Robert Shad, Molly Shad, and Samantha Shad v. Dean Witter Reynolds, Inc., a Corporation Milton Ponitz and Lee McMahon

Plaintiffs Robert, Molly, and Samantha Shad appeal from a jury verdict in favor of Dean Witter Reynolds, Inc. (“DWR”) and two of its account executives. The Shads alleged that DWR account executives churned four Shad accounts between August 1978 and July 1982 in violation of section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b). The assignments of error require us to review discovery procedures, the exclusion of expert testimony, the denial of a motion for mistrial, and the rejection of proffered instructions. We remand for a new trial on account of the exclusion of expert testimony. We otherwise affirm the district court.

In December 1977, Robert and Molly Shad, husband and wife, opened a brokerage account at DWR with a transfer of securities and the deposit of funds. The Shads told the account executive, Douglas McCombs, that Robert Shad was retired and it was necessary to pay family living expenses from dividend income. When Samantha Shad’s account was opened, McCombs was told that she was not then gainfully employed and that her income consisted primarily of spousal and child support. Consequently, McCombs managed the Shads’ accounts in a conservative…