truth? Just accept that that is the truth and

25 where does that get you? I mean, why would you

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1 want to undermine that they were accredited?

2 MR. WALD: Your Honor, if they lied in order

3 to get into these investments, we believe that's

4 something a jury can take into account in

5 deciding --

6 THE COURT: But tell me in terms of

7 pleading, what would you plead to make that

8 admissible or relevant or --

9 MR. WALD: As The Court recognized in In Re

10 Baker, it just goes to their basic credibility

11 about the allegations that they're making, which

12 is, among other things, that Deloitte's

13 involvement in this transaction was material to

14 them, as Your Honor has found in connection with

15 the finding, with -- in upholding the

16 allegations on secondary liability. And in

17 finding that they had adequately alleged that

18 Deloitte's credibility was important to them, we

19 believe we are able, we should be able to argue

20 to the jury either that they lied in order to

21 get into these investments, which the jury could

22 well conclude on the basis of that, the

23 inference to be drawn is they didn't care about

24 anything except getting into the investments or

25 on the other hand, Your Honor --

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1 THE COURT: But where does that get you?

2 Because your only defense is that you did not

3 know and could not know. So I don't understand

4 how that bears on any defense or element of the

5 case.

6 MR. WALD: It bears, Your Honor, on at least

7 the following things: On secondary liability it

8 bears on the question of whether Deloitte's

9 association with the transaction, which we

10 dispute as a matter of fact, but for these

11 pleading purposes we accept that you found that

12 they have pled enough, we submit, Your Honor,

13 that we can show through cross-examination that

14 Deloitte's association with the transaction was

15 not material to them, was not material to them.

16 THE COURT: Well, but that -- Okay. So, I

17 mean, without doing a back-door reliance, which

18 is also a question mark because we know that

19 there's not a reliance factor, I mean, I can see

20 you saying the fact that Deloitte was on the PPM

21 and they were accredited and sophisticated means

22 that it had no bearing on their decision. I

23 mean, if that's even at issue, setting aside the

24 whole reliance argument for a moment. But, but

25 that is contrary to what you're just now saying,

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1 because you can't have it both ways. You can't

2 say they are sophisticated and so us being on

3 the PPM didn't matter to them in their purchase

4 and therefore it wasn't material and also they

5 weren't accredited and therefore not, and then

6 of course it does get into the whole thing about

7 whether accredited and sophisticated is the same

8 thing, which is also a question mark. But you

9 can't say that because they were liars and

10 weren't accredited, then what? They shouldn't

11 have bought it.

12 MR. WALD: Yes, Your Honor.

13 THE COURT: But that's not a defense.

14 MR. WALD: Well, Your Honor, we believe the

15 jury is, is entitled to consider from a but-for

16 point of view whether they would have bought

17 these securities with or without Deloitte's

18 association. And, and, Your Honor, the facts

19 are binary. They either were accredited or they

20 were not accredited.

21 THE COURT: But you get to make a

22 presumption that they were accredited because

23 they bought and certified as such.

24 MR. WALD: And what if those were lies, Your

25 Honor?

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1 THE COURT: That's what I mean. It's a

2 circular argument, because I don't understand

3 how that goes to anything that's an element of

4 the case.

5 MR. WALD: It goes to the question of

6 whether they are credible in saying that

7 Deloitte's association with this transaction was

8 material to them, something which Your Honor has

9 found under the Galbraith case and the Gonia

10 case, et cetera, is an important element of the

11 claim.

12 THE COURT: But the credibility argument is

13 an opposite argument, in my eyes. That's the

14 argument that they were sophisticated and thus,

15 or accredited, and thus had the ability to know

16 that Deloitte's name on the PPM wasn't anything

17 that influenced anything or aided in the sale,

18 because it had no real bearing on it.

19 MR. WALD: Your Honor, they've come into

20 this court and they've said to Your Honor that

21 they've lost their life savings and they're

22 living hand to mouth. We expect to see those

23 arguments with the jury.

24 THE COURT: Well, you might expect it, but

25 I'm not sure I'm allowing it. Because that

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1 argument from the beginning has troubled me, as

2 I already said to Mr. Kayser. So we'll talk

3 about that another day. But that's not what's

4 here.

5 MR. WALD: Okay. Well, Your Honor, we

6 submit that you are certainly right that if they

7 are, in fact, accredited investors, that we are

8 able, we should be entitled to argue certain

9 inferences to the jury on that basis. If they

10 are not, however, accredited investors and they

11 lied in order to get into these investments, we

12 submit to Your Honor that that goes to the

13 question of whether they cared or they didn't

14 care about Deloitte's association with the

15 transaction. And we believe we should be

16 entitled to argue the inference to the jury that

17 these people -- And we've seen documents, Your

18 Honor, we've already started to see documents

19 where they're saying, we are looking for a

20 high-return, low-risk investment to which people

21 might say, aren't we all?

22 THE COURT: Well, but your argument sounds

23 like to me a reliance argument, and we don't

24 have that in this case.

25 MR. WALD: We don't think it is reliance,

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1 Your Honor. We think it goes to materiality.

2 We think it goes to the question of whether or

3 not Deloitte's association with the transaction

4 was material, as Your Honor has found is an

5 important element of secondary liability.

6 THE COURT: But you get to presume that they

7 are accredited. And I really do think there is

8 a fair argument to be made around the question

9 that I've already noted, and that was in the

10 papers of whether "sophisticated" and

11 "accredited" are synonymous. They might not be.

12 There's, you know, remember the Beverly

13 Hillbillies? They had tons of money but weren't

14 sophisticated.

15 MR. WALD: Well, Your Honor, I don't -- from

16 a relevance point of view, likely to, reasonably

17 calculated to lead to the discovery of

18 admissible evidence --

19 THE COURT: Well, I do understand the

20 standard for discoverability, but I also

21 understand the balance of privacy and

22 protection. And I'm really struggling to find

23 out how getting into their financial records

24 that have nothing to do with the damages of this

25 case, because the damages are separate and

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1 apart.

2 MR. WALD: Let's talk about the damages,

3 Your Honor.

4 THE COURT: Okay.

5 MR. WALD: Because they are relevant to the

6 damages. The damages, as you know, are set by

7 statutory formula. They depend on what they

8 purchased, when they purchased, and what monies

9 they received as a consequence of their

10 purchase, at least those elements. And what we

11 submit is that we're entitled to see bank

12 statements, broker statements, tax returns that

13 confirm the dates of purchase, the date of

14 sales, if any, or rollovers and the amount of

15 interest that was secured by the plaintiffs in

16 connection with those investments.

17 THE COURT: So tell me why, because I don't

18 know, the reference to the bankruptcy package.

19 I mean, what's lacking from that that gives, if

20 that's the right reference.

21 MR. WALD: Well, that's the one thing that's

22 been told to us so far, Your Honor. I mean,

23 this is the --

24 THE COURT: Well, what's in it?

25 MR. WALD: The bankruptcy trustee attempted

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1 to put together a package of information for

2 each investor and sent it back to the investor,

3 saying is this accurate or is this not accurate?

4 We don't know what they have responded to. But,

5 but it doesn't -- The -- In his own filing the

6 receiver said, we can't verify these numbers

7 because Aequitas did not keep ledgers that allow

8 us to do that. So we don't know what the right

9 numbers are.

10 THE COURT: So the underlying documentation

11 hasn't been provided for the actual sales that,

12 purchases that are at issue in the case?

13 MR. WALD: Not, as to our knowledge it's not

14 part of the bankruptcy package, Your Honor, nor

15 is it clear whether whatever was sent out by the

16 bankruptcy receiver is accurate.

17 THE COURT: Okay. Well, we're going to sort

18 that out because you do have a right to the

19 documentation that supports what we bought.

20 But, I mean, that was from Aequitas; right?

21 MR. WALD: Right.

22 THE COURT: Okay. Well, I'll hear from you

23 about what that piece is. But, I mean, you have

24 a right to whatever supports their damages in

25 terms of whatever that is, but somebody will

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1 educate me more about what piece of paper that

2 would look like.

3 MR. WALD: All right. So let's hold damages

4 to one side, Your Honor. Our submission on

5 relevance is that there are three ways in which

6 these documents are relevant. The first is it

7 goes to the question of primary liability. The

8 plaintiffs have said that they were misled about

9 the riskiness, the relative stability on the one

10 hand or riskiness in security of --

11 THE COURT: You mean the "lent to

12 credibility" argument?

13 MR. WALD: Well, that's for secondary

14 liability, Your Honor.

15 THE COURT: Yeah.

16 MR. WALD: But I think it's part and parcel

17 of the same thing. I think the first question

18 is whether or not we are entitled to show that

19 if they were misled about the relative security

20 and safety of these investments, which we

21 contest, that it was because they lied in order

22 to get into the investment. And we think that

23 we should be entitled to confirm from the

24 plaintiffs' own documents whether they actually

25 were accredited investors as they told Aequitas,

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1 as a condition of being allowed to invest in

2 these investments, we should be allowed to see

3 whether that was true. And if it wasn't true,

4 we should be allowed to argue to the jury that

5 if they were misled, it was because they,

6 themselves, lied in order to get into this

7 investment. And that is a primary liability

8 argument, Your Honor, which goes to the question

9 of whether there were false and mis- --

10 THE COURT: But if there was fraudulent

11 statements or fraud in the inducement or however

12 you want to look at it, fraud in buying the

13 purchase, whether they had money or not, that's

14 a separate and apart issue.

15 MR. WALD: They would not have been on the

16 scene, Your Honor, if they had told the truth.

17 They would not have been on the scene. They

18 would not have been permitted to invest in these

19 securities if they had told the truth. And the

20 jury is entitled to take that into account in

21 assessing --

22 THE COURT: So you want to, you're likening

23 it to a causation piece of the case then?

24 MR. WALD: Correct. The connection to the

25 sale. That's right. That's exactly right under

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1 both primary liability and secondary liability.

2 And then, Your Honor, I know there's a,

3 there's a live debate about the affirmative

4 defenses. But to the extent that, that they,

5 you know, that we are entitled to show and we

6 believe that we are entitled to show things like

7 in pari delicto, things like ratification and

8 estoppel, all of those would be, would be, would

9 make relevant the question of how they talked

10 themselves into, if I can put it that way, Your

11 Honor, being able and allowed to invest in these

12 securities.

13 THE COURT: Well, and I'll have to say that

14 right now that doesn't hold water for me, those

15 defenses. But I'm willing to be educated on it

16 on another day.

17 But the equitable defenses I just don't see

18 under our, Oregon law how you would get that.

19 But I'll save that for another day. I would not

20 give you the documentation on that basis.

21 MR. WALD: All right. Well, let's -- then I

22 won't continue with that argument, Your Honor.

23 Our fundamental point is that yes, you're

24 right. If they really were sophisticated

25 investors, it could lead to one set of

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1 inferences to argue to the jury. If they lied

2 and they weren't sophisticated investors, that

3 leads to a different set of arguments and

4 inferences that we would ask the jury to draw,

5 including the fact that but for their own

6 misrepresentations, they never would have been

7 in the investments and they can't say that they

8 were misled by the conduct of Deloitte when what

9 they were misled by was the fact that they lied

10 to get into the investments and they never

11 should have been admitted as investors.

12 THE COURT: So you've got a bunch of joint

13 plaintiffs and you're in front of a jury. And

14 so on half of them you're going to argue they're

15 sophisticated and therefore it didn't matter and

16 on the other half you're going to say they

17 weren't and therefore it was but-for causation.

18 MR. WALD: Your Honor, we have a mass

19 action. That's what it is. We're confronted

20 with that problem. I mean, we'll have to talk

21 to Your Honor about how you want to structure

22 the trial. We recognize that's going to be an

23 issue. Right now we're just in discovery.

24 We're trying to discover the facts. We have

25 charts, Your Honor, for each plaintiff. You

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1 know, that's the only way we can defend the

2 case. That's how it's presented to us. And so

3 we need to go through each plaintiff and we need

4 to show, we need to understand whether or not

5 they were, in fact, accredited and whether or

6 not they told the truth in connection with their

7 subscription agreements.

8 Once we have the basic facts and we have the

9 facts on damages, Your Honor, then we can take a

10 step back and we can assess what we actually

11 have in the case. But without the underlying

12 documents, we can't do that.

13 THE COURT: Okay. Let me hear from the

14 plaintiffs.

15 MR. CHRISTY: Thank you, Your Honor. Our

16 position is that there is absolutely no nexus

17 between the documents that Deloitte seeks and

18 the claims and defenses at issue in this case.

19 And I think Your Honor got to the heart of it

20 with your discussion about the relevance of

21 sophistication here. Our position is that there

22 is absolutely no relevance to accredited

23 investor status or sophistication in any way

24 that would reflect on our claims as investors

25 under the Oregon securities law.

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1 THE COURT: Well, then get to his but-for

2 causation argument.

3 MR. CHRISTY: The but-for causation argue is

4 entirely a collateral issue. The fact that

5 investors may have lied, we have no evidence

6 that investors did lie about their accredited

7 investor status, but the fact that they --

8 assuming, for the sake of argument, that is the

9 case, that does not defeat a claim under the

10 Oregon securities law. There is no affirmative

11 defense that would allow them to make that

12 statement and, and have the jury conclude that

13 they are somehow responsible. It's essentially

14 a covert way of imposing an in pari delicto

15 requirement or affirmative defense, which the

16 Oregon legislature has not allowed based on the

17 language of the statute, which provides very

18 single affirmative defense that the defendants

19 knew or in the exercise of reasonable care

20 should have known about the fraud.

21 The defense that Mr. Wald is talking about

22 is not something that would defeat a claim, even

23 if it's true. So --

24 THE COURT: What about the damages?

25 MR. CHRISTY: The damages issue, I think

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1 Mr. Wald is misrepresenting the nature of what

2 we are going to be providing as proof in this

3 matter. The investor packets that our clients

4 received are, are the crux of what --

5 THE COURT: Okay. So they receive. So tell

6 me what it is.

7 MR. CHRISTY: So it's a packet of

8 information that the receiver put together that

9 shows the principal that our investors invested.

10 It shows the amount of interest that our

11 investors received back. It shows what they, it

12 shows the amount that was reinvested. It's

13 essentially a balance sheet showing the

14 different types of --

15 THE COURT: But where did it come from? How

16 did he create that?

17 MR. CHRISTY: Our understanding is that the

18 receiver looked through the Aequitas records and

19 was able to make a determination based on those

20 records as to what the damages --

21 THE COURT: So where are the original

22 documents so the defendants can have them?

23 MR. CHRISTY: They were in the Aequitas

24 receiver's database, and the defendants have

25 access to that database. They have the same

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1 information that we have. And we don't intend

2 to rely on any information that the defendants

3 are currently seeking to prove our claims.

4 THE COURT: So your clients don't have their

5 own documentation.

6 MR. CHRISTY: Our clients -- Excuse me, Your

7 Honor. Our clients have some of their own

8 documentation. To the extent it pertains to

9 Aequitas, we have produced all those materials.

10 We have produced the materials relating to the

11 notes that our clients signed. We have produced

12 notes relating to the transactions themselves,

13 the subscription agreements, the private

14 placement memorandum, of that information, to

15 the extent it's in our clients' possession, has

16 been produced to the defendants.

17 THE COURT: So I need at that addressed.

18 Why then are you thinking there's something

19 else?

20 MR. WALD: Your Honor, it's easy for the

21 plaintiffs to call their brokers and to supply

22 us with the broker statements which are

23 inarguable and will show once and for all what

24 they bought, when they bought it and what they

25 received on it. The receiver in his report said

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1 he doesn't know.

2 THE COURT: Okay. But what about the

3 Aequitas documentation themselves that they say

4 you have the database for?

5 MR. WALD: Well, the database is 16 million

6 documents, Your Honor. It was made available

7 about a month ago basically to people. What we

8 know is that the receiver who has been

9 collecting documents and information for the

10 past two years did the best job that the

11 receiver could, sent to the plaintiffs, to each

12 of the plaintiffs apparently a set of

13 information and asked them to verify whether it

14 was accurate. We don't know.

15 THE COURT: But the core documents that are

16 in database you can't get to?

17 MR. WALD: We can get to them Your Honor.

18 We don't know that they will show what we're

19 looking for, which is --

20 THE COURT: Oh. Well, why don't you look

21 first and see if they do or don't?

22 MR. WALD: Your Honor, there are 16 million

23 documents there. We, we are --

24 THE COURT: Are they not organized by name

25 that you could just do a status search?

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1 MR. WALD: No.

2 THE COURT: Really? Are you kidding me?

3 MR. MASUDA: Your Honor, if I may, the more

4 fundamental problem is even if we were able to

5 run a search and identify, for example,

6 Mr. Wurster's documents, the receiver himself

7 has noted problems in the data where Aequitas

8 did not sufficiently maintain their own records

9 in the database for even the receiver, with all

10 of his resources, to be able to say, I know what

11 this plaintiff purchased and exactly when. And

12 that's in the latest receiver's report, which is

13 published in the SEC case.

14 THE COURT: Okay. Is it impossible to go to

15 the broker and get the piece of papers?

16 MR. CHRISTY: I would not say it's

17 impossible, but it's an extreme burden to go to

18 66 different clients and 66 different brokers

19 and collect all of that information especially,

20 especially, Your Honor, because that information

21 is already in the Aequitas database.

22 THE COURT: The exact same documents?

23 MR. CHRISTY: We don't know exactly what our

24 clients --

25 THE COURT: So do you, have you already

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1 accessed the database and got this thing, all

2 this on behalf of your clients?

3 MR. CHRISTY: We do have access to the

4 database, Your Honor. Yes.

5 THE COURT: Well, why don't you provide it

6 to them?

7 MR. CHRISTY: Through the Aequitas database?

8 THE COURT: Well, from whatever means, a

9 broker, a database, your clients' safe at home.

10 I mean, why can't you give them papers saying

11 what the damages are?

12 MR. CHRISTY: Well, Your Honor, our position

13 is we've already provided all that information.

14 THE COURT: How?

15 MR. CHRISTY: Through the Aequitas investor

16 packets and through the other material that our

17 clients have in their possession.

18 THE COURT: Okay. The packets of original

19 documentation is what I just heard, and I just

20 heard that the receiver's having issues with

21 some of it himself. And so they want to verify

22 the truth of the under -- of the claim.

23 MR. CHRISTY: I think that's slightly a

24 misstatement of what the receiver has said. The

25 receiver has actually talked about the fact that

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1 Aequitas did a very good job at bookkeeping.

2 It's one of the only things that Aequitas did

3 that was, that was actually on the level and

4 successful. So I don't think that that's

5 correct that the receiver's database is somehow

6 inaccurate.

7 To the extent that we are trying to prove

8 our claims based on any documentation, it's

9 based on documents that we've either already

10 provided to them or documents that are in the

11 Aequitas receiver's database.

12 THE COURT: Yeah, but they want to verify

13 the truth of the matter, that it's a real

14 amount. And so you have to figure out a way to

15 assuage them of their fears that you're asking

16 for something that isn't actually true. So I

17 don't, you know, because a summary is not the

18 actual document. And so they want to see a

19 piece of paper that really says what your client

20 paid for the investment and what the interest

21 was.

22 So I don't really mind how you go about

23 doing it, but it sounds like that it may not

24 exist in perfection, Mr. Wald, but that it

25 exists to the point where it's admissible in

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1 court to support a claim for damages.

2 And so the two of you have to get on the

3 same page and sort this out with each other

4 because the documents to a degree that would

5 create admissibility for a claim are there and

6 that's what they're going to rely on. And if

7 you think that's inadequate, then you can tell

8 the jury it's inadequate. But in terms of them

9 giving it to you or you getting, who, you know,

10 nobody wants to go to the database and I

11 probably think, there's costs affiliated with

12 that I'm quite sure. But it is your claim. So

13 somehow you have to get them to say, okay, we

14 can live with this.

15 MR. CHRISTY: And to be clear, Your Honor,

16 we don't have a problem with providing

17 information relating to our Aequitas

18 investments, but what Mr. Wald, what Deloitte is

19 asking for is far broader than that. They're

20 asking for tax returns --

21 THE COURT: No. No. No. No. I'm just

22 talking about the purchase. I'm just talking

23 about the investment for, I'm talking about the

24 damage claim, what you're going to be asking the

25 jury for, whatever supports what you're asking

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1 the jury for needs to have some foundational

2 documentation to it and you need to give that to

3 them. That's all I'm talking about.

4 MR. WALD: Your Honor, if I may, let me just

5 say I don't think there's any doubt that they

6 could call their brokers and get these records.

7 And there would be no question as to the

8 accuracy and the authenticity.

9 THE COURT: Okay.

10 MR. WALD: They've made no.

11 THE COURT: I don't think making 66 phone

12 calls in a major action like this is a big deal,

13 personally. A paralegal could cover that in a

14 week at most.

15 MR. WALD: And there's been no showing, Your

16 Honor, of burden. They didn't put anything --

17 THE COURT: Okay. I'm with you on that.

18 MR. WALD: All right. And with respect to

19 the receiver, Your Honor, what he said in the

20 most recent report is, quote, that Aequitas

21 lacked a consolidated accounting and investor

22 reporting platform and he acknowledged that,

23 quote, the receiverships records do not align

24 with investor and creditor records.

25 THE COURT: Okay. We're going to get to

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1 besides a packet. So we're not going to just

2 rely on a summary from somebody. We need some

3 original documentation. And whether that's from

4 the database or from a broker or from your

5 client, mox nix to me. Just figure it out and

6 give it to each other.

7 MR. CHRISTY: To be clear, I just want to

8 make sure I understand what Your Honor's saying

9 here. We're talking about documents relating to

10 the Aequitas investments.

11 THE COURT: I am. That's what I'm talking

12 about. I'm not talking about your clients'

13 personal records or tax records beyond that.

14 I'm talking about the claim for damages.

15 MR. CHRISTY: I think we can work that out

16 then, Your Honor.

17 MR. WALD: Your Honor, can I then go back to

18 the causation issue just to wrap up?

19 THE COURT: Yeah.

20 MR. WALD: Because I don't believe that

21 there's been a credible response by the other

22 side on that issue. If the plaintiffs lied to

23 get into the investments and that is what caused

24 their damages, the jury is entitled to conclude

25 that Deloitte is not responsible for that. The

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1 jury is entitled to conclude that there is not a

2 causal connection between the alleged conduct of

3 Deloitte and the sale, which Your Honor on

4 page 16 I believe of your opinion recognizes the

5 law in the state of Oregon, that they need to

6 show not only that it was material to them, and

7 we've talked about that, but also that it caused

8 the sale. And if that's not what caused the

9 sale, we're entitled to argue that inference

10 very hard to this jury, Your Honor.

11 And so there, it isn't just a matter of

12 credibility. It's a matter of whether or not

13 that causal chain has been broken. And we

14 submit, Your Honor, that what we're asking for

15 is not -- They haven't made the argument on

16 burdensomeness. We do understand and appreciate

17 that these are personal financial records. They

18 are the plaintiffs'. They're suing Deloitte for

19 hundreds of millions of dollars. We have a

20 protective order. And under Reg D we are

21 entitled to original documents that prove or

22 disprove the warrant and representation that

23 they made, that they had income of $200,000 or

24 more for each of the two years prior to their

25 purchase of Aequitas securities or net worth of

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1 a million dollars. And if we can demonstrate

2 that some or many of them did not, Your Honor,

3 we intend to argue very hard that there is no

4 causation here.

5 THE COURT: Okay. I, as I sit right now,

6 I'm denying in part and granting in part. I'm

7 granting on what we just talked about with

8 damages. I'm denying otherwise with leave to

9 renew later in the case once we get more into

10 developing the structure of the case legally. I

11 don't think you have the affirmative defense

12 that you're trying to claim that you have, but I

13 can be educated to that if later on I'm

14 convinced otherwise.

15 But at this stage in the proceedings you're

16 not going to get that documentation. We'll see

17 as we develop because I'm first to admit I keep

18 getting educated. I keep learning more. And so

19 if I don't get something right at this moment in

20 time, maybe it will make a difference later in

21 time and I'll see the error of my ways. But as

22 we sit here right now today, you're not getting

23 it besides the damage documentation. And then

24 we'll see how this unfolds. And as we learn

25 more as we move through the case and, I mean,

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1 financial records can be provided easily. And

2 I'd liken it to in a punitive damage case where

3 we don't offer up the net worth in documentation

4 until later in the case as a way to protect it

5 until we see if it's really going happen or not.

6 So I guess with that said, I'm going to see

7 if this is really going to happen or not in

8 terms of the defense that you're trying to say

9 here today that you're going to be asserting,

10 because I don't know that you actually can. But

11 we'll see. Okay? That's the ruling today.

12 MR. WALD: Thank you, Your Honor.

13 MR. CHRISTY: Thank you, Your Honor.

14 THE COURT: Do you want a time frame for

15 providing these or can you work that out between

16 you?

17 MR. CHRISTY: I think we can work that out.

18 Should we prepare an order, Your Honor?

19 THE COURT: Yes, you should.

20 MR. CHRISTY: All right. We're happy to do

21 that.

22 THE COURT: Do you want a time frame or are

23 you good with working it out? Can you do it

24 within, what, 30 days? Is that what you want?

25 MR. WALD: That would be great, Your Honor.

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1 THE COURT: Is that adequate amount of time?

2 MR. CHRISTY: You know, I'm not certain. I

3 don't know the number of people that we're going

4 to need to talk to or their level of

5 responsiveness.

6 THE COURT: Well, given the length of this

7 case, 45 days?

8 MR. CHRISTY: I think 45 days would be

9 reasonable, Your Honor.

10 THE COURT: Okay. 45 days.

11 MR. WALD: Your Honor, if I may, and mindful

12 of what you just said about coming back to you

13 later in the case not only on the affirmative

14 defenses but on the causation issue, which is

15 their burden on the affirmative defense, just

16 want to make sure that the documents that we are

17 seeking are preserved.

18 THE COURT: Yes. So don't destroy anything.

19 That would be very bad. Okay.

20 MR. CHRISTY: Understood, Your Honor.

21 THE COURT: Then I'd give a jury instruction

22 you wouldn't like. All right. Bye for now.

23 (Recess at 9:02 a.m.)

24 * * *

25

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1 C E R T I F I C A T E

2

3 I, Aleshia K. Macom, CSR No. 94-0296, do

4 hereby certify that at the time and place

5 mentioned in the caption herein; that said

6 proceedings were taken down by me in stenotype

7 and thereafter reduced to typewriting; and that

8 the foregoing transcript, pages 1 to 32, both

9 inclusive, constitutes a full, true and accurate

10 record of said proceedings had during the taking

11 of said hearing, and of the whole thereof, to

12 the best of my ability.

13 Witness my hand at Portland, Oregon, this

14 16th day of April, 2018.

15

16 ____________________________

 Aleshia K. Macom

17 CSR No. 94-0296

 Expires 9-30-2020

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