From: Jeffrey A. Feldman
Sent: July 11, 2005
Subject: File No. SR-NASD-2003-158

Jonathan G. Katz
Securities and Exchange Commission

Re: Release No. 34-51856, file No. SR-NASD-2003-158

Dear Mr. Katz:

I am writing to comment on the proposed changes to the NASD Code of Arbitration Procedure with regard to customer disputes. I am a practicing attorney in San Francisco, and almost my entire practice consists of representing customers in NASD arbitrations against broker-dealers. I have been doing this kind of work since becoming an attorney in 1991.

I have the following specific comments regarding certain provisions of the proposed code that I believe harm the rights of customers.

1. Proposed Rule 12100(n) Nonpublic Arbitrator. I believe that industry arbitrators should be eliminated from consumer NASD arbitrations. At least give the option to the Claimants. Often, I feel like the industry arbitrator is overtly hostile to a claimant, identifying much more so with the broker. Industry arbitrators may also feel that in order to get a "more" fair shake in an arbitration down the road filed against that arbitrator or the arbitrator's firm, the arbitrator may feel obliged to give preference to the broker for which the industry arbitrator is sitting in judgment. In other words, the roles may be reversed one day, and that effects industry arbitrators. Industry arbitrators are often industry lawyers who come to a hearing with a decidedly skewed perspective, which is anti-Claimant and pro-industry. It does not happen in every case, but it happens enough that Claimants often do not get hearing from three impartial arbitrators. Where this happens, the Claimant may even prevail in a very good case, but still receive much less in damages than would be appropriate because of the industry arbitrator's influence.

2. Proposed Rule 12400(b) Arbitrators Rosters. The use of separate and exclusive chairperson rosters and non-chair public arbitrator rosters will result in a lowering of the experience and expertise on a panel. Currently, both public arbitrators on a three-person panel may be qualified chairpersons, who necessarily have more training and experience in the arbitration process than most other public arbitrators. The proposed rule will ensure that there is only one qualified chairperson appointed to a panel. This is a disservice to the customer because trained and experienced public arbitrators are better able to resist the influence of the nonpublic industry arbitrators given a place on each panel by the NASD for their "industry expertise." Therefore, as long as the NASD is going to continue placing biased industry arbitrators on panels in customer disputes, the customer should have the benefit of the most experienced, best trained, and most knowledgeable public arbitrators available. The proposed three arbitrator roster should be dropped or the general public arbitrator roster should also include qualified chairpersons.

3. Proposed Rules 12506(b) and 12507(b) Time for Responding to Document Production Lists and Requests. The proposed rules extend the time to respond to discovery from the current thirty days to sixty days. There is absolutely no justification for the extension of time. The NASD certainly does not offer one. Arbitration is supposed to have more limited discovery than in court, yet the proposed rule provides twice as much time to respond than provided in most court rules. In my experience, respondents initially object to producing many responsive documents, including those in the Discovery Guide Lists. Thus, extending the time to respond simply provides an additional month for respondents to object to discovery, further delaying the process before anything can be done to compel production. Therefore, the proposed provisions extending the time to respond from thirty days to sixty days should be dropped.

Thank you for your consideration of these comments.

Jeffrey A. Feldman
505 Montgomery St., 7th Floor
San Francisco, CA 94111