From: Avery B. Goodman, Esq.
Sent: August 1, 2005
To: rule-comments@sec.gov
Subject: File No. SR-NASD-2005-079


Amending section 10322(a) to establish a 10 day period, during which opposing parties are given a chance to object to any subpeona, is a good idea. It establishes firm guidelines for subpeona issuance, and puts the NASD Arbitration Code in line with other administrative rules, governing hearings before the SEC and other administrative bodies, as well as with the traditional 10 day period used under the Federal Rules of Civil Procedure.

Section 10322 (b)(h), however, should not be adopted. It establishes a cost shifting mechanism, whereby the cost of producing witnesses can be shifted to the opposing party. This disadvantages the party with fewer resources, which is usually the claimant, who may be called upon, for example, under this rule, to reimburse large firms for the time that one or more of their employees expend in testimony, even though those witnesses may be critically important to providing needed information in the proceedings. Some of the people who may be called to testify in a particular case are securities industry employees who earn tens of millions of dollars. Requiring claimants to "reimburse" them for their time could, in some cases, bankrupt employees who have been wrongfully discharged and customers who are making a claim before the NASD. This, of course, will have a chilling effect on the ability of such persons to seek redress of their rights.

One of the justifications usually given for arbitration is that it is less costly than a jury trial. However, in a civil court action, even when a third party witness is called to testify, the uninvolved third-party gets only a nominal "witness" fee ($40.00 per day in the federal courts). Parties are never required to "pay" for the attendence of witnesses who are employees of the opposing parties. NASD's proposal would make arbitration far more expensive than court proceedings. This onerous burden of additional cost would fall most heavily upon customers and former employees, who are bringing claims against large corporate entities with far greater resources.

Section 10322 (b)(h), requiring payment for witnesses, should be removed from the new rule, before being adopted by the SEC.

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A.B. Goodman Law Firm, Ltd.
Avery B. Goodman, Esq.
419 Canyon Avenue, Suite 300
Fort Collins, CO 80521