Q: At a disciplinary hearing I went through recently, the hearing officer allowed FINRA to present testimony from someone they claimed to be an expert, but whom I objected to as not having experience with the specific types of investments at issue. How is that allowed?

A: Hearing officers have broad discretion to accept or reject expert testimony. They get to decide whether an expert is qualified to address the issues involved in the hearing. And they get to determine whether the testimony meets the requirements for admissibility set forth in FINRA Rule 9263, which allows a hearing officer to exclude evidence deemed irrelevant, immaterial, unduly repetitious, or unduly prejudicial.

To guide their decisions, hearing officers sometimes rely on both the Federal Rules of Evidence, which govern the introduction of evidence in U.S. federal trials, and relevant court cases that have interpreted those rules. Those federal rules (which, I should point out, FINRA hearing officers aren’t compelled to follow) provide that a witness who is “qualified as an expert by knowledge, skill, experience, training, or education” may give opinion testimony if his or her “specialized knowledge will help the trier of fact” and the testimony meets certain measures of reliability.

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Relevant court cases have said that expert testimony is admissible if it is both “relevant and reliable.” The primary factor is whether the proposed testimony would be helpful to the hearing officer.

Apparently, the hearing officer in your case felt the expert’s testimony would be helpful to him in deciding your case, even though that testimony might not have been strictly relevant to the specific product at issue. Without knowing more of the specifics, it’s impossible for me to opine as to what those aspects might have been. All I can suggest is that you speak with your attorney regarding your options for appealing the decision.

Alan J. Foxman

Alan J. Foxman

Alan J. Foxman is a senior consultant and vice president at NCS Regulatory Compliance, and a partner at the law firm of Dew Foxman & Haugh in Delray Beach, Florida.