September 13, 2005
As an attorney who represents public investors, I support the proposed rule. However, the proposed rule only touches the surface. It is just wrong to have an industry arbitrator in every case. Now is the time to do away with a jury of three arbitrators, where one arbitrator is an securties industry representative. All three arbitrators should be truly public arbitrators. The system is flawed.
My clients are generally not given a choice as to whether or not they want to arbitrate. It is mandatory in most situations. However, for a public investor to be forced to arbitrate in a system that does not pass the smell test, is another story. We do not need an industry arbitrator to educate the public panel members. In virtually every case, expert witnesses educate the panel members.
Another problem is what I like to refer to as the wolf in sheeps clothing problem, where a so-called public arbitrator, who spends his or her time representing securties industry respondents against public investors, is appointed to an arbitration panel as a public member.
These people should be eliminated from the NASD arbitration panel selection process.
Thank you for the opportunity to comment on this proposed rule.