August 3, 2005
I am an attorney, with a practice devoted primarily to representing public customers in securities arbitration. I also represent individual brokers in employment disputes and regulatory matters.
Though the rule proposed by the NASD regarding subpeonas is an improvement over current practice, it doesnt go far enough to eliminating the tactic employed by far too many NASD member firms, of issuing a blizzard of overbroad, harrassing discovery subpeonas over the signature of counsel prior to the appointment of arbitrators, as the comment submitted by Seth Lipner makes clear.
To curtail if not eliminate the abusive use of discovery subpeonas, the proposed rule should be amended to make clear that:
1. Only arbitrators can issue a discovery subpeona;
2. all parties must be given at least 10 days to oppose the requested issuance of the discovery subpeona;
3. discovery subpeonas should be issued by the arbitrators only upon a showing of need -- ie, documents not available from the parties -- and a showing that the requested documents specifically relate to the matter in controversy -- the standard used for discovery from parties in NASD arbitrations; and
4. discovery subpeonas cannot be served on the records custodian until after the arbitrators have approved the issuance of the subpeona.
The proposal should also be amended to make clear that serving a discovery subpeona on a non-party prior to it being issued or approved by the arbitrators is conduct inconsistent with the just and equitable principles of trade.
Thank you for the opportunity to comment on this proposal.
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