July 21, 2006
I strongly request that you reconsider the proposed amendment of NASD Code of Arbitration Rule 10322(e) concerning issuance of subpoenas by arbitration panels to the extent that it requires a public customer to pay for copies of any subpoenaed documents that it requests from the party that subpoenaed the documents originally. It has long been the NASD's policy that documents will be exchanged by the parties on a voluntary basis and will be produced without charge to the opposing party. In my experience, it is the broker dealer that most often requests subpoenas, often 12-18 in number, for all of the customer's documents, which the broker dealer then sends to every employer, bank, brokerage firm, mutual fund or insurance company that sponsors variable annuities and/or variable life insurance policies owned by the customer for an unlimited period of time, which can be 20 or more years in some cases. Even though the customer objects to the issuance of the subpoena, arbitration panels rarely refuse to issue the subpoena or in most cases, even limit the time period of the request. By sending out the excessive number of subpoenas, the brokerage firm can use its superior ability to finance the discovery, whereas the customer/claimant generally cannot afford to finance such excessive discovery and risks being blindsided in a hearing if he/she cannot afford to gain access to the documents that the brokerage firm may use in cross-examination. This is simply another means of stacking the deck against a customer in arbitration. This inequitable change in the existing policy should not be permitted in this last-minute amendment.