Subject: File No. SR-NASD-2005-094
From: Mitchell S. Ostwald, Esquire

September 20, 2005

September 20, 2005

Jonathan G. Katz, Secretary
Securities and Exchange Commission
100 F. Street, N.E.
Washington, D.C. 20549-9393

Re: File No. SR-NASD-2005-094
Public Arbitrator Definition

Dear Secretary Katz:

I have represented both customers and individual brokers in NASD arbitrations for more than 20 years. I am writing to comment on the rule changes proposed by the NASD regarding the classification of arbitrators. While the proposed change is not without merit, it does not go far enough to remedy the problem of the publics lack of confidence in the neutrality and fairness of the NASDs arbitration process.

A customer who believes he has been hurt by his broker has no choice but to arbitrate his claims in a forum sponsored by the company that hurt him. The decision by the arbitration panel is final and binding, and absent extremely limited circumstances, there is no mechanism to review the award. Given these circumstances, the fact that one of the arbitrators is directly linked to the industry gives, at the very least, an appearance of bias that cannot be overcome. The goal of fairness and neutrality--achieved in a court setting by an impartial judge and a jury of ones peers, and full review of all errors--is not well served by mandating one third of every panel to be an industry member.

The purported reason for requiring an industry member to sit on every panel--that their industry-related expertise is necessary--is not sufficient to justify this inherent bias. In my experience, both claimants and respondents are ably represented by qualified attorneys who present evidence of all of the facts and issues in dispute, and how these facts and issues fit into industry practice. I believe that if twelve of my untrained peers are capable of hearing and deciding even the most complex of cases--and we have seen time and again that they are--then three intelligent, well-trained, and unbiased arbitrators are fully capable of resolving customer complaints.

In short, the requirement that one panel member be part of the industry must be eliminated, and customers should be assured that all arbitrators are unbiased, and without the appearance of bias.

Mitchell S. Ostwald
Law Offices of Mitchell S. Ostwald