Subject: File No. SR-NASD-2007-021
From: Seth E Lipner
Affiliation: Professor of Law, Zicklin School of Business, Baruch College, CUNY

July 23, 2007

The NASD's Rule proposal sets a limit of $50,000 in income earned from the securities industry before one is classified as a "public arbitrator". The limit on income from so-called "public arbitrators" should be zero.

$50,000 is a substantial amount of money to earn from a single source, and shows a significant connection to the industry. Public arbitrators should be truly public.

The entire concept of "industry arbitrators" is offensive to justice adjudication of public claims should be made exclusively by truly public arbitrators, not industry members or quasi-industry arbitrators.

The instant Rule Proposal, is, I submit, another attempt to preserve the existence of the industry arbitrator. Cleaning the so-called "public pool" (which this proposal falls short of doing) is not enough the NASD needs to purify its entire system by removing from the pool of arbitrators all those who are beholden to the Securities Industry for all or part of their livelihood. (Note: I would also exclude all lawyers who represent investors in the NASD forum from serving as arbitrators)

The NASD has no way to police the $50,000 limitation, and such a limit invites dissemblance by those applying or serving as arbitrators. In addition, the limit requires (at least for some arbitrators) an annual update of their material - something that my own experience shows does not happen with the regularity that it should. But again, the NASD has no way to check it. The NASD should not create a standard it cannot police.

The SEC should approve this proposed rule change, but it should first delete the $50,000 "exemption".

In sum, the Rule Proposal is an improvement over the existing sisutation, but it does not go far enough. Indeed, the very existence of this arbitrary $50,000 limit shows that justice at the NASD is (unfortunately) too often the subject to negotiation, expedience, influence and compromise.

Seth E. Lipner
Prof. Of Law
Zicklin School of Business
Baruch College, CUNY
member, Deutsch Lipner
Gardem City, N.Y.