WHY HIRE A SECURITIES EXPERT?
Q. Why hire a securities expert witness?
A. Who else can testify about broken laws, regulations, and norms?
The attorney gives the opening and closing argument, but that is not evidence. The client can testify about how he was wronged, but he has a financial interest to gain. The brokerage firm representatives can testify that they did things, "by the book" but they have assests to protect. The securities expert/witness is an unbiased person engaged to give an opinion based on experience, knowledge, and expertise. He provides independent, impartial, and unbiased evidence to the court or arbitration panel.-
The Roll of a Securities Expert Witness
expert witnesses are used throughout courts and arbitrations in the United States.
Their job is to work for the defense or the claimant in assisting the fact
finder (the arbitrators or, in court, the jurors) in understanding the issues
upon which they must base their decision. You may or may not be familiar with
the use of experts in the litigation arena. Securities arbitrations are unique
in their use of expert witnesses. There is a famous quote that, "Securities
experts are the gladiators of securities arbitration." This is because
securities experts usually play a triple role in securities arbitrations -
analyzing the investments at issue, determining what securities rules and
regulations were violated, and calculating the investor's damages. Most panel
members may have no involvement in the securities industry, education by an
expert on these three areas is paramount. Since on February 1, 2011 the SEC
approved FINRA's rule change to
provide customers in all FINRA arbitrations the
option of having an all public panel, the securities expert witness is even
However, there is a fourth function of securities
experts. Ever since 1987, due to a United States Supreme Court ruling,
investors have been required to arbitrate their claims, as opposed to taking
them to court. Behind the private, closed-doors of arbitration, securities
experts do more than assist the trier of fact with respect to the three areas
mentioned above. They additionally serve as assistants to the lawyers in the
case. Arbitration rules allow securities expert witnesses to stay in the
hearing room throughout the arbitration. This is a major benefit, because in
court, the expert is disallowed from being in the courtroom when other
witnesses testify. There, though, the expert has the benefit of pre-trial fact
finding procedures such as dispositions, interrogatories, and other types of
discovery. In a court case, lawyers are able to gather a large percentage of
the testimony and facts prior to the trial or hearing. They then prepare their
case with that information and funnel the information to their testifying
Not so in arbitration where pre-trial discovery
avenues are unavailable or severely limited. Although this is a tremendous cost
saving for the client, it means that much of the "discovery" in the
case actually occurs during the arbitration while the witnesses are testifying!
The expert can play a critical role in
assisting the lawyer in interpreting what can sometimes be complicated
securities issues that arise during witness testimony. In addition, the expert
can comment on the testimony of witnesses and form opinions based on what has
transpired during the arbitration.
An additional reason for hiring a securities expert witness in FINRA securities arbitration, is because the opposition almost always has at least one securities expert witness. It is the standard that both parties have their securities expert witnesses attend the entire FINRA arbitration. If you don't have a countering securities expert witness of your own, you will most likely be outgunned.