Subject: File No. SR-NASD-2005-032
From: Robert S. Clemente, Esq.
Affiliation: Liddle & Robinson, L.L.P.

July 22, 2005

I respectfully submit to the Commission that the proposed rule as submitted should not be approved. The proposed rule amendment is not consistent with the provisions of Section 15 A b6 of the Act. Rules imposed upon parties should be neutral in fact and appearance and should further the goal of equitable resolution of disputes. This rule fails on several fronts.

Having observed thousands of arbitrators deliberate cases presented to them, and the diversity of perceptions individual arbitrators bring to the table, I am of the opinion that requiring arbitrators to explain their awards, as oppose to leaving it to their discretion is a mistake and will lead to further collateral litigation.

Requiring arbitrators to explain their awards will not provide greater confidence, satisfaction with or transparency to the NASD arbitration process, nor will this rule change the so-called perception problems NASD arbitration faces. The very fact that most arbitrations settle before a hearing or award is evidence that all, or at least most, of those that are decided by arbitrators are cases where one or both sides have take unreasonable positions or have unreasonable expectations. Accordingly, when a party loses an arbitration they believed they should have won it is doubtful that any explanation is going to be satisfactory.

This proposal is yet another band-aid to a system damaged beyond repair, and one that has outlived the basis for its creation. What is needed to assure confidence of all parties in securities industry arbitration is a forum that is not subject to the influence of any one particular group. The SRO arbitration process, which has gone from a choice between 10 different forums to literally one, is no longer viable.

Moreover, a rule that is unilaterally exercised should not be approved. A neutral forum should be neutral in fact and appearance. Accordingly the rule, if approved, should be amended to permit any party to require the arbitrators to explain their award and it should apply to all arbitrations, including simplified arbitration. In addition the rule should be amended to permit any party to make the demand that the arbitrators to explain their award at any time prior to the commencement of the plenary hearing.

Although this rule proposal should not be approved, having been involved in the SRO rule making process for nearly 20 years I have little doubt that this rule, having reached the stage of publication, will, in some substantially similar form, be approved. Therefore I implore the Commission to direct the NASD to amend the proposed rule as set forth above and further amend its submission to clearly set forth what uniform instructions, directions or training the NASD intends to give to arbitrators who are required to explain their decisions.

I thank the Commission for the opportunity to comment on this proposal.

Respectfully submitted,

Robert S. Clemente