Compass Lexecon Client the SEC Prevails in Civil Securities Fraud Action

The US Securities and Exchange Commission (“SEC”) alleged that Brian K. Hutchison made material misrepresentations to investors while he was the Chief Executive Officer of RTI Surgical Holdings, Inc (“RTI”). Specifically, the SEC alleged that Mr. Hutchison intentionally or recklessly failed to disclose the company's practice of shipping customer orders early to recognize revenue in earlier quarters, thereby artificially inflating the company's quarterly revenues and stock price.

The SEC retained Compass Lexecon Affiliate Professor Kenneth M. Lehn to test whether the alleged misstatements were value-relevant to investors and supported the SEC’s allegation that the misstatements were material. Professor Lehn issued a report in which he opined that (i) RTI’s revenue guidance was likely to be value-relevant to investors because it was associated with statistically significant changes in the company’s stock price and (ii) the change in RTI’s stock price on July 27, 2016, following its announcement that it was lowering its revenue guidance, provides a reliable basis to conclude that the alleged misstatements were value-relevant to investors. He also was deposed by Mr. Hutchison’s counsel.

On August 5, 2026, US District Judge Richard J. Leon granted the SEC’s motion for summary judgment, finding for the SEC on all issues. In assessing the SEC’s materiality claim, Judge Leon cited Professor Lehn’s opinions, finding that (i) the revenue guidance was material in part because “the 13.2% decline in RTI's stock price after RTI missed its Q3 2015 guidance was ‘statistically significant’” and (ii) “the 10.4% drop in RTI's stock price was principally caused by RTI's announcement in Q2 2016 that it was lowering its revenue guidance for the rest of the year.”

Professor Lehn was assisted by a Compass Lexecon team led by Michael Keable and Anne Marie Yale. Compass Lexecon worked closely with attorneys at the SEC, including Nishchay Maskay, John Timmer, and Derek Bentsen.