Legal Definitions - Securities dispute resolution: Experts

Experts are individuals who can provide their opinions on various issues related to securities disputes. They can offer necessary information to support claims made by either the claimant or the respondent. Experts can help explain complex transactions and provide expert testimony to support a party's case.

For example, in a securities dispute, an expert may be hired to provide an opinion on the management of an account or the calculation of profits. The decision to hire an expert depends on several factors, such as the type of claim or defense being made, the cost of the expert compared to the amount claimed as damages, and the need for expert testimony compared to background information.

The Financial Industry Regulatory Authority (FINRA) provides rules related to experts in securities disputes. These rules include:

• Rule 9263, which authorizes the Hearing Officer to exclude irrelevant, immaterial, unduly repetitious, or unduly prejudicial evidence, including expert testimony.
• Rule 9242(a), which authorizes the Hearing Officer to order a party to provide an expert's qualification statements, publications, and involvement in other proceedings.
• Rule 9242(b), which prohibits a former officer of FINRA from testifying within a year of leaving FINRA.
• Rule 12602 (for customer disputes) and Rule 13602 (for industry disputes), which permit expert witnesses to attend all hearings absent persuasive reasons to the contrary.

The arbitration panel determines whether to allow an expert witness to testify. The standards used in litigation provide a helpful guide. Federal courts may allow expert witnesses to testify if their knowledge helps the trier of fact to understand the evidence or to determine a fact in issue, the testimony is based on sufficient facts or data, the testimony is the product of reliable principles and methods, and the witness has reliably applied the principles and methods to the facts of the case. State courts may impose different rules. Arbitrators are not bound by either federal or state standards in evaluating the expert.

Once an expert witness is permitted to testify in arbitration, the party that called the expert asks questions to the expert through a direct examination. The opposing party may question the expert through a cross-examination. The arbitrators may also question the expert.