Securities Expert Witness Allowed in FINRA Dispute

Plaintiff filed a declaratory judgment with the court related to a securities dispute.  The defendant hire a securities expert to assist in their side of the case.  The plaintiff filed a motion to exclude the expert’s testimony.  The court denied the motion.

Facts:  This case (UBS FINANCIAL SERVICES, INC. v. BOUNTY GAIN ENTERPRISES, INC – United States District Court – Southern District of Florida – April 14th, 2017) involves a Financial Industry Regulatory Authority (FINRA) dispute.  The plaintiff (UBSFS) filed a declaratory judgment in 2014 with this court stating that it did not have to submit to a FINRA arbitration in a dispute with the the defendant (Bounty Gain) because Bounty Gain was not a customer of UBSFS.  To help prove their case, Bounty Gain has hired Gene Carasick as a Securities Expert Witness.  UBSFS filed a motion to preclude Mr. Carasick from testifying as an expert.

Discussion:  UBSFS argues that Carasick should be excluded from testifying as an expert witness because caselaw dictates whether or not parties in a dispute must arbitrate.  Thus, Mr. Carasick’s testimony would lead the court to a decision, which is not proper. In addition, they argue that Mr. Carasick is not qualified to testify on FINRA Rule 12200.  Last, they state that his testimony is not relevant because he does not accept the analysis and legal standard under Rule 12200.

In reply, Bounty Gain argues that Mr. Carasick is highly qualified to testify on the matter at hand and would not obstruct the procedures or principles of the court.  In addition, Bounty Gain states that UBSFS’s rebuttal expert substantiated the qualifications of Mr. Carasick in a separate case and that he has adopted the legal standards and applicable facts of this case.  Last, they argue that because there is no jury in this case, there is no need to protect the jury from the influence of the expert testimony.

The court opined that Mr. Carasick is qualified to testify on the matters in which he intends to discuss.  The judge pointed to a similar case regarding plaintiffs and customers were charged excessive fees by securities dealers in which Mr. Carasick was allowed to testify about the securities industry.  That court rules that Mr. Carasick worked at FINRA for 18 years and dealt with over 400 disciplinary cases relating to almost feature of FINRA and SEC regulations.  That court also mentioned that the rebuttal witness, the same person in the current case, held Mr. Carasick in high regard, professionally.

In the current case, the court agreed with Bounty Gain, opining that Mr. Carasick was qualified to testify in regard to FINRA rule 12200.  Even thought Mr. Carasick does not have enough experience on customer status, the court stated that an expert can opine on narrow subtopics of his broader expertise.

In addition, the court relayed that, since this is a bench trial, there is no risk that the jury will be confused or influenced improperly.  Also, the court noted that the testimony by Mr. Carasick on FINRA rule 12200 does not fall under a legal conclusion that is not permissible.  Mr. Carasick will be testifying about his interpretation of the rule and how it factors into the current case and that the court will be the final arbiter of the legal conclusion of the case.

Conclusion:  The motion to exclude the expert witness testimony of Gene Carasick is denied.