Subject: File No. DF Title VIII - Rulemakings
From: Pat Huddleston
Affiliation: Attorney

August 19, 2010

Please make a change. Please allow investors a choice between arbitration and the courthouse.

People pay, through their tax dollars, the salaries of their local judges and for upkeep on the courthouse. But, God willing, the only time in their life that they need to resort to the civil justice system, they find that they cannot access it because of a contract of adhesion signed long before they could envision any dispute, and that they have to pay thousands of dollars for the service of private judges in a forum set up and run by the very industry responsible for their losses.

The right to appeal is important. Mandatory arbitration denies that right to customers in almost every instance. Full discovery is important. Mandatory arbitration denies it to customers. Understanding the reasons behind the results is important. Arbitration does not allow it.

If the Commission imposes a fiduciary duty on stockbrokers, that duty will be meaningless unless customers can take an alleged breach to experienced jurists who understand the importance of that duty and the strict standards that it imposes. The combination of a higher duty and access to a forum in which its requirements can be spelled out plainly in written opinions that later litigants can rely upon as precedent might force some beneficial change in the industry. A higher duty without elimination of mandatory pre-dispute arbitration clauses will result in very little, if any, beneficial change.

The arguments in favor of maintaining the status quo will revolve around the supposed savings in time and money that arbitration affords. Please let each investor weigh those supposed benefits against the lack of any practical right to appeal, the lack of the ability to understand the reasoning behind the results, and the lack of full discovery. If investors, counseled by knowledgeable and experience securities attorneys after a dispute has arisen, choose to avail themselves of arbitration, there is no reason why that option should be foreclosed. But investors should be free to make the choice in every instance.

Thank you for considering this comment.

Pat Huddleston
Kennesaw, Georgia