April 3, 2008
Nancy M. Morris, Secretary
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549-1090
Proposed FINRA Rules regarding Motions to Dismiss
Dear Ms. Morris:
I am an attorney in private practice in the Washington, D.C. area. The majority of my practice is devoted to the representation of individual investors against registered representatives and broker-dealers in FINRA arbitration.
In my experience, I have found Respondents’ counsel increasingly more likely to file abusive Motions to Dismiss in FINRA arbitrations. These Motions are burdensome and time-consuming, and they further erode any benefits to investors/consumers that may be present in the arbitration system. Furthermore, the Motions typically rely upon Respondents’ allegations or affidavits regarding factual issues in dispute - a practice that is inappropriate considering the limited discovery in arbitration and the investors’ supposed right to an evidentiary hearing.
Although I do support these Rule changes which will restrict the Motions to Dismiss in arbitration, I do so with reservations. I believe that one of the allowed grounds for filing of Motions to Dismiss (the moving party was not associated with the account(s), security(ies), or conduct at issue) is ripe for abuse. I expect counsel for control persons and supervisors (who may be liable under various causes of action) will attempt to use this provision to force a dismissal of a case prior to the evidentiary hearing, despite their legal liability.
Furthermore, by specifically allowing Motions to Dismiss after the presentation of Claimants’ evidence, Respondents will be encouraged to file lengthy Motions in the middle of the final hearings without Claimants having the opportunity to review, research, or respond to the Motions.
In regard to Motions to Dismiss relating to FINRA eligibility rules, these motions invariably require analysis of facts and evidence, and such issues can and should be addressed only after the conclusion of discovery and the presentation of evidence at the final hearing.
Despite these reservations, I support the Rule changes and I endorse and adopt the comments of the Public Investors Arbitration Bar Association (PIABA) previously filed addressing this issue.
Very truly yours,
W. Scott Greco
GRECO & GRECO, P.C.