Attentive readers will recall that a couple of weeks ago, I mentioned in a preface to great post from Chris about expungement becoming an endangered creature due to changes in FINRA rule that I was about to embark on a two-week FINRA Enforcement hearing, all done by Zoom, by consent.  I promised to provide some feedback, so here it is.

In short, despite the best and sincere efforts and intentions of the parties, their counsel, and the Hearing Officer, in a word, it simply failed.

It was not, however, a matter of the typical Zoom-related technical glitches, like someone inexplicably dropping off the feed, or someone’s video freezing.  We had a few of those, but, at the Hearing Officer’s instructions, everyone on the call was extremely attentive to any such occurrences, and when they happened, they were immediately brought to the Hearing Officer’s attention (unless she discovered the problem first herself), and she paused the proceeding to correct the glitch.  So, I have no complaints about that.

Sadly, my complaints are much more serious.

What happened was that at the close of the hearing on Day 2 (of what was supposed to be a 10-day hearing, remember), I posed a question to the Hearing Officer.  I told her that when a witness was testifying while a document was being displayed to the witness – which was about 90% of the time a witness was testifying – I could only see the document, and not the witness.  (For that matter, I couldn’t see anyone, that is, either the witness or the members of the hearing panel, so I also had no way of gauging the degree of attention being paid to the proceedings by the panelists.)  Maybe it was no big deal that I couldn’t see the witnesses.  But, given that it was the job of the hearing panel, perhaps its most important job, to make credibility calls about the testifying witnesses, based not only on what the witnesses said but, as well, on how they said it, i.e., their demeanor, it was a very big deal to ensure that each panelist was able to see the witnesses as they testified.  So, I asked if anyone else was having the same experience as me.

The Hearing Officer told me that, indeed, she could see both the witness and the exhibit.  Great.  The second panelist echoed that response, as he, too, could see both.  Excellent.  But…the third panelist said, nope, that, like me, he could only see the document and not the testifying witness.

Remember, this was after two full days of testimony, all from my clients, the respondents.  This meant that one-third of the hearing panel was, basically, deprived of the essential tools he needed to do his job.

Ah, but that’s not all!

After informing us that he couldn’t see the testifying witness 90% of the time, the third panelist also volunteered the fact that he had not been able to hear the second witness very well, either.

Mind you, that witness’s testimony, i.e., my client’s testimony, had occupied much of the second hearing day.  Which meant that for all intents and purposes, the hearing panelist could neither see nor hear (at least not very well) hours of testimony from one of the two respondents.  I know justice is blind, but this, well, this is not what anyone had in mind.

Perhaps not surprisingly, when we resumed the hearing on Day 3, the Hearing Officer announced that due to the problems that my inquiry had revealed at the close of Day 2, she was adjourning the hearing, and that there would be a do-over.  That is, we would pretend the first two day had not happened, i.e., no opening statements, no testimony, no nothing, and we would start all over again at some point in the future, from the beginning, when the hearing panel could both see and hear the witnesses.

From a fairness-of-the-hearing standpoint, I think that the Hearing Office had no choice but to make that decision.  There was simply no way to adequately remedy the problem.  I mean, I suppose that the third hearing panelist could be provided with a transcript of the hearing to read the testimony he was not able to hear, but there is simply no way to make up for the fact that he had been deprived of his ability to eyeball the witnesses while they testified.

From a fairness-to-my-clients perspective, however, consider the costs, both out-of-pocket as well as emotional, of having to start over again.  Consider, too, that when this hearing restarts, Enforcement will have had the benefit of hearing my opening statement, and seeing my nifty PowerPoint slide deck, and seeing how my clients performed on the witness stand.  There is nothing that FINRA can do to compensate for that.

The only positive development is that this little snafu provided an opening to settle the case on terms that heretofore FINRA refused to find agreeable.  In other words, for the first time, FINRA agreed to drop its insistence that – guess what? – both my clients be permanently barred.

The irony of this experience is that it happened despite pretty good diligence by the Hearing Officer, not because of inattentiveness.  The lesson is that you can take absolutely nothing for granted in a virtual hearing, and must constantly take steps to ensure that everything is proceeding according to plan.  While there is no good excuse for the third hearing panelist not to have complained sooner that he could not hear the witness’s testimony, there is also not much excuse for FINRA to have set up a system in the first place that apparently did not permit that panelist to see the witness while a document was being displayed, and for not checking on that before I happened to bring it up when I did.  It should not be my job to ensure that the hearing – from a straight technological, administrative angle – is fair.