Expert Witness for Financial Disputes: Don Keysser


Interviewer: Mark Santi (MS), Minneapolis Attorney

Interviewee: Don Keysser (DK)

[Start of transcription]


MS: Hi. I’m Mark Santi. I’m an attorney here at Minneapolis. I’m meeting today with Don Keysser. He serves as an expert witness for financial disputes. Welcome Don.

DK: Thank you very much, pleasure to be here.

MS: Hey Don if you could give us a little idea about your background?

DK: Sure. I was investment banker at Dain Bosworth. Well it’s now called RBC Dain Rauscher but I do it as Dain Bosworth for many years as a Managing Director there. And then I went to Miller & Schroeder as a principal there and as a senior vice president of the capital markets. So I have been doing investment banking for probably thirty … thirty plus years.

MS: Great. I understand from your CV that you have done some teaching as well.

DK: Right. I am an adjunct professor of corporate finance. I was at Metro State for a while. And then, now I am at … now I am currently at Argosy University, where I am also working on my doctorate degree as well. But I do teach there at MBA level in corporate finance, capital markets, global finance and government finance.

MS: Great. We are going to talk a little bit today about investment disputes and [01:00] the role you serve as an expert witness. So tell us when did you first become an expert witness for investment cases?

DK: I think back in the middle/late 90s I was called for my first case and that was an eye opener for me because I never really thought about being an expert witness but I have been doing this for a long … long time. So I was brought in by a class action against investment bank. And the financing that they had underwritten defaulted. And they had made, in my opinion, a number of errors in that underwriting. So I testified about that and I thought, yeah, I really enjoyed doing this.

MS: Ok. So as part of being an expert witness you testify, you attend the trials or the hearings…?

DK: Well typically … first of all I do a lot of reading. I am asked to read all of the case documents, the complaint to counter complaint to motions, the other definitions of the pretrial materials. And then usually I am asked to write a report where I summarize my opinion as to what transpired [02:00]. And I write it in the light of the current financial management practices in the industry. So one of the things I actually teach expert witnessing now, and one of the things that I point out, is that its critical to understand that you are not there as an advocate – you are there as an expert on a particular subject matter; for the disclosure of… or due diligence… you’re there as an expert on that matter. Obviously you’re hired by one side not by the other. But you are not there to advocate for the client, you are there to give your expert opinion as to how that client performed in the light of current practices in investment banking.

MS: That’s right. I think that’s an important distinction.

DK: Very important!

MS: And before we get into the issues where we can learn more about you. Is there a website?

DK: Yes, my consulting firm is Hannover Limited. So you can go to And Hannover has two Ns. That’s where I was born so I kind of picked that name as a sentimental reason. But I have a group of consultants that I work with [03:00]. And we provide a pretty broad range of financial consulting services. I am already working with early stage companies, raising capital and doing MNA. And my specialty, in addition to that, is expert witness. So there is a section in the website on my expert witness services. And I have done about 23 cases to date.

MS: Great! … So some of our viewers are going to be investors, wondering how they can protect themselves. So hopefully they don’t have to meet someone like you one day.

[Mutual laugh]

DK: Well … I know exactly what you mean and I have worked on a number of cases or class action cases where investors will sue an underwriter. And a couple of points to make: one is invest in your area of expertise. If you for example come from a medical background, it makes sense to invest in a biomedical early stage startup. But if you come from an IT software background it may not make sense to invest in a biomedical. Because you don’t understand what you are reading [04:00]! So my first suggestion is invest in what you understand, in what you know. Secondly, read the documents. You are going to be given or you should be given a lot of materials, business plan, proformas, management analysis and proformas. Read them very carefully and ask lots of questions. When an investor buys a private placement they are signing a certification that they have read everything, they understand everything, they have asked all the questions that they have wanted to ask and that they are satisfied. So if a year later the deal collapses and you try to sue, it is a little bit hard to maintain this little argument that well you weren’t told everything. You signed it, you did! So ask a lot of questions.

MS: What if the investor reads those documents and often times it’s a huge stack of documents and they don’t understand what they are reading. What professional advice should they seek?

DK: Well they really should seek the advice of a professional investment manager or a fund manager or tax consultant, whatever is appropriate for them. And hopefully if they have that level of wealth, [05:00] they have a relationship with a wealth management advisor or broker. And ask that person, this is their livelihood. And that by the way raises an additional point in investing in complex, high yields investments that should not be your bread and butter money. You should be invested in solid … safe investments like T-bills, municipals, the AAA corporate and real estates. This is sort of the fund invested. This is at the top of the pyramid of your investment package. So if you lose the money you put into, which you have a risk of doing more than you would do with an AAA corporate stock, for example. You are not out of business knowing you’ve suffered loss, but you’re not clipping food stamps or selling your house or pulling the kids out of college. So this is fun money, but yes by all means consult with your wealth advisor.

MS: I think you have referenced so far sophisticated investor or investors that should be sophisticated [06:00]. What about your average everyday investors who are meeting with the broker or dealing with the financial advisor. How can they protect themselves?

DK: I have a very strong conservative bias here and in most of my investment banking years I dealt with institutional investors. And on purpose! Because I think for a lot of retail investors, i.e. Ma and Pa, individual investors, they really should be careful about getting involved in, what are called, alternative investments. For the average investor what makes the most sense is to buy indexed funds and forget about them. Just leave it alone. Let it sit there and it will go up and it will go down. It won’t go up or down by a lot but it’s relatively safe. When using the word relatively.

MS: Now let’s say an investor … an average investor didn’t take your advice and got involved in some stocks or some other financial instruments recommended by their broker and they feel that something was not right about that situation. Do you ever deal with thinner arbitration?

DK: Yes, I have got one coming up real soon and [07:00] one of the points that we raised in that in developing our case here is the one of suitability. This is a very important topic in investment management. When an individual goes to a broker to start a new relationship, the first thing that broker should be doing is going through a risk profile of that person. And they should go through their socio-economic background. How old are you? Are you married? How about the age of your children, if you have any? What are your career goals? Where are you in your career? All these kinds of questions and you develop a risk profile. You know a young man who is, let’s say, 25 years old, unmarried and has an MBA degree is probably fairly aggressive and afford to take some chances. A man who is 50; married, let’s say, he is divorced, has three school aged children is probably not as risk prone. Or he shouldn’t be, you know, because you have less time to catch up, you have greater responsibilities. So you need to get a risk profile of the investor. And then you should counsel your client. You, being a broker, should counsel your client to invest within the parameters of that risk profile [08:00]. I see, for example, cases where a 75 year old widow is put into oil and gas partnership. That’s outrageous! That’s a wrong investment for a person in that particular risk profile. Whereas a young man who is 25, has an MBA, who is kind of aggressive any way, that might be a good investment. But it has to fit their risk profile.

MS: Ok. And that widow, typically, her redress would be to file for FINRA arbitration.

DK: Correct.

MS: And as an expert witness how do you assist in the various stages of arbitration?

DK: Actually I should go one step back.

MS: Sure.

DK: The first thing that she would do with her attorney is to write a demand letter back to her brokerage firm. It’s basically I demand my money back. And in many cases they will get it back because the brokerage firm doesn’t want to go through FINRA arbitration unless they think that they will ever have a really solid case.

MS: So do you assist at that stage in the proceeding or not quite yet?

DK: No, no, the attorney can handle that and sometimes they will get the money back. With or without the interest [09:00] but at least they get the principal back.

MS: Sure.

DK: If that’s refused and they go to arbitration then I will step in and one of the things that I would do is to look at the suitability question. What was that investment and compared to the profile of that individual was that an appropriate investment? More often I am engaged in civil litigations between an underwriter and an institutional investor. So I just finished a case and there were leads where a mutual fund, a large mutual fund, had bought a municipal bond that had been issued through a local county. And the deal collapsed and the mutual fund sued. And it settled out court, most of these cases settle! So I don’t really know what the final settlement was, but in my opinion there was really no case. The mutual fund was a huge wealth mega billion dollar institution that sent an analyst down there twice to walk around and ask questions and meet people and they made a mistake. They asked the wrong questions [10:00] and they didn’t ask the right questions. So they invested in a bond issue that they shouldn’t have.

MS: So I understand that you don’t always act as an expert witness for the investor. You may also act as an expert witness for the person offering the investment product. Is that correct?

DK: Right. I have been at both the plaintiff and the defendant side and I have deliberately tried to keep that balance. Because I think some experts become tagged as their always plaintiff experts or their always defendants experts. And that I think begins to color your objectivity over time. So I try really hard, in fact I just got hired on a case out west where I am on the plaintiff side. And, a government is suing investment managers for allegedly bad advice and misrepresentation. So I try to be on both sides where I can. Or not on both sides but on either side depending on state.

MS: I see. And what steps you typically go through when you are first analyzing the case?

DK: The first thing that I want to do is to read everything that they have. For example I want to read the prospectus [11:00] or the official statement if it’s a bond case or read the complaint and the counter complaint. And then if they have already taken depositions of the principal players I want to read those. All the factual backgrounds and if there a feasibility study, I want to read that. If there were proformas, I want to read that. So I want to read all the background information so I get really immersed in the details of the transactions.

MS: And you typically generate reports for either your clients and/or to submit to the court for the arbitrators…?

DK: Right. I typically will write a report on behalf of/ for my client. And my client is the attorney who represents the underlying client and that’s given to the court and the other side to. And that’s my analysis of the case, my opinion of the conduct of whichever party is at fault here or allegedly at fault. And that is the corner stone of my deposition later. And if it goes to trial, my trial testimony. That’s really the heart of my service.

MS: Well remind us again how we can get in touch with you if we need your services. [12:00]

DK: Well, first of all, my website is and Hannover has two Ns. There is a one N version and a two N version. I’m the two N. And my phone number is 612 710 0995. Or Mark can get hold of me.

MS: Alright. Thank you so much. I appreciate your time Don.

DK: It’s a pleasure.

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