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FINRA

 

 

FOR RELEASE:
CONTACTS:
Wednesday, April 12, 2006
Nancy Condon (202) 728-8379
Sarah Bohn (202) 728-8464

 


NASD DR Proposes Restricting Subpoena Power to Arbitrators

Washington, DC — In an effort to protect investors and other parties from abuse in the subpoena process and to maintain a uniform rule nationwide, NASD Dispute Resolution announced that it has filed with the U.S. Securities and Exchange Commission (SEC) proposed revisions to the Code of Arbitration Procedure which would permit only arbitrators to issue subpoenas.

 

The original rule proposal gave both arbitrators and counsel in proceedings subpoena powers in an arbitration forum. The rule proposal was amended to address potential issues regarding the scope of subpoenas issued by attorneys who were legally authorized to do so in a few states.

 

"Under NASD's national program, it can be cumbersome to maintain different rules for different states," said NASD DR President Linda Fienberg. "We believe that providing arbitrators with greater control over the issuance of subpoenas will reduce the confusion for parties and their counsel regarding whether they have the ability to issue subpoenas, minimize gamesmanship in the subpoena process, and foster greater efficiency and consistency in administering the rule. This proposal is one more step in ensuring that the process is transparent to all parties, especially investors."

 

NASD also proposed clarifying the requirements regarding the service of subpoenas, by specifying that, after the arbitrators issue a subpoena, the party that requested it must serve a copy of the subpoena on all parties and the entity receiving the subpoena in the exact same manner and on the same day. Additionally, the new rule would require parties that receive documents in response to non-party subpoenas to make the documents available to all other parties upon request. 

 

NASD filed the original rule proposal on June 17, 2005, and the SEC published it for public comment on July 6, 2005. Based on comments received, NASD filed these latest proposed revisions to the rule.  The proposal is subject to approval by the SEC.

 

NASD DR is the largest securities dispute resolution forum in the world. NASD DR facilitates the efficient resolution of monetary, business, and employment disputes between investors, securities firms, and employees of securities firms by offering both arbitration and mediation services through a network of hearing locations across the United States.

 

NASD is the leading private-sector provider of financial regulatory services, dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. NASD touches virtually every aspect of the securities business - from registering and educating all industry participants, to examining securities firms, enforcing both NASD rules and the federal securities laws, and administering the largest dispute resolution forum for investors and member firms. For more information, please visit our Web site at www.nasd.com.