A former SEC economist was cited by a judge for giving fraudulent testimony - in a case fraught with serious implications.  He's now fighting back, in part to restore a seriously damaged reputation.  But there's much more that's riding on the credibility of his testimony. Craig McCann was hired as an expert witness by a group of customers whose $9.2mn FINRA arbitration award against Morgan Keegan was now being challenged.  The award was invalidated by U.S. District Judge Lynn Hughes of Houston, TX, based in part because of McCann's allegedly "fraudulent testimony" regarding the investors' claims against the firm.  Attorneys for the investors have appealed the decision to the U.S. Court of Appeals for the 5th Circuit. The ultimate outcome of the case, and of Mr. McCann's testimony could potentially affect hundreds of claims against Morgan Keegan and other securities firms - cases in which investors have relied upon Craig McCann as an expert witness. Impact on McCann and Cases in Which He's Been Involved. McCann, who runs Securities Litigation and Consulting Group Inc., wants Judge Hughes to delete references to him in that court opinion.   His motion to the court was among a recent flurry of legal filings in an already bitter dispute between Memphis-based Morgan Keegan & Co., a unit of Regions Financial Corp., and a group of investors over losses tied to troubled bond funds.  The finding by Judge Hughes hinges on calculations that McCann made about the valuation of funds in the case - figures he revised in a later Morgan Keegan case. In his motion to the court, McCann wrote that, until this point, he had been a well-respected expert witness who's testified numerous times against securities firms on behalf of investors and regulators, including the SEC.  But since he's been linked to alleged fraudulent conduct, his credibility has been undermined. Lawyers in other Morgan Keegan cases are already using the decision to discredit McCann's testimony.   Some lawyers who had arranged to use him on cases against other firms have told McCann they'll no longer hire him and asked him to return their retainers. About 1,000 investors filed arbitration cases involving losses they incurred during 2007 and 2008 - many of them are still pending.  Morgan Keegan paid a $200 million fine to the SEC and state regulators this summer to settle fraud allegations. While it's commonplace for opposing lawyers to attack an expert witness, the reference to McCann in the recent ruling is highly "unusual."  Fordham Law professor Constantine Katsoris says, "Fairness would dictate that you should be able to defend yourself."  Yet, McCann said he didn't know of Morgan Keegan's efforts to use the figures to overturn the ruling until he read the opinion, according to an affidavit. Judge Hughes, in an initial hearing on the matter last week, showed no inclination to change his mind about McCann, according to a review of the transcript.  McCann was paid and coached by lawyers who didn't try to retract the earlier figures, Judge Hughes said. "We are not reopening the record because he doesn't like how he was represented," the judge told lawyers. Still, he ordered the parties to file more information about the case. Lawyers for McCann, in legal papers filed with the court, said Morgan Keegan "misstated and withheld key information" from the court when it alleged last year that McCann's testimony was fraudulent.  The brokerage firm, they said, "concealed" its knowledge of McCann's revised calculations because he informed them of the problem during another arbitration case, in which he also testified about the changes, McCann's lawyers wrote. Keegan's lawyers, however, argued in court documents that McCann has no right to relief, because he isn't a party in the case, adding that his allegations are "meritless."  McCann is not "the first disgruntled expert to seek intervention and his predecessors have quite properly met with no success," they wrote, in an earlier filing. All the cases and motions continue. To read the story on which this posting was based, go to:   [Reuters, 11/18/11]