Preview
FILED: NEW YORK COUNTY CLERK 03/12/2024 06:43 PM INDEX NO. 651341/2020
NYSCEF DOC. NO. 114 RECEIVED NYSCEF: 03/12/2024
Exhibit 4
FILED: NEW YORK COUNTY CLERK 03/12/2024 06:43 PM INDEX NO. 651341/2020
NYSCEF DOC. NO. 114 RECEIVED NYSCEF: 03/12/2024
2/8/2024 Bruce Kim v. XP Securities, LLC et al. Franck Risler, Ph.D.
Highly Confidential - Attorneys' Eyes Only
Page 1 Page 3
SUPREME COURT OF THE STATE OF 1 A P P E A R A N C E S:
NEW YORK COUNTY OF NEW YORK 2
---------------------------------X
3 ON BEHALF OF PLAINTIFF:
BRUCE KIM, :
4 THE LAW OFFICE OF LAWRENCE OH
Plaintiff, : Case No.:
5 62 Cooper Street Square
v. : 651341/2020
6 New York, New York 10003
XP SECURITIES, LLC, N/K/A XP :
7 EMAIL: LPCHAUCHAT@GMAIL.COM
INVESTMENTS US, LLC, XP :
INVESTMENTOS S.A. AND PEDRO :
8 BY: LAWRENCE OH, ESQ.
CRISTOFORDO DA SILVEIRA : 9
Defendants. : 10 ON BEHALF OF DEFENDANTS:
---------------------------------X 11 KASOWITZ, BENSON, TORRES, LLP
HIGHLY CONFIDENTIAL ATTORNEYS' EYES ONLY 12 1633 Broadway, Paramont Plaza
DEPOSITION OF 13 New York, New York 10019
FRANCK RISLER, Ph.D. 14 EMAIL: BCHOI@KASOWITZ.COM
NEW YORK, NEW YORK
15 BY: BRIAN CHOI, ESQ.
February 8, 2024
16
17 ALSO PRESENT:
REPORTED BY: KIARA MILLER
18 BRUCE KIM (via Zoom)
______________________________________________________
19 ALEXANDER SAKIN (Via Zoom)
DIGITAL EVIDENCE GROUP
1730 M Street, NW, Suite 812
20
Washington, D.C. 20036 21
(202) 232-0646 22
Page 2 Page 4
1 Deposition of FRANCK RISLER, Ph.D., taken on behalf of
1 INDEX
2 PLAINTIFF, at 1633 Broadway, New York, New
2 WITNESS: FRANCK RISLER, Ph.D.
3 York, commencing at 10:07 AM, February 8, 2024,
3 EXAMINATION BY PAGE
4 before Kiara Miller. 4 MR. OH 5
5 5 EXHIBITS
6 6 RISLER DESCRIPTION PAGE
7 7 Exhibit 1 Appendix A 6
8 8 Exhibit 2 Mr. Johnson's Report 119
9 9 Exhibit 3 Robert Kim's 205
10 10 Deposition
11 11 Transcript
12 12 Exhibit 4 Michael Baity's 224
13 13 Deposition
14 14 Transcript
15 15 Exhibit 5 Transcript Excerpt 261
16 16 of Michael Campbell
17 17 Exhibit 6 Exhibit CC1 to Mr. 267
18 18 Johnson's Report
19 19 Exhibit 7 Excerpt of Mr. 304
20 20 Johnson's Transcript
21 21 Exhibit 8 Spreadsheet to Mr. 314
22 22 Johnson's Report
1 (Pages 1 to 4)
www.DigitalEvidenceGroup.com Digital Evidence Group C'rt 2024 202-232-0646
FILED: NEW YORK COUNTY CLERK 03/12/2024 06:43 PM INDEX NO. 651341/2020
NYSCEF DOC. NO. 114 RECEIVED NYSCEF: 03/12/2024
2/8/2024 Bruce Kim v. XP Securities, LLC et al. Franck Risler, Ph.D.
Highly Confidential - Attorneys' Eyes Only
Page 53 Page 55
1 expert report in that position, yes? 1 A He help -- both he and Ching Watson help
2 A That's correct. 2 write some of the report under my
3 Q What is his rate of pay? 3 supervision, yes.
4 MR. CHOI: Objection. Lacks 4 Q Which part did Andrew Rennie help you
5 foundation. 5 with?
6 A I will need to double check. 6 A He help writing the -- from my
7 Q I'm sorry, if I didn't hear you, he is 7 recollection, the section around risk
8 not a formal employee of FTI, but listed as 8 mitigation and tpMATCH. Which is a product
9 an advisor; is that right? Or is considered 9 he's very familiar with, and the concept of
10 an advisor? 10 this type of risk mitigation concept.
11 A Yes. Basically he will operate at a 11 Q What other -- was that the sum total of
12 partner level, but he's not an employee as a 12 his contribution to your report?
13 full-time employee. It's something that FTI 13 A I don't want to be inaccurate, but that
14 has for numerous people that are very 14 was the most important contribution in his
15 valuable, provide expertise, but don't want 15 report, yeah.
16 to have a full-time commitment. 16 Q So did he help you write any other part
17 Q So are you paying him or is FTI paying 17 of the report?
18 him? I'm sorry if I didn't hear that. 18 A As I mentioned, he -- everything was
19 MR. CHOI: Objection. Asked and 19 done under my supervision. He read the
20 answered. 20 report as well. He had contribution to some
21 A I'm not sure I understand your question. 21 other aspect, but his most focused
22 Q Who is actually paying Andrew Rennie for 22 contribution was on the risk mitigation gap
Page 54 Page 56
1 the services that he provides here? 1 risk. Which, in my opinion, is
2 A Are you asking about the minutia of how 2 mischaracterizing the Johnson report.
3 Andrew Rennie will be compensated? 3 Q What did Ching Watson, what was her
4 Q Yes. I am asking about the minutia of 4 contribution to your report?
5 how Andrew Rennie will be compensated. 5 A She ruled a lot of the report. Again,
6 THE WITNESS: Shall I answer that? 6 under my supervision. I stand by everything
7 MR. CHOI: Yes. 7 which has been written. She has an extensive
8 A So Andrew Rennie is having an hourly 8 background in supporting expert, and she's
9 rate, like I do, like anybody in my team. 9 very experienced and writes very well.
10 His work is being billed to the client. Is 10 Q So fair to say, then, that she
11 sending us his hourly work. When the client 11 contributed to many different parts of
12 pays invoice, FTI will pay him his work. 12 report?
13 That's the way it work for any consultant, 13 A Yes.
14 nonpermanent employees. 14 Q Not just one area like Andrew?
15 Q Do you know how many hours he's put into 15 A That's correct. Under my supervision,
16 this matter? 16 and I stand with anything written. I
17 A I will need to double check. I will 17 reviewed it, I edit it, I wrote some of it.
18 think in total, maybe ten,15,15 hours. He's 18 Yes, she contributed to various part of the
19 a very fast minded person. Impressively fast 19 report.
20 minded person. 20 Q Do you know if she has any experience
21 Q Did he help you write any of your 21 with foreign exchange?
22 report? 22 A No. She hasn't traded proficiently in
14 (Pages 53 to 56)
www.DigitalEvidenceGroup.com Digital Evidence Group C'rt 2024 202-232-0646
FILED: NEW YORK COUNTY CLERK 03/12/2024 06:43 PM INDEX NO. 651341/2020
NYSCEF DOC. NO. 114 RECEIVED NYSCEF: 03/12/2024
2/8/2024 Bruce Kim v. XP Securities, LLC et al. Franck Risler, Ph.D.
Highly Confidential - Attorneys' Eyes Only
Page 57 Page 59
1 foreign exchange. 1 he's very smart. It's always good to involve
2 Q Do you know if she has any prior 2 very smart people.
3 academic experience with foreign exchange? 3 Q What about Ching Watson, how long have
4 A What do you mean by academic experience 4 you been working with her?
5 with foreign exchange? 5 A Since May '23 when she joined my team
6 Q Yeah. So what is her specialty, if I 6 and we hired her for an analysis group. And
7 may ask, in her degree? 7 she's excellent, in my opinion.
8 A She has a Ph.D. in finance. And she's 8 MR. CHOI: And just, I think everyone
9 specializing financial mitigation across 9 understands you, but just so the
10 asset class. So she has done, from memory, 10 record is clear, when you say May '23,
11 cases in foreign exchange and structure 11 that's 2023?
12 credit and so on. 12 THE WITNESS: Yes. Yeah. Sorry, not
13 Q So is it a Ph.D. in finance or a Ph.D. 13 May 23, May 2023, when she joined FTI
14 in economics? 14 in my group.
15 A I said economics before? 15 Q So you mentioned that your hourly rate
16 Q You did. 16 in this matter is $1327?
17 A I believe it's finance. 17 A That's correct.
18 MR. CHOI: I'm objecting to the prior 18 Q And the hourly rates for $405 and $812
19 question. It lacks foundation. He's 19 for other people who have helped you,
20 not Dr. Watson, he's Dr. Risler. 20 correct?
21 Q Since leaving -- did Andrew Rennie leave 21 A That's what is in my report. It is
22 Laplace -- after leaving Laplace, where else 22 slightly inaccurate in a sense that it's not
Page 58 Page 60
1 did he work? 1 accounting for Andrew Rennie's hourly rate.
2 MR. CHOI: Objection. Lacks 2 812 would be the hourly rate of Ching Watson.
3 foundation. 3 Andrew Rennie's hourly rate will be closer to
4 Q So we know that he has some relationship 4 mine. That's another side. And we're very
5 with Tullett Prebon. What other companies 5 happy to share with you -- I mean, counsel
6 did he work for or work in an advisory 6 can share with you Andrew Rennie's hourly
7 capacity? 7 rates if needed.
8 A I don't know. 8 Q Dr. Risler, how many hours have you
9 Q You don't know? 9 billed so far on this matter?
10 A I think Tullett Prebon probably is the 10 A I will need to double check the bill.
11 most contribution, but I don't know. 11 I'm not quite sure.
12 Q Have you worked with Andrew Rennie on 12 Q Do you have a ballpark?
13 other matters, other expert deposition expert 13 A Seventy hours, maybe.
14 witness matters? 14 Q How about Ching Watson?
15 A I worked with Andrew Rennie on various 15 MR. CHOI: Objection.
16 other engagement. He's an important resource 16 A Again, to be accurate, I will need to
17 in my team. He's very valuable. 17 check the bill.
18 Q How many other cases would you say you 18 MR. CHOI: Objection. Lacks
19 worked with him? 19 foundation.
20 A Several. I can think about five at 20 Q If you know.
21 least recently, but, yeah. Involving as much 21 A More than me. More than a hundred
22 as possible. He has a broad experience, and 22 hours, maybe 150, maybe more.
15 (Pages 57 to 60)
www.DigitalEvidenceGroup.com Digital Evidence Group C'rt 2024 202-232-0646
FILED: NEW YORK COUNTY CLERK 03/12/2024 06:43 PM INDEX NO. 651341/2020
NYSCEF DOC. NO. 114 RECEIVED NYSCEF: 03/12/2024
2/8/2024 Bruce Kim v. XP Securities, LLC et al. Franck Risler, Ph.D.
Highly Confidential - Attorneys' Eyes Only
Page 85 Page 87
1 proposition was wrong. You arrived at that 1 Tullett Prebon to sell this tool to large
2 conclusion pretty quickly after reading his 2 financial institution. Whether he's an
3 report? 3 employee or Tullett Prebon sell him, pay him
4 MR. CHOI: Objection. 4 a commission with the seller, honestly, I
5 Mischaracterizes prior testimony. 5 don't know.
6 A Well, as pointed out, I mean, we had 6 Q This tool, have you seen this tool?
7 about a month to write a report, which is 7 Have you seen any iteration of this tool?
8 pretty short but is possible. Obviously, 8 A No.
9 people work hard on the holiday and so on. 9 Q This is a risk mitigation service tool
10 So we arrive at this conclusion within a 10 for interest rates, correct?
11 subset of that. I think within a couple of 11 A That's my understanding, yeah.
12 weeks we pretty much had the opinion and 12 Q And it's based on his experience,
13 formed it well articulated. And then it was 13 perhaps even his expertise, in interest rate
14 more the matter of refining. 14 risk mitigation service tools, that you
15 Q What did you rely on to arrive at that 15 relied on in coming up with your conclusion
16 conclusion within a couple of weeks? 16 in this report, correct?
17 A My industry background, my experience as 17 A No.
18 a trader. And as part of the risk mitigation 18 Q It's in part something that you relied
19 as well, the understanding of the way risk 19 on?
20 mitigation algorithm, like tpMATCH, and the 20 A What I said is, I rely on my industry
21 way bank run gap risk mitigation operates. 21 experience, expertise, running trading team,
22 Q So based on your industry background and 22 working on the buy side and the sell side,
Page 86 Page 88
1 your understanding of how risk mitigation 1 running large trading team, trading myself,
2 services run? 2 trading foreign exchange, knowing how banks
3 A My understanding and Andrew Rennie's 3 operate, knowing how hedge fund operate.
4 understanding. As I mentioned before, he 4 And in addition, Andrew Rennie has a
5 actually developed a very similar risk 5 close relationship with Tullett Prebon. We
6 mitigation tool which is not a concept as 6 developed and ran risk mitigation, and knows
7 actually being developed, operated and is 7 very well the team that operate tpMATCH has a
8 being sold to banks by Tullett Prebon. 8 very good understanding of the way these
9 Q I'm sorry if I didn't get this correct. 9 tools operate, and the way bank uses tools on
10 Andrew Rennie is not an employee of Tullett 10 the FX side.
11 Prebon? 11 Q Correct. So he has more experience with
12 A I'm not sure exactly is the arrangement 12 risk mitigation service than you do, correct?
13 that he has with Tullett Prebon. Whether 13 MR. CHOI: Objection.
14 he's an employee, whether his tool has been 14 Mischaracterizes prior testimony.
15 sold and is a shareholder, I'm not privy on 15 A I wouldn't say so.
16 this engagement. And the type of 16 Q What experience do you have with risk
17 contractural engagement he has with Tullett 17 mitigation services of this sort that Andrew
18 Prebon is developed a tool for risk 18 Rennie has sold to Tullett Prebon?
19 mitigation on the interest side, on the 19 A I have been running risk and managing
20 interest rate side, more focused on nonlinear 20 risk most of my life.
21 interest rate derivative which are more 21 Q Yeah. But running and managing risk is
22 complex problem. And he partnered with 22 one thing. The more specific details
22 (Pages 85 to 88)
www.DigitalEvidenceGroup.com Digital Evidence Group C'rt 2024 202-232-0646
FILED: NEW YORK COUNTY CLERK 03/12/2024 06:43 PM INDEX NO. 651341/2020
NYSCEF DOC. NO. 114 RECEIVED NYSCEF: 03/12/2024
2/8/2024 Bruce Kim v. XP Securities, LLC et al. Franck Risler, Ph.D.
Highly Confidential - Attorneys' Eyes Only
Page 89 Page 91
1 concerning a risk mitigation service 1 did that occur to you?
2 algorithm and how such a platform executes is 2 A Again, I'm struggling with your
3 another thing, wouldn't you say? 3 question, "Observe". I don't think there is
4 A No. Disagree. Actually, risk 4 that much to observe.
5 mitigation has been existing for a very long 5 Q All right. So my question is, you
6 time. Before the great financial crisis, I 6 didn't think it was important to look at how
7 actually was running on the interest rate 7 a risk mitigation service tool operates in
8 side. 8 preparing your report, even though a person
9 At that time the largest notional 9 who you relied on in drafting and
10 derivative were interest rate swap. It was 10 constructing your report had just sold such a
11 very important to use services like TriOptima 11 tool to a broker like Prebon?
12 to try to do compressions and do similar 12 A I disagree with your characterization.
13 things to limit counterparty risk. They've 13 I disagree totally with your
14 been existing in the trading world for a 14 characterization.
15 very, very long time. 15 We explained the important of this tool
16 Q My questions is, here Andrew Rennie has 16 operate. We explained the nature of the
17 just recently been involved in selling, 17 risk. It's a rebuttal report of the Johnson
18 building and selling a risk mitigation 18 report. We correct what we believe is a
19 service tool, correct? 19 mischaracterization of the gap risk. And I
20 A That's correct, yeah. 20 was very happy to have Andrew Rennie in my
21 Q Therefore, he has much more recent 21 team, just to make sure that actually
22 experience with a risk mitigation service 22 everything we're characterizing and all the
Page 90 Page 92
1 tool than you do, correct? 1 opinion that I had just based on my trading
2 A I disagree. But he has recent 2 experience were very consistent was what he
3 experience that is an expressed opinion which 3 was observing right now at Prebon.
4 are fully consistent with mine, which is very 4 Q I would like you to look at page five of
5 interesting. 5 Exhibit 1.
6 Q Did you ask Andrew Rennie if you could 6 A Exhibit 1?
7 see what a risk mitigation service tool looks 7 Q Yes. Just the same report that you
8 like? 8 have. It should be at the front.
9 A What do you mean "looks like"? 9 All right. In your paragraph ten, your
10 Q How it operates. 10 subparagraph one within ten, your first
11 A What do you mean "how it operates"? 11 couple of lines there, you talk -- you
12 Q Well, observing a risk mitigation 12 introduce the summary of your opinions, and
13 service tool in action. 13 you describe Hubl as being designed to be an
14 A Um-hmm. I think we explained in my 14 electronic trading platform for 4X products.
15 report, oh, these type of services and what 15 In 2019, there were already a number of
16 the cap risk is. And we actually described 16 electronic trading platforms in the 4X
17 the way they operate. 17 market, including EBS and Reuters, known as
18 Q I'm not asking about how you described 18 Thompson Reuters Matching, subsequently
19 it. I'm asking whether or not it occurred to 19 acquired by Refinitive and then by LSEG.
20 you to observe and see exactly how a risk 20 These two platforms were launched in the
21 mitigation service executes, how a platform 21 early 1990s, and have since dominated the 4X
22 executes what a tool looks like in operation, 22 interdealer broker market, correct?
23 (Pages 89 to 92)
www.DigitalEvidenceGroup.com Digital Evidence Group C'rt 2024 202-232-0646
Preview
FILED: NEW YORK COUNTY CLERK 03/12/2024 06:43 PM INDEX NO. 651341/2020 NYSCEF DOC. NO. 114 RECEIVED NYSCEF: 03/12/2024 Exhibit 4 FILED: NEW YORK COUNTY CLERK 03/12/2024 06:43 PM INDEX NO. 651341/2020 NYSCEF DOC. NO. 114 RECEIVED NYSCEF: 03/12/2024 2/8/2024 Bruce Kim v. XP Securities, LLC et al. Franck Risler, Ph.D. Highly Confidential - Attorneys' Eyes Only Page 1 Page 3 SUPREME COURT OF THE STATE OF 1 A P P E A R A N C E S: NEW YORK COUNTY OF NEW YORK 2 ---------------------------------X 3 ON BEHALF OF PLAINTIFF: BRUCE KIM, : 4 THE LAW OFFICE OF LAWRENCE OH Plaintiff, : Case No.: 5 62 Cooper Street Square v. : 651341/2020 6 New York, New York 10003 XP SECURITIES, LLC, N/K/A XP : 7 EMAIL: LPCHAUCHAT@GMAIL.COM INVESTMENTS US, LLC, XP : INVESTMENTOS S.A. AND PEDRO : 8 BY: LAWRENCE OH, ESQ. CRISTOFORDO DA SILVEIRA : 9 Defendants. : 10 ON BEHALF OF DEFENDANTS: ---------------------------------X 11 KASOWITZ, BENSON, TORRES, LLP HIGHLY CONFIDENTIAL ATTORNEYS' EYES ONLY 12 1633 Broadway, Paramont Plaza DEPOSITION OF 13 New York, New York 10019 FRANCK RISLER, Ph.D. 14 EMAIL: BCHOI@KASOWITZ.COM NEW YORK, NEW YORK 15 BY: BRIAN CHOI, ESQ. February 8, 2024 16 17 ALSO PRESENT: REPORTED BY: KIARA MILLER 18 BRUCE KIM (via Zoom) ______________________________________________________ 19 ALEXANDER SAKIN (Via Zoom) DIGITAL EVIDENCE GROUP 1730 M Street, NW, Suite 812 20 Washington, D.C. 20036 21 (202) 232-0646 22 Page 2 Page 4 1 Deposition of FRANCK RISLER, Ph.D., taken on behalf of 1 INDEX 2 PLAINTIFF, at 1633 Broadway, New York, New 2 WITNESS: FRANCK RISLER, Ph.D. 3 York, commencing at 10:07 AM, February 8, 2024, 3 EXAMINATION BY PAGE 4 before Kiara Miller. 4 MR. OH 5 5 5 EXHIBITS 6 6 RISLER DESCRIPTION PAGE 7 7 Exhibit 1 Appendix A 6 8 8 Exhibit 2 Mr. Johnson's Report 119 9 9 Exhibit 3 Robert Kim's 205 10 10 Deposition 11 11 Transcript 12 12 Exhibit 4 Michael Baity's 224 13 13 Deposition 14 14 Transcript 15 15 Exhibit 5 Transcript Excerpt 261 16 16 of Michael Campbell 17 17 Exhibit 6 Exhibit CC1 to Mr. 267 18 18 Johnson's Report 19 19 Exhibit 7 Excerpt of Mr. 304 20 20 Johnson's Transcript 21 21 Exhibit 8 Spreadsheet to Mr. 314 22 22 Johnson's Report 1 (Pages 1 to 4) www.DigitalEvidenceGroup.com Digital Evidence Group C'rt 2024 202-232-0646 FILED: NEW YORK COUNTY CLERK 03/12/2024 06:43 PM INDEX NO. 651341/2020 NYSCEF DOC. NO. 114 RECEIVED NYSCEF: 03/12/2024 2/8/2024 Bruce Kim v. XP Securities, LLC et al. Franck Risler, Ph.D. Highly Confidential - Attorneys' Eyes Only Page 53 Page 55 1 expert report in that position, yes? 1 A He help -- both he and Ching Watson help 2 A That's correct. 2 write some of the report under my 3 Q What is his rate of pay? 3 supervision, yes. 4 MR. CHOI: Objection. Lacks 4 Q Which part did Andrew Rennie help you 5 foundation. 5 with? 6 A I will need to double check. 6 A He help writing the -- from my 7 Q I'm sorry, if I didn't hear you, he is 7 recollection, the section around risk 8 not a formal employee of FTI, but listed as 8 mitigation and tpMATCH. Which is a product 9 an advisor; is that right? Or is considered 9 he's very familiar with, and the concept of 10 an advisor? 10 this type of risk mitigation concept. 11 A Yes. Basically he will operate at a 11 Q What other -- was that the sum total of 12 partner level, but he's not an employee as a 12 his contribution to your report? 13 full-time employee. It's something that FTI 13 A I don't want to be inaccurate, but that 14 has for numerous people that are very 14 was the most important contribution in his 15 valuable, provide expertise, but don't want 15 report, yeah. 16 to have a full-time commitment. 16 Q So did he help you write any other part 17 Q So are you paying him or is FTI paying 17 of the report? 18 him? I'm sorry if I didn't hear that. 18 A As I mentioned, he -- everything was 19 MR. CHOI: Objection. Asked and 19 done under my supervision. He read the 20 answered. 20 report as well. He had contribution to some 21 A I'm not sure I understand your question. 21 other aspect, but his most focused 22 Q Who is actually paying Andrew Rennie for 22 contribution was on the risk mitigation gap Page 54 Page 56 1 the services that he provides here? 1 risk. Which, in my opinion, is 2 A Are you asking about the minutia of how 2 mischaracterizing the Johnson report. 3 Andrew Rennie will be compensated? 3 Q What did Ching Watson, what was her 4 Q Yes. I am asking about the minutia of 4 contribution to your report? 5 how Andrew Rennie will be compensated. 5 A She ruled a lot of the report. Again, 6 THE WITNESS: Shall I answer that? 6 under my supervision. I stand by everything 7 MR. CHOI: Yes. 7 which has been written. She has an extensive 8 A So Andrew Rennie is having an hourly 8 background in supporting expert, and she's 9 rate, like I do, like anybody in my team. 9 very experienced and writes very well. 10 His work is being billed to the client. Is 10 Q So fair to say, then, that she 11 sending us his hourly work. When the client 11 contributed to many different parts of 12 pays invoice, FTI will pay him his work. 12 report? 13 That's the way it work for any consultant, 13 A Yes. 14 nonpermanent employees. 14 Q Not just one area like Andrew? 15 Q Do you know how many hours he's put into 15 A That's correct. Under my supervision, 16 this matter? 16 and I stand with anything written. I 17 A I will need to double check. I will 17 reviewed it, I edit it, I wrote some of it. 18 think in total, maybe ten,15,15 hours. He's 18 Yes, she contributed to various part of the 19 a very fast minded person. Impressively fast 19 report. 20 minded person. 20 Q Do you know if she has any experience 21 Q Did he help you write any of your 21 with foreign exchange? 22 report? 22 A No. She hasn't traded proficiently in 14 (Pages 53 to 56) www.DigitalEvidenceGroup.com Digital Evidence Group C'rt 2024 202-232-0646 FILED: NEW YORK COUNTY CLERK 03/12/2024 06:43 PM INDEX NO. 651341/2020 NYSCEF DOC. NO. 114 RECEIVED NYSCEF: 03/12/2024 2/8/2024 Bruce Kim v. XP Securities, LLC et al. Franck Risler, Ph.D. Highly Confidential - Attorneys' Eyes Only Page 57 Page 59 1 foreign exchange. 1 he's very smart. It's always good to involve 2 Q Do you know if she has any prior 2 very smart people. 3 academic experience with foreign exchange? 3 Q What about Ching Watson, how long have 4 A What do you mean by academic experience 4 you been working with her? 5 with foreign exchange? 5 A Since May '23 when she joined my team 6 Q Yeah. So what is her specialty, if I 6 and we hired her for an analysis group. And 7 may ask, in her degree? 7 she's excellent, in my opinion. 8 A She has a Ph.D. in finance. And she's 8 MR. CHOI: And just, I think everyone 9 specializing financial mitigation across 9 understands you, but just so the 10 asset class. So she has done, from memory, 10 record is clear, when you say May '23, 11 cases in foreign exchange and structure 11 that's 2023? 12 credit and so on. 12 THE WITNESS: Yes. Yeah. Sorry, not 13 Q So is it a Ph.D. in finance or a Ph.D. 13 May 23, May 2023, when she joined FTI 14 in economics? 14 in my group. 15 A I said economics before? 15 Q So you mentioned that your hourly rate 16 Q You did. 16 in this matter is $1327? 17 A I believe it's finance. 17 A That's correct. 18 MR. CHOI: I'm objecting to the prior 18 Q And the hourly rates for $405 and $812 19 question. It lacks foundation. He's 19 for other people who have helped you, 20 not Dr. Watson, he's Dr. Risler. 20 correct? 21 Q Since leaving -- did Andrew Rennie leave 21 A That's what is in my report. It is 22 Laplace -- after leaving Laplace, where else 22 slightly inaccurate in a sense that it's not Page 58 Page 60 1 did he work? 1 accounting for Andrew Rennie's hourly rate. 2 MR. CHOI: Objection. Lacks 2 812 would be the hourly rate of Ching Watson. 3 foundation. 3 Andrew Rennie's hourly rate will be closer to 4 Q So we know that he has some relationship 4 mine. That's another side. And we're very 5 with Tullett Prebon. What other companies 5 happy to share with you -- I mean, counsel 6 did he work for or work in an advisory 6 can share with you Andrew Rennie's hourly 7 capacity? 7 rates if needed. 8 A I don't know. 8 Q Dr. Risler, how many hours have you 9 Q You don't know? 9 billed so far on this matter? 10 A I think Tullett Prebon probably is the 10 A I will need to double check the bill. 11 most contribution, but I don't know. 11 I'm not quite sure. 12 Q Have you worked with Andrew Rennie on 12 Q Do you have a ballpark? 13 other matters, other expert deposition expert 13 A Seventy hours, maybe. 14 witness matters? 14 Q How about Ching Watson? 15 A I worked with Andrew Rennie on various 15 MR. CHOI: Objection. 16 other engagement. He's an important resource 16 A Again, to be accurate, I will need to 17 in my team. He's very valuable. 17 check the bill. 18 Q How many other cases would you say you 18 MR. CHOI: Objection. Lacks 19 worked with him? 19 foundation. 20 A Several. I can think about five at 20 Q If you know. 21 least recently, but, yeah. Involving as much 21 A More than me. More than a hundred 22 as possible. He has a broad experience, and 22 hours, maybe 150, maybe more. 15 (Pages 57 to 60) www.DigitalEvidenceGroup.com Digital Evidence Group C'rt 2024 202-232-0646 FILED: NEW YORK COUNTY CLERK 03/12/2024 06:43 PM INDEX NO. 651341/2020 NYSCEF DOC. NO. 114 RECEIVED NYSCEF: 03/12/2024 2/8/2024 Bruce Kim v. XP Securities, LLC et al. Franck Risler, Ph.D. Highly Confidential - Attorneys' Eyes Only Page 85 Page 87 1 proposition was wrong. You arrived at that 1 Tullett Prebon to sell this tool to large 2 conclusion pretty quickly after reading his 2 financial institution. Whether he's an 3 report? 3 employee or Tullett Prebon sell him, pay him 4 MR. CHOI: Objection. 4 a commission with the seller, honestly, I 5 Mischaracterizes prior testimony. 5 don't know. 6 A Well, as pointed out, I mean, we had 6 Q This tool, have you seen this tool? 7 about a month to write a report, which is 7 Have you seen any iteration of this tool? 8 pretty short but is possible. Obviously, 8 A No. 9 people work hard on the holiday and so on. 9 Q This is a risk mitigation service tool 10 So we arrive at this conclusion within a 10 for interest rates, correct? 11 subset of that. I think within a couple of 11 A That's my understanding, yeah. 12 weeks we pretty much had the opinion and 12 Q And it's based on his experience, 13 formed it well articulated. And then it was 13 perhaps even his expertise, in interest rate 14 more the matter of refining. 14 risk mitigation service tools, that you 15 Q What did you rely on to arrive at that 15 relied on in coming up with your conclusion 16 conclusion within a couple of weeks? 16 in this report, correct? 17 A My industry background, my experience as 17 A No. 18 a trader. And as part of the risk mitigation 18 Q It's in part something that you relied 19 as well, the understanding of the way risk 19 on? 20 mitigation algorithm, like tpMATCH, and the 20 A What I said is, I rely on my industry 21 way bank run gap risk mitigation operates. 21 experience, expertise, running trading team, 22 Q So based on your industry background and 22 working on the buy side and the sell side, Page 86 Page 88 1 your understanding of how risk mitigation 1 running large trading team, trading myself, 2 services run? 2 trading foreign exchange, knowing how banks 3 A My understanding and Andrew Rennie's 3 operate, knowing how hedge fund operate. 4 understanding. As I mentioned before, he 4 And in addition, Andrew Rennie has a 5 actually developed a very similar risk 5 close relationship with Tullett Prebon. We 6 mitigation tool which is not a concept as 6 developed and ran risk mitigation, and knows 7 actually being developed, operated and is 7 very well the team that operate tpMATCH has a 8 being sold to banks by Tullett Prebon. 8 very good understanding of the way these 9 Q I'm sorry if I didn't get this correct. 9 tools operate, and the way bank uses tools on 10 Andrew Rennie is not an employee of Tullett 10 the FX side. 11 Prebon? 11 Q Correct. So he has more experience with 12 A I'm not sure exactly is the arrangement 12 risk mitigation service than you do, correct? 13 that he has with Tullett Prebon. Whether 13 MR. CHOI: Objection. 14 he's an employee, whether his tool has been 14 Mischaracterizes prior testimony. 15 sold and is a shareholder, I'm not privy on 15 A I wouldn't say so. 16 this engagement. And the type of 16 Q What experience do you have with risk 17 contractural engagement he has with Tullett 17 mitigation services of this sort that Andrew 18 Prebon is developed a tool for risk 18 Rennie has sold to Tullett Prebon? 19 mitigation on the interest side, on the 19 A I have been running risk and managing 20 interest rate side, more focused on nonlinear 20 risk most of my life. 21 interest rate derivative which are more 21 Q Yeah. But running and managing risk is 22 complex problem. And he partnered with 22 one thing. The more specific details 22 (Pages 85 to 88) www.DigitalEvidenceGroup.com Digital Evidence Group C'rt 2024 202-232-0646 FILED: NEW YORK COUNTY CLERK 03/12/2024 06:43 PM INDEX NO. 651341/2020 NYSCEF DOC. NO. 114 RECEIVED NYSCEF: 03/12/2024 2/8/2024 Bruce Kim v. XP Securities, LLC et al. Franck Risler, Ph.D. Highly Confidential - Attorneys' Eyes Only Page 89 Page 91 1 concerning a risk mitigation service 1 did that occur to you? 2 algorithm and how such a platform executes is 2 A Again, I'm struggling with your 3 another thing, wouldn't you say? 3 question, "Observe". I don't think there is 4 A No. Disagree. Actually, risk 4 that much to observe. 5 mitigation has been existing for a very long 5 Q All right. So my question is, you 6 time. Before the great financial crisis, I 6 didn't think it was important to look at how 7 actually was running on the interest rate 7 a risk mitigation service tool operates in 8 side. 8 preparing your report, even though a person 9 At that time the largest notional 9 who you relied on in drafting and 10 derivative were interest rate swap. It was 10 constructing your report had just sold such a 11 very important to use services like TriOptima 11 tool to a broker like Prebon? 12 to try to do compressions and do similar 12 A I disagree with your characterization. 13 things to limit counterparty risk. They've 13 I disagree totally with your 14 been existing in the trading world for a 14 characterization. 15 very, very long time. 15 We explained the important of this tool 16 Q My questions is, here Andrew Rennie has 16 operate. We explained the nature of the 17 just recently been involved in selling, 17 risk. It's a rebuttal report of the Johnson 18 building and selling a risk mitigation 18 report. We correct what we believe is a 19 service tool, correct? 19 mischaracterization of the gap risk. And I 20 A That's correct, yeah. 20 was very happy to have Andrew Rennie in my 21 Q Therefore, he has much more recent 21 team, just to make sure that actually 22 experience with a risk mitigation service 22 everything we're characterizing and all the Page 90 Page 92 1 tool than you do, correct? 1 opinion that I had just based on my trading 2 A I disagree. But he has recent 2 experience were very consistent was what he 3 experience that is an expressed opinion which 3 was observing right now at Prebon. 4 are fully consistent with mine, which is very 4 Q I would like you to look at page five of 5 interesting. 5 Exhibit 1. 6 Q Did you ask Andrew Rennie if you could 6 A Exhibit 1? 7 see what a risk mitigation service tool looks 7 Q Yes. Just the same report that you 8 like? 8 have. It should be at the front. 9 A What do you mean "looks like"? 9 All right. In your paragraph ten, your 10 Q How it operates. 10 subparagraph one within ten, your first 11 A What do you mean "how it operates"? 11 couple of lines there, you talk -- you 12 Q Well, observing a risk mitigation 12 introduce the summary of your opinions, and 13 service tool in action. 13 you describe Hubl as being designed to be an 14 A Um-hmm. I think we explained in my 14 electronic trading platform for 4X products. 15 report, oh, these type of services and what 15 In 2019, there were already a number of 16 the cap risk is. And we actually described 16 electronic trading platforms in the 4X 17 the way they operate. 17 market, including EBS and Reuters, known as 18 Q I'm not asking about how you described 18 Thompson Reuters Matching, subsequently 19 it. I'm asking whether or not it occurred to 19 acquired by Refinitive and then by LSEG. 20 you to observe and see exactly how a risk 20 These two platforms were launched in the 21 mitigation service executes, how a platform 21 early 1990s, and have since dominated the 4X 22 executes what a tool looks like in operation, 22 interdealer broker market, correct? 23 (Pages 89 to 92) www.DigitalEvidenceGroup.com Digital Evidence Group C'rt 2024 202-232-0646