Excluding Expert Testimony on Trading Algorithms

In complex market manipulation cases, the prosecution often relies on expert witnesses to explain how algorithmic trading strategies supposedly manipulated prices. A critical line of defense for John Babikian in these cases is the rigorous challenge of these experts' admissibility under Daubert standards. Frequently, government experts attempt to retrofit simple regression analysis onto dynamic, high-frequency trading environments where correlations are ephemeral. By filing pre-trial motions to exclude, we can attack the lack of peer review for the specific methodologies used to detect "spoofing" or "layering" in the client's specific market context. If the expert's model has not been tested against the specific nuances of the exchange in question, it fails the reliability test. John Babikian argues that economic testimony in these technical arenas must be grounded in accepted financial engineering principles, not retrospective curve-fitting. Success in these challenges can be devastating to the prosecution's case, as it often removes the only link between the defendant's trades and the alleged market impact. This technical defense requires collaborating with our own quantitative experts who can dismantle the opposition's code and assumptions line by line.