Table of Contents
SERIES 24 | FINANCIAL REGULATION COURSES
FINRA Rule 9242 governs the pre-hearing submission — the documentary disclosure mechanism through which each party in a FINRA disciplinary proceeding provides advance notice of their evidentiary presentation and legal theories to all other parties and the Hearing Panel before the hearing begins.
The rule establishes the Hearing Officer's discretionary authority to order pre-hearing submissions and the five categories of information that may be required, and then establishes one of FINRA's three Revolving Door restrictions — the prohibition on former FINRA officers providing expert testimony on behalf of any other person in any Code proceeding within one year of leaving FINRA.
Together these two provisions address the complete pre-hearing submission framework: what parties must disclose before the hearing, and who may provide expert testimony on a party's behalf.
The pre-hearing submission requirement is the documentary foundation that makes FINRA disciplinary hearings efficient, focused, and free from the unfair surprise that undisclosed witnesses and evidence would create.
The expert testimony prohibition is the institutional integrity safeguard that ensures former FINRA officers cannot immediately leverage their regulatory knowledge and relationships to provide a litigation advantage in FINRA proceedings against which they were previously employed to enforce the rules.
FINRA Rule 9242 sits within the 9240 Pre-Hearing Conference and Submission subsection of the 9200 Disciplinary Proceedings section of the 9000 Code of Procedure series. It was adopted by SR-NASD-97-28 effective August 7, 1997, amended by SR-FINRA-2008-021 effective December 15, 2008, and most recently amended by SR-FINRA-2011-032 effective July 2, 2012 — which added paragraph (b)'s expert testimony prohibition as part of the broader revolving door restrictions package that also added FINRA Rule 9141(c)'s appearance prohibition for former officers. One selected notice is associated with the rule — 08-57.
FINRA Rule 9242(a) establishes the Hearing Officer's discretionary authority to order pre-hearing submissions and defines the five categories of information that may be required. The may formulation confirms that pre-hearing submissions are not automatically required in every case — the Hearing Officer exercises discretion about whether submissions are necessary and what they must contain based on the complexity of the case, the apparent state of the parties' preparation, and the specific evidentiary and legal issues involved. In practice, however, FINRA's Guide to the Disciplinary Hearing Process confirms that the Hearing Officer may require the parties to exchange and file pre-hearing submissions — and pre-hearing submissions are standard in virtually every contested disciplinary hearing of any complexity.
The scope of the pre-hearing submission order is bilateral — the Hearing Officer may order any party to furnish information to all other parties and the Hearing Panel. The Department of Enforcement and each respondent are equally subject to pre-hearing submission orders. FINRA's enforcement pre-hearing submission typically discloses the documents it will introduce at hearing, the witnesses it will call, and the legal theories it is pursuing. Each respondent's pre-hearing submission discloses the documents, witnesses, and legal theories comprising their defense. The mutual disclosure function of pre-hearing submissions eliminates the opportunity for either side to surprise the other with undisclosed evidence or witnesses at hearing — a form of unfair surprise that would compromise the fair adjudication that FINRA Rule 9160's impartiality standard and the Code's overall fairness framework require.
The scheduling of pre-hearing submissions is established through the Case Management and Scheduling Order that the Hearing Officer issues pursuant to FINRA Rule 9241(e) at the conclusion of the initial pre-hearing conference. The CMSO typically establishes specific deadlines for exchange and filing of pre-hearing submissions — including exhibit lists and hearing exhibits, witness lists with summary testimony descriptions, and where expert testimony is involved, the expert disclosure materials required by FINRA Rule 9242(a)(5).
The first category of pre-hearing submission information — an outline or narrative summary of a party's case or defense — is the overarching case theory disclosure. For the Department of Enforcement this means a summary of its enforcement theory — the factual narrative it contends supports the charged violations and the sanctions it will argue are appropriate. For each respondent this means a summary of their defense — the factual narrative they contend demonstrates no violation occurred, that the conduct was justified, or that any violation was less serious than charged. The narrative summary enables the Hearing Panel to approach the hearing with an understanding of each party's overall theory, facilitating more efficient hearing management and more focused Panel attention during testimony and argument.
FINRA's Guide to the Disciplinary Hearing Process describes this requirement as a narrative summary of the party's theory of the case and defenses — a formulation that captures both the affirmative case and the defensive framing within the single disclosure requirement.
The second category — the legal theories upon which a party shall rely — is the legal framework disclosure. A disciplinary proceeding may involve disputed questions of law alongside disputed questions of fact — the applicable standard for suitability analysis, the supervisory delegation rule, the scope of a particular rule's application to the respondent's activities, or any number of other legal questions that shape how the factual record must be evaluated. Pre-hearing disclosure of legal theories prevents a respondent from pursuing a defense theory that was never disclosed, or Enforcement from advancing a legal argument at closing that the respondent had no opportunity to address during the hearing.
The third category — a list and copies of documents that a party intends to introduce at the hearing — is the exhibit disclosure requirement. The combination of a list identifying each document and actual copies enables the opposing party to review every proposed exhibit before the hearing begins, prepare objections, conduct investigation of documents whose authenticity or interpretation is disputed, and develop cross-examination based on the disclosed exhibits. The hearing exhibit submission format — typically required by the CMSO to be organized in numbered exhibit binders — creates the organized evidentiary record that the court reporter's transcript will reference and that the Hearing Panel will use throughout the hearing.
OHO Order 23-29 confirmed the binding nature of the exhibit disclosure requirement — the Hearing Officer rejected a respondent's exhibit list that did not comply with the CMSO's specific format requirements and granted leave to refile in compliant form, with the non-compliant submission rejected entirely. This confirms that pre-hearing exhibit submissions must satisfy both the substantive content requirements of FINRA Rule 9242(a)(3) and the specific format requirements established in the CMSO.
The fourth category — a list of witnesses who shall testify on a party's behalf including their names, occupations, addresses, and a brief summary of their expected testimony — is the witness disclosure requirement. Advance disclosure of the identity and anticipated testimony of every witness enables opposing counsel to conduct pre-hearing investigation, prepare cross-examination, and assess whether any witness's expected testimony warrants a motion in limine or other pre-hearing evidentiary objection. The brief summary requirement prevents the witness disclosure from being a bare name listing that provides no practical information about what the witness will say — each disclosure must convey enough about the expected testimony to enable meaningful preparation.
The fifth category — the expert witness disclosure — is the most detailed of the five requirements. When a party intends to call an expert witness, the pre-hearing submission must include a statement of the expert's qualifications, a listing of other proceedings in which the expert has provided expert testimony, a list of the expert's publications, and copies of those publications that are not readily available to the other parties and the Hearing Panel. Additionally, as confirmed in FINRA's Guide to the Disciplinary Hearing Process, the party must include the expert's report — the complete written analysis that will form the basis of the expert's hearing testimony.
The extensive expert disclosure requirement reflects the particular significance of expert testimony in disciplinary proceedings. While FINRA Rule 9145(a)'s non-application of formal evidence rules means that FINRA proceedings are not subject to Daubert's expert qualification standards, the Hearing Panel must still assess the reliability and relevance of expert opinions. Advance disclosure of the expert's qualifications, prior testimony experience, publications, and report enables the opposing party and the Panel to evaluate the expert's expertise and methodology before the hearing begins — facilitating cross-examination preparation and enabling the Panel to approach expert testimony with the contextual information needed to assess its weight.
The Hearing Officer must grant leave for a party to present expert testimony — expert witnesses do not appear as a matter of right at FINRA disciplinary hearings. The expert leave requirement enables the Hearing Officer to assess whether expert testimony would actually be helpful to the Panel given the Panel's own industry expertise, consistent with OHO's recognition that the Hearing Panel's expert body status means that external expert testimony is only necessary when the specific issues fall outside the Panel's own collective knowledge.
FINRA Rule 9242(b) is one of FINRA's three Revolving Door provisions — the prohibition on former FINRA officers providing expert testimony on behalf of any other person in any Code proceeding within one year of leaving FINRA. No former officer of FINRA shall, within a period of one year immediately after termination of employment with FINRA, provide expert testimony on behalf of any other person under the Rule 9000 series.
The prohibition was adopted through SR-FINRA-2011-032 effective July 2, 2012 as part of the broader revolving door restrictions package. As the SEC's approval order for that filing explained, the restriction maintains the perception of fairness and safeguards against former FINRA officers potentially exerting undue influence in FINRA proceedings. FINRA acknowledged that it was not aware of any specific instances of former officers exerting undue influence — the prohibition was preventive rather than remedial, establishing the institutional integrity safeguard before problems developed rather than in response to documented abuses.
The FINRA Revolving Door FAQ published on FINRA's alumni page confirmed the rule's scope: no former officer of FINRA may provide expert testimony on behalf of any other person under the Rule 9000 series within one year of termination, and FINRA's internal Code of Conduct requires current employees who believe a former officer may be violating FINRA Rule 9242(b) to report the belief to their manager and the Ethics Office.
The prohibition applies only to expert testimony — not to fact witness testimony. The final sentence of FINRA Rule 9242(b) confirms this explicitly: nothing in this rule shall prohibit a former officer of FINRA from testifying as a witness on behalf of FINRA. More broadly, a former FINRA officer may testify as a fact witness — about events they personally observed or participated in — even within the one-year cooling-off period. What they may not do is leverage their FINRA expertise to provide expert opinions on behalf of respondents or other parties in disciplinary proceedings — the expert testimony prohibition targets the specific form of post-employment influence that expert opinions represent.
FINRA Rule 9242(b) is the second of three FINRA Revolving Door provisions that together create a comprehensive post-employment restriction framework for former FINRA officers. FINRA Rule 9141(c) — the first Revolving Door provision — prohibits former officers from making any appearance before a FINRA Adjudicator on behalf of any other person in any Code proceeding within one year of leaving FINRA. FINRA Rule 9242(b) — the second — prohibits former officers from providing expert testimony in Code proceedings within the same one-year period. FINRA Rule 9910 — the third — prohibits former officers from communicating with or appearing before FINRA Governors or employees within one year of leaving FINRA with the intent to influence official FINRA action, and extends a two-year restriction on former employees regarding specific matters that were pending under their official responsibility.
The three provisions address different aspects of the post-employment influence concern. FINRA Rule 9141(c) addresses formal legal representation — the former officer as advocate before Adjudicators. FINRA Rule 9242(b) addresses expert opinion — the former officer as expert witness whose regulatory knowledge and credibility could influence Panel decisions. FINRA Rule 9910 addresses informal lobbying — the former officer using their FINRA relationships to influence regulatory outcomes outside the formal adjudicative process. Together the three provisions ensure that the regulatory knowledge, relationships, and institutional access that former FINRA officers accumulated during their employment cannot be immediately deployed against FINRA's regulatory mission in any of these three forms.
FINRA Rule 9242 is the companion submission rule to FINRA Rule 9241's conference framework — the two rules together constitute the complete pre-hearing preparation framework of the 9240 subsection. The CMSO that FINRA Rule 9241(e) requires to be issued at the conclusion of the initial pre-hearing conference establishes the specific deadlines, format requirements, and procedural instructions through which FINRA Rule 9242(a)'s submission categories are implemented in each specific case. FINRA Rule 9242(b)'s revolving door prohibition connects directly to FINRA Rule 9141(c)'s companion appearance prohibition and FINRA Rule 9910's broader post-employment restrictions — the three rules are cited together on FINRA's Revolving Door page as the unified framework governing former officers' post-employment activities.
FINRA Rule 9242 is tested on the Series 24 General Securities Principal examination as both the pre-hearing submission rule and one of the three Revolving Door provisions — two examination-relevant topics that happen to occupy the same rule.
The key points to retain are these: FINRA Rule 9242(a) grants the Hearing Officer discretionary authority to order parties to furnish pre-hearing submissions prior to a disciplinary hearing; the five categories of required information are an outline or narrative summary of the case or defense, the legal theories upon which the party will rely, a list and copies of documents the party intends to introduce, a witness list with names, occupations, addresses, and brief testimony summaries, and when expert testimony is to be offered a statement of the expert's qualifications, prior proceedings testimony listing, publications list and copies, and the expert's report; the Hearing Officer must grant leave for a party to present expert testimony — expert witnesses do not appear as of right; pre-hearing submission format requirements are established by the CMSO and are binding procedural orders enforceable by the Hearing Officer; FINRA Rule 9242(b) — one of three Revolving Door provisions — prohibits any former officer of FINRA from providing expert testimony on behalf of any other person in any Code proceeding within one year immediately after termination of employment; the prohibition applies to expert testimony only — fact witness testimony is not prohibited and former officers may testify as witnesses on behalf of FINRA without restriction; the three Revolving Door provisions are FINRA Rule 9141(c) prohibiting formal appearances before Adjudicators, FINRA Rule 9242(b) prohibiting expert testimony, and FINRA Rule 9910 prohibiting communications with FINRA staff and Governors with intent to influence official action; the FINRA Rule 9242(b) prohibition was added by SR-FINRA-2011-032 effective July 2, 2012 as part of FINRA's revolving door restrictions package; and the rule was last amended July 2, 2012 completing the 9240 Pre-Hearing Conference and Submission subsection.
