April 3, 2009
I am an attorney in Seattle, Washington, who handles securities lawsuits and arbitrations. In my 26 years of practice, I have represented broker-dealers, registered representatives and customers.
Based on my experience, the proposed revisions to the Discovery Guide must be amended. The revisions slant too far in favoring respondents, and fail to include the reforms that should be made to allow customers a reasonable and less expensive chance at fair and just resolution of their claims. Particularly when arbitration is mandatory, there can be no justification for some of the absurd requirements in the revisions. All in all, many of the revisions impose undue obligations on customers that make it less likely that customers will bring meritorious claims, and when they so, prevail.
The following are specific examples of deficiencies in the proposed revisions:
1. List 2 changes to five years from three years the customers obligation to produce income tax returns, other brokerage statements and net worth statements. The change from three years to five years for these materials will substantially lengthen arbitrations and intimidate claimants from ever filing arbitrations because they dont want to be subject to irrelevant inspections of their personal lives. Why should a client who complains about one unauthorized trade be required to provide three years of his personal tax returns that have nothing to do with the unauthorized trade? The proposed revision to increase the time period to five years is outrageous.
2. List 2 also requires production of the customers loans for five years prior to the transactions at issue. This too is uncalled for and without basis. It leads to a fishing expedition for anything the respondent can find about the customer in an effort to embarrass him or her, and has no relevance to securities law.
3. List 4 should be amended so that commission runs and exception reports are provided in all cases.
4. The revisions to the parties obligations to produce information on prior complaints and settlements are unfair and one-sided. The broker and firms should be required to produce all complaints and settlements regarding the broker.
I also want to add my support for, and agreement with, the comments by the Public Investors Arbitration Bar Association.