July 14, 2005
I am an attorney in California, and have been representing parties in securities arbitrations administered by the NASD, NYSE, PCX and AAA since 1994. Though most of my practice involves representing public customers with claims against their stockbrokers, I also represent brokers in disputes with their firm and in regulatory matters. I also occasionally represent brokers in disputes with customers, but infrequently.
I certainly appreciate the NASDs attempts to make the Code more user-friendly. I support many of the comments and suggestions made by PIABA, and by individual commentators Seth Lipner, Martin Fienberg, Gail Boliver, Stuart Meisner, John Miller, Richard Layne, Jeffrey Feldman, Steven Stolle and Pat Sadler among others. I will not repeat those comments here, but would like to emphasize in particular:
1. if substantive motion practice is to be allowed at all, the extraordinary circumstances which might warrant such a motion should be described in the Code itself, including the high burden of proof that the moving party must meet in order for the motion to be granted; there also needs to be protections for the opposing party to take broader discovery prior to substantive motion being decided, including the unilateral right of a party opposing a substantive motion to cross-examine those persons or entities who submit affidavits in support of the motion;
2. using a separate list for chairs of arbitration panels could lead to unbalanced panels, and should be dropped; and
3. the code should make explicit that discovery subpoenas to non-parties can only be issued by the arbitrators, upon application and opportunity to oppose by all parties, and then only upon a showing of necessity and direct relevance to a claim or defense -- a more stringent standard than simply may lead to the discovery of admissible evidence .
In addition, the revised Code should provide for broader disclosures by arbitrators in its pool, to parallel the disclosure obligations set forth by the California Judicial Council in the California Ethics Standards for Neutral Arbitrators in Contractual Arbitration Cal. Rules of Court, App. VI. In addition, prospective arbitrators should be required to disclose without limitation: 1 all arbitrations in which the arbitrator sat as a panelist including NYSE, PCX and AAA arbitrations which involved any of the parties or their counsel currently only NASD awards are disclosed; and 2 all arbitrations in which the arbitrator sat as a panelist and ruled on a substantive motion to dismiss.
Thank you for your consideration of these views.
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