Subject: SR-NASD-2007-021

July 25, 2007

Nancy M. Morris, Secretary
Securities and Exchange Commission
450 Fifth Street, NW
Washington, D.C. 20549-0609
Re: File No. SR-NASD-2007-021
Public Arbitrator Definition

Dear Ms. Morris,

I am a lawyer with a 19-attorney firm in Cleveland, Ohio, and on behalf of myself and the four colleagues with whom I practice securities law, I wish to comment on the changes proposed by the NASD with respect to the definition of "public arbitrator". The proposal, while not perfect, would be a positive step in addressing one of the serious problems facing aggrieved investors who are forced to arbitrate in the NASD -- namely, the use of public arbitrators who have strong ties to the brokerage industry.

By way of background, I devote nearly 100 percent of my professional practice to the handling of private investor disputes. Within my firm, I belong to a specialized practice group whose five members have more than 100 years of collective experience in the area of securities litigation. Prior to 2001 when we began to exclusively represent investors, the primary focus of our securities practice was the defense of national and regional broker-dealers. In fact, the most recent addition to our practice group is the former general counsel of a major brokerage firm. Consequently, I think we can offer a broad perspective.

Some of the individuals commenting on this proposed rule change have expressed the view that it does not go far enough. They argue that the important policy of avoiding even an appearance of impropriety or bias mandates a rule that would exclude from the definition of public arbitrator anyone earning any compensation from a member of the securities industry. I completely agree with their positions, but I regret that their comments might be seen as equivocal or unsupportive of the proposed change. Were they asked whether they preferred the proposed new rule to the status quo, I can assure you that they would uniformly line up in favor of the proposed change.

The correction of unfair or unwise aspects of NASD arbitration never seems to happen as quickly as it should. The process of repair is slow and incremental, even when the unfairness of a particular rule or practice seems obvious to anyone interested in a truly equitable process. I wish the system were otherwise. I wish that NASD Dispute Resolution and the SEC would not seem to be perpetually dragging their feet when simple changes would reassure the investing public that the arbitration system is not as biased as common sense would lead investors to believe. But these wishes do not match reality. The reality is that when the NASD offers any change that would on balance make the system better, one must grab the opportunity, support the proposed change, see the changed approved, and then work to fix the attendant imperfections.

Consequently, I wish to state my position unambiguously. The proposed rule change would vastly improve the arbitration process with which we are currently saddled. It would cleanse the "public arbitrator" pool of persons whose ties to the investment industry might impair their ability to be impartial and whose illogical categorization as public arbitrators creates, at minimum, an appearance of impropriety. Thus, while I would welcome even stronger measures to promote fairness -- e.g., elimination of the industry arbitrator; a definition of public arbitrator that excludes anyone earning compensation for providing services to the industry; customer choice in the selection of an arbitral or judicial forum -- I SUPPORT the proposed change at issue and urge that it be approved.

Thank you for considering this vitally important issue.

Very Truly Yours,

Jay H. Salamon


Jay H. Salamon
Hermann Cahn & Schneider LLP