Subject: File No. SR-NYSE-2005-02
From: Robert S. Clemente, Esq.
Affiliation: Of Counsel, Liddle & Robinson, L.L.P.

July 7, 2005

July 7, 2005

Jonathan G. Katz, Secretary
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549-0609

Re: File Number SR-NYSE-2005-02 SEC Rel. No. 34-51863
Proposed Amendment NYSE Rule 607 Appointment of Arbitrators

Dear Mr. Katz:

I submit the following comment on the New York Stock Exchanges NYSE or Exchange proposed amendment to Rule 607 regarding appointment of arbitrators. This being the second recent proposal regarding the manner in which arbitrators are appointed, it is disappointing that the Exchange again fails to offer any reasoning, purpose or statistical support for its proposal, or otherwise conform the proposed rule amendment to reflect the realities of current practice by adopting, substantially, the language approved by the Securities Industry Conference on Arbitration SICA. Reciting an abridged history of the voluntary pilot program is no substitute for stating a purpose for the current proposed amendment. In addition, the proposal does not adequately address the needs or desires of participants in arbitration regarding arbitrator selection. In fact the opposite is true, parties in arbitration want more not less choice in the selection of arbitrators. The current proposal, by limiting strikes and eliminating the second list, offers the parties less choice in selecting arbitrators. As currently proposed, other than making list selection a permanent option, for customers and non-members, the NYSEs amended rule appears in total to benefit the NYSE more than it does the parties.

In the first instance this proposal, similar to its predecessor SR-NYSE-2004-29, offers no justification or purpose for eliminating the second list and limiting the number of permitted strikes against the arbitrators on the sole list, other than a vague reference to reducing the time it takes to appoint a panel. While this may be a worthy goal, the NYSE offers no support for this claim.

It is commendable that the Exchange, as suggested in my comment letter to SR-NYSE-2004-29, and my February 3, 2005 comment letter to SR-NYSE-2005-03 which was submitted after the filing but before publication for comment - attached, is eliminating the necessity for all parties to agree to the list selection. However, the proposal falls short in several other aspects.

In light of the passage of time since the original filing, the Exchange could have devoted at least a minimal effort to propose a complete revision of Rule 607 rather than simply tacking on slightly revised language from the existing pilot program. For example what, if any, purpose is served by maintaining the current language in paragraph ai, . . .an arbitration panel which shall consist of no less than emphasis added three 3 arbitrators, at least a majority emphasis added of whom shall not be from the securities industry, . . . Are there any circumstances where the NYSE would appoint a panel of more than 3 arbitrators, all of whom are not from the securities industry? If there are any such circumstances under which the Exchange would appoint such a panel they are not mentioned in the current rules or this proposal. These changes were adopted by SICA as early as 1998.

Furthermore, considering the passage of time and the comments made during the March 17, 2005 House Subcommittee hearing , the NYSE should have withdrawn this proposal and taken this opportunity to completely review and revise its current arbitrator classification and disclosure policies. The current arbitrator classifications, which have been a topic of much debate, are not addressed in this proposal, nor does the NYSE propose any improvement regarding the standards by which an investor, or other individual pursuing a claim against an Exchange member, may be assured that those individuals classified as public are not from the securities industry and do not, in fact, have close business, professional or personal ties to the securities industry.

For example, under the current rule, and maintained in this proposal, a party is not informed of the disclosures the arbitrators are required to make pursuant to Rule 610 until after the parties are required to exercise their peremptory challenge or strikes and a panel is completed. This leaves the parties in the untenable position of learning potentially critical information about an arbitrator after the arbitrators are appointed and then having only the limited ability to challenge an arbitrator under the narrow definition of for cause. It would make much more sense for a party to receive full and complete disclosure from all of the potential arbitrators before strikes are required to be exercised and the panel is appointed. This would permit the parties to make informed decisions on which, if any, arbitrators to strike.

In light of the fact that the NYSE was readily granted another extension of the voluntary pilot program to July 31, 2005, it should seek, and the SEC should grant, a further extension of the pilot programs, and withdraw or amend this current proposal to address the concerns outlined here, as well as reduce the redundant verbiage of the proposed rule by better incorporating the list selection option into the text of Rule 607.

Moreover, in light of the recent filing by the Exchange to further amend Rule 607, its proposed merger with Archipelago, and change from a not for profit organization to a public company, and the current steep decline in new arbitration case filings at the NYSE , it would be a better use of SEC and NYSE resources if, other than proposals to maintain the status quo such as further extensions of the voluntary pilot program, the NYSE submit no further proposed amendments to its arbitration rules at this time. Consideration should also be given to withdrawing the currently filed proposed amendments by the NYSE or the SEC take no action upon them at this time.

After years of consolidation from ten SRO arbitration programs to virtually only two, with the NASD receiving the overwhelming majority of cases, the SEC should reconsider its 1976 proposal to create a single, SEC managed, entity to administer securities industry arbitrations. In light of the consolidation and structural changes that have taken place among the various SROs there no longer exists any competition among the SROs with regard to arbitration, nor do investors or others have any meaningful choice of forum to choose from. Accordingly the justification for maintaining the current SRO arbitration programs no longer exists. I would be happy to provide the SEC further elaboration on this point.

In response to the Commissions specific request for comment, I am, notwithstanding the above, in full support of the arbitrators last three decisions being automatically sent to the parties in addition to also informing the parties of the availability of prior NYSE arbitration discussions being freely available on the Exchanges website. In addition, the Exchange should inform the parties of the availability of other SRO arbitration decisions, such as on the NASDs website and various commercial websites. Although, perhaps a topic for another more thorough examination, I believe the letter and spirit of the rules requiring SRO arbitration awards be made publicly available requires free access to all interested persons on a centralized website.

Thank you for your consideration. If you have any questions or require additional information please contact me.

Respectfully yours,

Robert S. Clemente

RSC/cs

cc: Justin Daly, Esq., Senior Counsel w/attachment
Kristen E. Jacobi, Esq. Counsel w/attachment
U.S. House of Representatives
Committee on Financial Services
2129 Rayburn House Office Building
Washington, DC 20515

E-MAIL: rclemente@liddlerobinson.com

February 3, 2005

Jonathan G. Katz, Secretary
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549-0609

Re: File Number SR-NYSE-2005-02
Proposed Amendment NYSE Rule 607 Appointment of Arbitrators

Dear Mr. Katz:

I submit the following comment on the New York Stock Exchanges NYSE or Exchange proposed amendment to Rule 607 regarding appointment of arbitrators. This being the second recent proposal regarding the manner in which arbitrators are appointed, it is particularly disturbing that the Exchange again fails to offer any reasoning, purpose or statistical support for its proposal. In addition, the proposal as written, fails to adequately address the needs or desires of participants in arbitration regarding arbitrator selection. Reciting an abridged history of the voluntary pilot program is no substitute for stating a purpose for the current proposed amendment.

In the first instance this proposal, similar to its predecessor SR-NYSE-2004-29, fails to explain or adequately justify its divergence from the arbitrator selection method approved by the Securities Industry Conference Arbitration SICA. Nor does the Exchange offer any justification or purpose for eliminating the second list and limiting the number of permitted strikes against the arbitrators on the sole list.

While it is commendable that, with this proposal, the Exchange is, as suggested in my comment letter to SR-NYSE-2004-29, eliminating the necessity for all parties to agree to the list selection, it falls short in several other aspects. For instance, the NYSE offers no reason why, after exhaustion of the names remaining after the parties exercise their limited strikes that the process defaults to the Director of Arbitration to appoint arbitrators rather than randomly selecting arbitrators to complete a panel. The Exchange also fails to explain or justify why it is eliminating the other alternative arbitrator selection methods currently available under the voluntary pilot program. One would think that with its declining number of case filings and increase in staffing that the NYSE could more than adequately accommodate a partys desire to use alternative arbitrator selection methods.

Moreover, the Exchange could have devoted at least a minimal effort, at this juncture, to propose a complete revision of Rule 607 rather than simply tacking on slightly revised language from the existing pilot program. For example what, if any, purpose is served by maintaining the current language in paragraph ai, . . .an arbitration panel which shall consist of no less than emphasis added three 3 arbitrators, at least a majority emphasis added of whom shall not be from the securities industry, . . . Are there any circumstances where the NYSE would appoint a panel of more than 3 arbitrators, all of whom are not from the securities industry? If there are any such circumstances under which the Exchange would appoint such a panel they are not mentioned in the current rules or its proposal.

Furthermore, the NYSE should have taken this opportunity to completely review and revise its current arbitrator classification and disclosure policies. The current arbitrator classifications, which have been a topic of much debate, are not addressed in the proposal, nor does the NYSE propose any improvement regarding the standards by which an investor, or other individual pursuing a claim against an Exchange member, may be assured that those individuals classified as public are not from the securities industry and do not, in fact, have close business, professional or personal ties to the securities industry. For example, under the current rule, and maintained in this proposal, a party is not informed of the disclosures the arbitrators are required to make pursuant to Rule 610 until after the parties are required to exercise their peremptory challenge or strikes and a panel is completed. This leaves the parties in the untenable position of learning potentially critical information about an arbitrator after the arbitrators are appointed and then having the limited ability to challenge an arbitrator under the narrow definition of for cause. It would make much more sense for a party to receive full and complete disclosure from all of the potential arbitrators before strikes are required to be exercised and the panel is appointed. This would permit the parties to make informed decisions on which, if any, arbitrators to strike.

In light of the fact that the NYSE has sought yet another extension of the voluntary pilot program to July 31, 2005 SR-NYSE-2005-10, it should withdraw or amend this current proposal to address the concerns outlined here, as well as reduce the redundant verbiage of the proposed rule by better incorporating the list selection option into the text of Rule 607.

Thank you for your consideration. If you have any questions or require additional information please contact me.

Respectfully yours,

/S/

Robert S. Clemente

RSC/cs