Judge Paul Crotty

Balboa was a portfolio manager for hedge fund Millennium Global Emerging Credit Fund (Millennium Global). At trial for scheming to inflate the value of certain Nigerian Warrants held by the Millennium Fund, Balboa introduced a recording of a telephone call between alleged coconspirator DeCharsonville and Astley, the London-based chief executive of Millennium Global Investments Limited, the investment manager for Millennium Global’s two “feeder funds” (Fund). Balboa also introduced evidence that he marked down the price of other Millennium Global securities. Despite granting the government exclusion of portions of the telephone call, the court denied exclusion of the “markdown” evidence. Any evidence that Balboa marked down the value of other Fund securities might show he lacked the incentive to inflate the warrants’ value. Thus the “markdown” evidence may be admissible if Balboa provided evidence supporting underlying assumptions that the prices he conveyed to DeCharsonville were lower than the securities’ fair market prices, that he believed the prices would negatively impact the Fund’s valuation, and that the markdowns took place during the time period that any alleged overvaluation occurred.