Subject: File No. SR-NASD-2005-094
From: Seth E Lipner
Affiliation: Professor of Law, Zicklin School of Business Baruch College; Member, Deutsch & Lipner

September 8, 2005

Once again, the NASD and NYSE have proposed minor changes in the definition of public arbitrator, at a time when major changes are long overdue. While the now-proposed NASD changes are necessary in view of the changing face of the financial services community, the SROs have again misse the main weakneses in the system.

The mandatory presence of an industry arbitrator in every case is unjustified, and it is time to eliminate that holdover from the days when the industry controlled the process. Public investors, who have no choice but to arbitrate before the SROs, should have right to a panel of public individuals, without the taint of an industry member on every panel. With the proliferation today of expert witnesses and experienced public arbitators, the industry arbitrators presence is not justifiable.

Compounding this problem is the fact that lawyers whose practice involves representing and/or defending industry members are permitted to serve on panels, as are in-house brokerage lawyers. All these individuals have a vested interest in keeping monetary customer awards low - lest they send a message of condemnation to the very industry members who they seek to service and impress for their livelihoods.

At a minimum, the NASD should take all these defense lawyers out of the pool altogether. Since the usual rationale for the industry arbitrator is his/her functional expertise,it makes no sense to have defense lawyers on arbitration panels. thank you for the opportunity to comment