From: Stuart D. Meissner, Esq.
As a securities arbitration practitioner and former regulator I submit the following comments on the proposed rule changes:
1) Rule 12307 -- Although this rule deals with deficient Statements of Claim or Cross Claims it does not deal with deficient Answers. It would appear that the same rule should apply when an Answer is deficient -- either based on its lack of content or if the Respondent fails to submit a Uniform Submission Agreement. From personal experience, I know for a fact that on numerous occasions Respondents fail to submit a proper Uniform Submission Agreement with their Answer and that the Claimants are forced to spend enormous time to get arbitrators to order the submission of such agreement. The rules should be parallel -- if the NASD does not serve or process a Statement of Claim without a Uniform Submission Agreement then they should not process an Answer. Similarly Respondents attempt to circumvent the time requirements in submitting their Answer by submitting a one page denial as an "Initial Answer" and then at their convenience submit an Amended Answer, in effect circumventing the time limitations. Again if a Statement of Claim is going to be rejected based on the lack of content etc then so should an Answer or Initial Answer.
2) Rule 12304, 12305, 12310 and current rule 10328 -- Current Rule 10328 permits any party to submit a "response" to any amended pleading in accordance with 10314(b). 10314(b) talks of 10 days for a Claimant to file a Reply to a Counterclaim, but 10328 does not restrict itself to responses to Counterclaims but refers to any amended pleading all parties have right to submit a "response" as opposed to a "Reply". As this has been a source of abuse by respondents attempting to prevent Claimants from submitting a response alleging that 10314 only allows for a Reply to a counterclaim, it should be clear in the new rules that all parties have a right to file a response to any amended pleading as per rule 10328.
3) Rule 12406 -- There should be no qualified Chair List -- such requirement basically would mandate that every single panel have someone who is either a lawyer or an arbitrator who has heard numerous arbitrations. Such is hardly a jury of one's peers and provides the appearance of attempting to maintain the "old boys network" by having one industry person on every panel and add to that someone who makes their living on not being stricken by the major wirehouses in arbitrator selection process - such person would be reluctant to issue any rulings that slam the industry. I can understand possibly a trial lawyer -not related to the industry - requirement (as opposed to any lawyer) , but someone with 3 arbitrations under their belt in no way makes them any better of an arbitrator - they just repeat the same mistakes over and over.