Barry D. Estell
Attorney At Law
6140 Hodges Drive
Mission, KS 66205

March 28, 2003

Secretary
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549-0609

Re: File No. SR-NASD-2002-168- Proposed Rule 2130 Governing Expungement of Customer Dispute Information From the Central Registration Depository

To the Commission:

This letter is in opposition to the NASD's proposed Rule 2130 seeking to legitimize its efforts to whitewash the records of its member firm's high producing but unethical registered representatives. I am an attorney who represents customers in NASD arbitration. The rule is a piece of regulatory legerdemain meant to hide misconduct with the pretense of oversight. I oppose the rule for the following reasons:

  1. The CRD system already provides the opportunity for a broker who prevails in arbitration to report that the panel dismissed all claims. The registered rep is further provided space to make whatever denials (s)he wishes. There is no need to erase all record of the claim.

  2. Confirmation by a court is a phony safeguard. A public customer defrauded by a registered representative and then a second time by an arbitration panel hand-picked by that rep's trade association is not going to contest an expungement motion in court. The court will grant an uncontested confirmation without independent review unless the NASD objects. There is only the pretense of an independent review.

  3. The NASD seeks the authority to decline participation in any expungement action. Because the member firm seeking the expungement votes in NASD elections and the customer does not; there will be no objection by the NASD as a matter of course. The SRO's miserable record during the tech bubble when it looked the other way while its member firms systematically defrauded the public in the IPO market is indicative of the fortitude with which it would police expungements which would have a very low profile.

  4. A corrupt broker should not be allowed to purchase a clean CRD from a destitute customer. This is especially true when the broker is the reason the customer is destitute. Any agreement to expunge an arbitration claim is inherently corrupt and contrary to the purpose of the CRD.

  5. It is an abuse of power for regulators elected by the brokerage industry to preempt and trivialize state open records laws. It was the states, after all, who have recently stood up for investor protection in the analyst scandals while the NASD and NYSE cowered in the background, afraid to offend their constituents. The only effective check on brokerage firms riding rough shod over individual investors in recent years has been from the states and the NASD's attempt to hinder their effectiveness is insulting.

  6. It is dangerous to allow arbitrators selected and trained by the securities industry to decide that an award is "without factual basis" or "frivolous" or "defamatory." It invites assaults on those who bring the cases, the claimant's bar. The collateral litigation over these issues could possibly exceed the original arbitration claims. Claimant's counsel has not "contracted" to allow industry selected arbitrators to determine these issues. It is beyond the scope of the arbitration agreement and this rule should not be allowed to threaten those who represent defrauded customers. If frivolous claims are a problem, the industry can remove their abusive arbitration agreements and enjoy the full benefits of a litigation motion practice in a court of competent jurisdiction.

  7. The vast majority of the public does not think it can get a fair hearing in an NASD arbitration proceeding. Family lawyers and accountants advise clients not to throw good money after bad. It is thought of as a kangaroo court run by brokers for brokers. To allow the NASD to further hide the results of its arbitrations is outrageous. Future public claimants should have some record of the arbitrators who declare most or even all the cases before them "frivolous." The NASD seeks to make that impossible by allowing its most corrupt arbitrators to cover their tracks.

  8. Honest brokers who do not abuse their clients should not be forced to compete with dishonest brokers who buy clean disciplinary records by purchasing expungement agreements.

The rule should be rejected and the NASD ordered to halt illegal expungement efforts by its members.

Yours truly,

Barry D. Estell
Attorney At Law
6140 Hodges Drive
Mission, KS 66205