From: LSSARB@aol.com
Sent: Friday, October 03, 2003 4:56 PM
To: rule-comments@sec.gov
Subject: sr-nasd-98-74

The purpose of this comment is to oppose the NASD's proposed amendment to 
Rule 3110[f].  The amendment would include subsection [f][4][B], allowing 
enforcement of a choice of law provision in arbitration. I have represented 
investors in pursuit of claims for over 30 years and therefore have considerable 
appreciation as to the impact of this proposal.

The amendment allows brokerage firms located in New York or which are defending 
claims arbitrated with the New York Stock Exchange or which involve securities 
traded in New York to potentially impose  New York law on citizens of the other 
49 states simply by including an apparently innocuous choice of law clause in a 
new account agreement.  

This is a critical issue to investors with claims in arbitration.  Unlike most 
states, the state of New York has not adopted the Uniform Securities Act; and 
therefore, if the amendment is adopted, investors from other jurisdictions may 
be deprived of the protections afforded by their state laws.  These include 
statutory claims for misrepresentation and omission against all sellers and 
control persons. While these claims may be available under federal law, the state 
laws generally have a longer statute of limitations and do not allow many of the 
defenses which have been raised federally.  The state laws also provide for 
attorney fees which are not available under New York law or in federal statutes.  

Not only does New York not have a securities law which can be enforced by investors, 
there is case law in New York which may limit investor remedies under the common law.

The point is that investors are entitled to the protections available under their 
state laws.  National brokerage firms make the economic decision to operate in a 
given state.  They should not then be allowed to sneak a choice of law clause into 
a customer agreement that deprives customers of their rights in their own jurisdiction.

The purported objective of the NASD is to protect investors. This proposal does the 
opposite.  It protects the industry.  The fact that the proposal makes the amendment 
retroactive confirms its anti-investor bias.

I respectfully request that the rule be rejected.

Laurence S. Schultz
Driggers, Schultz & Herbst, P.C.
2600 W. Big Beaver Road, Suite 550
Troy, Michigan 48084

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