Subject: SR-NASD-2007-021: Proposed Amendment to Rule 12100(u) of NASD Code

August 8, 2007

Ms. Nancy M. Morris, Secretary
Securities and Exchange Commission
100 F Street NE Washington, D.C. 20549-9303

Re: SR-NASD-2007-021: Proposed Amendment to Rule 12100(u) of the NASD Code of Arbitration Procedure, Which Pertains to Definition of Public Arbitrator

Dear Ms. Morris:

My law firm concentrates our practice in representing individual investors in disputes with the securities industry in NASD arbitration, and in state and federal courts. I am also an NASD-licensed arbitrator.

I agree with the NASD that Rule 12100(u) must be amended to address its treatment of public arbitrator industry conflicts. But the NASD proposal, while an improvement, does not address the Ruleís fundamental flaw, which is to impose conflicted public arbitrators on investors who must already face an mandatory industry arbitrator on their panel.

The NASD proposal to amend Rule 12100(u) would continue the rule in its current form except it would disqualify professionals who receive in excess of $50,000 in fees annually in the last two years, from disputes involving investor accounts or transactions.

The NASD proposal must be revised so as to expand the NASD proposal to apply to ALL industry fees. The NASD proposal contains an obvious flaw in that it fails to recognize that receiving fees from the securities industry presents a basic conflict for an arbitrator regardless of the nature of the industry work performed. The fee disqualification proposal must be expanded to apply to all industry work. Not making this change means the 10% rule is the only limitation on public arbitrators performing non-customer dispute work for the securities industry. This would allow an arbitratorís firm to accept millions in fees from industry clients and still be classified as a public arbitrator. The appearance of a pro-industry bias is clear. No investor would willingly accept such a standard because it is unfair on its face. The $50,000 limitation proposed by the NASD must be applied to all industry work and the 10% rule, which allows material conflicts and is unworkable on its face, must be eliminated.

It is imperative that the SEC address the fundamental flaws of Rule 12100(u) in its consideration of the NASD proposal. Conflicted public arbitrators corrupt the NASD arbitration process, and the NASD should not be allowed to impose them on investors already subject to mandatory arbitration with an industry arbitrator.

Sincerely,

Jeffrey S. Kruske, Esq.
Law Office of Jeffrey S. Kruske, P.A.
Overland Park, Kansas