From: Helen Mangano [sechmangano@earthlink.net]
Sent: Friday, March 28, 2003 4:22 PM
To: rule-comments@sec.gov
Subject: File S7-05-03

March 28, 2003
Dear Sirs,

     I understand through an SEC Release that a proposal was filed by the NASD 
as SR-NASD-2002-188 regarding expungement of records of arbitrations against 
registered representatives.  I am opposed to the adoption of such a rule and if 
passed I would say it would be one more instance of the regulators missing an 
opportunity to assist investors .  I view the proposal as one of many instances 
of the NASD - a supposed self regulator -as being "industry biased".

     For many years the public had available to it the records of brokers who 
churned accounts, engaged in unsuitable or unauthorized trading.  In many instances 
"bad brokers" went from firm or firm - often firms of the worst kind and the  
modern era of the "Boiler Room" - even gave rise to a movie formulated after the 
schemes of such individuals.  Many private individuals did not research their broker 
on the CRD before doing business with them.  That record which stood available, 
but usually unused until after the fact existed in the CRD.  It was most unfortunate 
that the regulators have not been able to disseminate and prevent more effectively 
many of those houses and firms and individuals from doing business in which large 
sums were taken from the investing public.   It is also unfortunate that the 
regulators have been unable to educate the investing public on the use of publicly 
available records before investing .....via the CRD.
 
   Within the last ten years, the expungement process has evolved on its own by 
an aggressive defense bar  for the major brokerage firms and the less savory ones.
In the past the prior record of the broker proved of some value in establishing a 
pattern of conduct.  This was useful to the attorney investigating the possible 
merits of the complaint, i.e. whether there were similar complaints necessitating 
arbitrations, and of possible use at the hearing depending on the type of behavior 
and the discovery obtained as to the prior matters.The idea of expungement was not 
even considered until the last few years , when defense counsel for the brokers 
conceived of the notion that in settlements they could obtain agreements to have a 
stipulated order entered with an expungement.  For brokerage firms this helped them 
to keep a clean record for any one looking up a broker who was a "BIG PRODUCER".  
For the "Boiler Room"  operations that mutated into other entities this was a boon 
to continued operations under a new corporate entity.  

     If an investor complains about losses  via a claim in arbitration - the investor 
ends up on trial -  for being greedy, for frivolous litigation, for defaming the broker.  
The merits of many a valid claim are easily suffused with the collateral litigation 
created by the defense bar which investors must defend against.  The proposal only 
enhances that unnecessary defense litigation. Believe me when I say after 20 years 
as a practicing securities attorney, for the SEC, NASD and private investors that 
the course any investor faces against the defense bar in securities arbitration is 
as difficult as possible for her or her attorney.The proposed rule adds to the costs 
and burdens to the investor litigant.
 
     In the "old days" any information on a CRD was within the discretion of the panel  
as an evidentiary matter - as to whether that information was discoverable and then 
whether that information was admissible,  i.e. whether that information related to a 
pattern or course of conduct.  In the new days ....the defense bar has evolved a way 
to have that information altogether eliminated from the process, making arbitraiton..
..by the way the brokerage industry's choice of private rather than public forum a 
little less fair than several years ago.  Private investors who bring legitimate cases 
are subject to additional issues and defenses and often automatic Motions to Dismiss 
before discovery even commences or is fairly completed in the private forum.

    It is important to also note that under the American law, claims made in litigation 
are not  ever subject to libel claims.  Why the brokerage industry thinks it should be 
subject to some different rule and should be able to subject investors to additional 
costly legal battles with the imprimator of the SEC and the NASD mystifies me.

     I find it   absurd that the supposed "industry watch dog" the NASD has even put 
forth this rule.   It is ironic that the Commission has given so little time for 
comment to the Rule.  Rules are to be promulgated for the benefit of the investing 
public not the protection of an industry that has so badly failed the investing public 
in the last several years. This rule benefits only the brokerage firms and their 
counsel  - not the investing public. It should not be adopted.  The CRD should be 
continued with the funds from some of the fines and censures being generated and 
upgraded as to its use and dissemination by the investing public pre and post 
investment when necessary.


Helen Mangano, Esq.
18 Village Lane
Bronxville, NY 10708