Table of Contents
SERIES 24 | FINANCIAL REGULATION COURSES
FINRA Rule 9145 establishes the evidentiary framework for all Code of Procedure proceedings through two foundational provisions of equal importance. The first provides that the formal rules of evidence — meaning the Federal Rules of Evidence and their state analogs — do not apply in any Rule 9000 series proceeding.
The second provides that Adjudicators in Rule 9000 series proceedings may take official notice of matters that might be judicially noticed by a court, and additionally of matters within the specialized knowledge of FINRA as an expert body, with the requirement that parties be given an opportunity to oppose or comment before official notice is taken.
Together these two provisions define the evidentiary world of FINRA disciplinary proceedings — a world that is more flexible than federal court litigation in its admission of evidence but that carries rigorous procedural protections ensuring that parties can challenge any matter the Adjudicator considers without formal proof.
FINRA Rule 9145 sits within the 9140 Proceedings subsection of the 9100 Application and Purpose section of the 9000 Code of Procedure series. It was adopted by SR-NASD-97-28 effective August 7, 1997 and last amended by SR-FINRA-2008-021 effective December 15, 2008 as part of the consolidated FINRA rulebook transition announced in Regulatory Notice 08-57. The rule has not been substantively amended since its 2008 consolidation — its two-provision evidentiary framework has remained stable since original adoption. FINRA Rule 9145(a) is cited frequently in OHO orders addressing evidentiary disputes, consistently confirming that the Federal Rules of Evidence impose no binding constraint on what evidence Adjudicators may consider.
The provision that the formal rules of evidence shall not apply in Rule 9000 series proceedings is one of the most operationally significant features distinguishing FINRA disciplinary hearings from civil litigation in federal court. The Federal Rules of Evidence — which apply in federal district court and serve as the model for most state evidence codes — impose a complex web of admissibility requirements: hearsay rules and their exceptions, foundation requirements for exhibits, authentication standards, expert witness qualifications under Daubert, the best evidence rule, lay witness opinion limitations, and many others. Compliance with these rules in complex securities litigation can be as demanding and time-consuming as the substance of the case itself.
FINRA's disciplinary proceedings are not subject to these constraints. FINRA Rule 9145(a) liberates Adjudicators from the Federal Rules of Evidence entirely — the Adjudicator may admit and consider any evidence that is probative and relevant, without regard to whether it would be admissible in a federal court proceeding applying the full Federal Rules of Evidence framework. A Hearing Panel may admit hearsay evidence — documents or testimony reporting what another person said — that would be excluded by the hearsay rule in federal court if no exception applied. It may admit documentary exhibits without strict authentication in the form that federal evidence rules would require. It may admit opinion testimony from lay witnesses on matters that federal court would reserve for formally qualified experts.
This evidentiary flexibility reflects the administrative law tradition within which FINRA's disciplinary proceedings operate. Administrative agencies and administrative tribunals across the federal government are generally not bound by the Federal Rules of Evidence — the Administrative Procedure Act permits agencies to consider any oral or documentary evidence, with relevance and probative value as the guiding standards rather than formal admissibility rules. FINRA Rule 9145(a) applies this administrative law tradition to FINRA's disciplinary proceedings, recognizing that Adjudicators in disciplinary cases are sophisticated professionals — attorneys and industry experts — who can assess the weight and reliability of evidence without the mechanical application of exclusionary rules designed for jury trials.
The non-application of formal evidence rules does not mean that anything goes in FINRA proceedings. FINRA Rule 9263 — Admissibility — provides that Hearing Officers may exclude evidence that is irrelevant, immaterial, or unduly repetitious even in the absence of the Federal Rules of Evidence. The exclusionary standards under FINRA Rule 9263 focus on relevance and probative value rather than technical admissibility rules — evidence that would not survive Daubert's expert witness qualification standards might still be admitted in a FINRA proceeding if the Adjudicator finds it probative, while evidence that is wholly irrelevant to any charge may still be excluded. The connection between FINRA Rule 9145(a)'s non-application of formal rules and FINRA Rule 9263's admissibility standards creates a coherent evidentiary framework that maximizes the Adjudicator's access to potentially relevant information while preserving the ability to manage the record efficiently.
The non-application of formal evidence rules in FINRA proceedings is closely related to the nature of the Adjudicator itself. A Hearing Panel consists of a Hearing Officer — an attorney with regulatory experience — and two Panelists drawn from the securities industry with extensive practical experience in the business being regulated. This composition means that FINRA Hearing Panels are not lay juries requiring the evidentiary guidance that exclusionary rules provide — they are expert tribunals whose members bring securities industry knowledge to their evaluation of evidence and can assess the reliability and significance of securities-related information that lay jurors might misunderstand or misweigh.
OHO decisions have consistently recognized this expert body status in the context of expert testimony requests. Because Hearing Panels bring their own collective securities industry expertise to bear, expert testimony in FINRA proceedings is generally not offered and not necessary unless the case involves novel issues or new, complex, or unusual securities products that fall outside the Panelists' generalized expertise. As OHO Order 22-09 confirmed, the critical factor is whether proposed expert testimony would actually be helpful to the Panel — testimony on matters within the Panel's own expertise adds little and may be excluded as unnecessary given the Panel's expert body status. This limitation on the need for formal expert testimony is the direct counterpart of FINRA Rule 9145(a)'s non-application of Daubert's expert qualification standards — the Panel's own expertise substitutes for the external expert testimony that would be essential in a court proceeding before a lay jury.
The official notice provision of FINRA Rule 9145(b) grants Adjudicators the ability to treat certain categories of facts as established without requiring formal proof — the administrative law analog to the judicial notice doctrine that courts apply to facts that are beyond reasonable dispute. Two distinct categories of facts may be officially noticed under FINRA Rule 9145(b).
The first category — matters that might be judicially noticed by a court — incorporates the standard judicial notice framework established in Federal Rule of Evidence 201. Courts may take judicial notice of facts that are generally known within the trial court's territorial jurisdiction, or facts that can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned. In the FINRA disciplinary context, this encompasses facts such as the existence and current status of FINRA rules and regulations, the text of federal securities statutes and regulations, publicly available market data such as historical stock prices, the existence of public companies and their SEC filings, interest rate levels during specific periods, and other matters of general public knowledge or documentary certainty.
The second category — matters within the specialized knowledge of FINRA as an expert body — is broader and more distinctive. This category extends official notice authority beyond the standard judicial notice framework to encompass the specialized institutional knowledge that FINRA has accumulated as the primary regulator of broker-dealers and the securities markets. FINRA's specialized knowledge includes how broker-dealer operations function, what constitutes standard industry practice in various business contexts, how specific securities products and trading strategies work, what information member firms are required to maintain and how they maintain it, how market manipulation schemes characteristically operate, what red flags for AML violations typically look like, and countless other matters of securities industry practice and regulatory knowledge that FINRA possesses as the expert self-regulatory organization.
The official notice authority for FINRA's specialized knowledge reflects the same expert body rationale that underlies the non-application of formal evidence rules. If FINRA Adjudicators — particularly the experienced industry Panelists — already possess expertise about how the securities business operates, requiring formal proof of basic industry facts and practices that all knowledgeable industry participants already understand would be a waste of adjudicative resources without corresponding benefit to the accuracy of the proceeding's outcomes. Official notice of industry-standard facts allows proceedings to focus on the genuinely contested issues rather than on proving uncontested background knowledge.
FINRA Rule 9145(b)'s final sentence establishes a critical procedural protection that accompanies the official notice authority: before an Adjudicator proposes to take official notice of a matter, it shall permit a party the opportunity to oppose or otherwise comment upon the proposal. This pre-notice opportunity requirement ensures that official notice — despite being based on facts treated as beyond reasonable dispute — is not used to introduce factual premises that parties have not had a chance to contest.
The procedural protection tracks the logic of Federal Rule of Evidence 201(e)'s opportunity to be heard on judicial notice — even facts that appear to be beyond reasonable dispute may be disputed in a specific proceeding, and parties must be given the opportunity to present that dispute before the Adjudicator treats the fact as established without proof. A party may have evidence that the ostensibly established fact is incorrect in the specific context of the case, or may have a legitimate argument that official notice of a particular matter would be prejudicially misleading in the context of the specific charges and defenses at issue.
The pre-notice opportunity requirement distinguishes official notice under FINRA Rule 9145(b) from the Hearing Panel's use of its own generalized expertise in evaluating evidence — Panelists may draw on their securities industry experience in assessing the credibility and significance of evidence without triggering the pre-notice requirement, because that expertise-informed evaluation is part of the adjudicative function itself rather than a discrete official notice of a specific fact. The pre-notice requirement applies when the Adjudicator proposes to treat a specific fact as established without proof — not when Panelists simply bring their industry knowledge to bear on the evaluation of presented evidence.
FINRA Rule 9145(b)'s official notice framework parallels the SEC's own official notice provision for its administrative proceedings — 17 CFR Section 201.323, which permits the SEC to take official notice of facts that might be judicially noticed by a federal district court, matters in the public official records of the SEC, or matters peculiarly within the knowledge of the SEC as an expert body. The parallel structure confirms that FINRA Rule 9145(b) reflects standard administrative law practice for expert regulatory agencies rather than an unusual or distinctive approach — securities regulatory adjudication across both FINRA and the SEC operates within the same administrative law evidentiary tradition that distinguishes agency proceedings from federal court litigation.
FINRA Rule 9145 is the general evidentiary framework rule within the 9100 General Provisions, establishing the non-application of formal evidence rules and the official notice authority that apply across all Code proceedings. FINRA Rules 9261 and 9263 — which appear in the Rule 9200 series governing specific disciplinary proceeding procedures — provide more detailed evidentiary guidance for the hearing phase specifically. FINRA Rule 9261 — Evidence and Procedures in Hearing — addresses the conduct of hearings, the examination of witnesses, and the admission of documents and other evidence in the specific context of disciplinary hearings. FINRA Rule 9263 — Admissibility — provides the Hearing Officer's authority to exclude irrelevant, immaterial, or unduly repetitious evidence. Together FINRA Rules 9145, 9261, and 9263 create a layered evidentiary framework — FINRA Rule 9145 establishing the non-application of formal rules and the official notice authority, FINRA Rule 9261 governing hearing procedures, and FINRA Rule 9263 providing the specific admissibility standards that apply within the FINRA Rule 9145 framework.
FINRA Rule 9145 is tested on the Series 24 General Securities Principal examination in the context of the Code of Procedure's procedural framework, the nature of FINRA disciplinary hearings as distinguished from federal court litigation, and the evidentiary standards applicable to FINRA proceedings. The rule's two provisions — non-application of formal evidence rules and official notice — are both precise and testable examination topics.
The key points to retain are these: FINRA Rule 9145(a) provides that the formal rules of evidence — including the Federal Rules of Evidence — shall not apply in any Rule 9000 series proceeding; this means Adjudicators may admit and consider any probative and relevant evidence including hearsay, loosely authenticated documents, and opinion testimony from lay witnesses that might be excluded under federal court evidentiary rules; the non-application of formal evidence rules reflects the administrative law tradition within which FINRA proceedings operate and the expert body status of Hearing Panels composed of attorney Hearing Officers and experienced industry Panelists; expert testimony in FINRA proceedings is generally not necessary unless the case involves novel issues or products outside the Panelists' generalized expertise because the Panel itself brings collective securities industry knowledge to evidence evaluation; FINRA Rule 9145(b) provides that Adjudicators may take official notice of matters that might be judicially noticed by a court — publicly known and undisputable facts — and additionally of matters within the specialized knowledge of FINRA as an expert body — securities industry practices, regulatory requirements, and other matters within FINRA's institutional expertise; before taking official notice of any matter the Adjudicator must give parties the opportunity to oppose or comment — protecting parties from having disputed factual premises treated as established without proof; FINRA Rule 9145(b)'s official notice framework parallels the SEC's administrative notice provision at 17 CFR Section 201.323 and reflects standard administrative law evidentiary practice for expert regulatory agencies; FINRA Rule 9145 is the general framework rule supplemented by FINRA Rules 9261 and 9263's more specific hearing and admissibility standards; and the rule was adopted in 1997 and last amended December 15, 2008 through SR-FINRA-2008-021 with no substantive amendments since original adoption.
